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By Dianne Rudolph

Topics: Payroll


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It’s that time of year again! Now for the third year running, Affordable Care Act 1095s have been mailed out to your employees. Chances are you’re going to be bombarded with questions as your employees finally receive these forms.

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It’s understandable they have questions. After all, the form is somewhat confusing. The Tax Cuts and Jobs Act has made things even more confusing, as the individual mandate has disappeared as well. If your employees haven’t started asking questions yet, rest assured they will. Be prepared to answer their questions with these six FAQs.

1. What Does It Do?

You can think of the ACA 1095 as a W-2 for healthcare coverage. The W-2 form reports annual income to the IRS. The employer sends a copy to both the employee and the IRS. The same thing happens with the ACA 1095. Both the employee and the IRS receive copies of this form.

The ACA 1095 reports not on income but on healthcare coverage. Essentially, it lets the IRS know if employees had healthcare insurance the previous year and, if so, how much coverage they had.

2. Why Are You Sending It?

The ACA 1095 shows what healthcare coverage an employee and their family had (or didn’t have) in the previous tax year. In 2017, every person needed to obtain health insurance. If an employee didn’t have health coverage last year, the IRS may levy a penalty. If you, as the employer, failed to provide healthcare coverage, you may also be penalized.

You need this form to report your healthcare coverage and avoid being penalized by the IRS for not being covered.

3. Didn’t the Individual Mandate Get Axed?

Yes, the individual mandate, which requires each individual to carry health insurance, has been dropped from the ACA. This was a result of the Tax Cuts and Job Acts, which was signed into law in December 2017.

The individual mandate no longer exists for 2018. Next year, employees won’t need to report with an ACA 1095. Since the change didn’t happen until the end of 2017, however, the individual mandate was still in effect for all of last year. Employees are filing their 2017 taxes now, so they also need to report on the healthcare coverage they had in 2017.

4. Do You Need to Do Anything with It?

Employees should file it and keep it in a safe place! The copy of the ACA 1095 an employee receives is for the employee’s records. The employer has to mail a copy to the IRS for its records, just the same as they do with the W-2.

Employees don’t need to do anything more.

5. What If You Got More Than One?

If an employee had health insurance through more than one employer in 2017, it’s possible they’ll receive multiple ACA 1095s. Again, these are for the employee’s records, so they should simply store them in a safe place. They don’t need to do anything more with them at this time.

They may also receive a 1095-A or 1095-B, which report specific health coverage details.

6. What If You Didn’t Receive One?

Everyone should have received this form by March 2, 2018, whether they had health coverage or not. You, as the employer, should have provided it either in person or through the mail. If you had employees’ permission, you may have sent the form electronically.

If you have an employee who believes they didn’t receive a form, be sure you can provide them with the name and contact details of the person in your business responsible for issuing these forms. They should be able to help.

If your employees still have questions, be sure to direct them to the IRS’s website about these forms, as well as a knowledgeable person in your business or at a partner firm. The ACA 1095 doesn’t need to be confusing.


Dianne Rudolph

Dianne is the Vice President of Sales and Marketing at Paymedia, LLC. She has a demonstrated history of working in the management consulting industry. Skilled in crisis management, business planning, customer acquisition, and coaching, she is a strong sales professional with 25 years of experience in the payroll industry. Through Paymedia, she offers clients results through iSolved, a platform that meets their needs today and that they won’t outgrow tomorrow. With five years' experience as an entrepreneur, Dianne has also taught herself how to launch and manage a successful business from the ground up. She lives has two grown children. As an empty nester, it gives Dianne time to pay it forward in her free time. Her mission is to help and give back. Her true inner peace is found at the beach and through yoga and massage.

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