Employer Requirements for Form 1095-C and Form 1095-B

Forms 1095-B and 1095-C are required by the Internal Revenue Service (IRS) to verify medical coverage (Form 1095-B) and the offer of medical coverage (Form 1095-C) by certain employers.

Every employee who had medical coverage in the prior calendar year will receive a Form 1095-B, which also will show dependent coverage, from the coverage provider. Employees will use their Form 1095-B to report coverage for themselves and their tax dependents on their annual personal tax filings. Please see the frequently asked questions about Form 1095-B on ERS’ public website.

Employers who offered medical coverage to employees are required to send Form 1095-C to every employee to whom they offered coverage – whether or not the employee took the coverage. Employers also must report offers of coverage to the IRS.

As per the requirements of the Affordable Care Act (ACA), large employers such as State of Texas agencies and higher education institutions will file information with the IRS about medical coverage they offered their employees in the previous year. Employers also must provide Form 1095-C statements to employees, to verify offer of coverage on their tax filings. The health plan under which an employee had coverage will send Form 1095-B to the employee.

As an employer, you will be required to report to the IRS:
  • the Offer of Coverage Information for all employees (Parts 1 and 2 of Form 1095-C) and
  • Enrollment Information for HealthSelect of Texas and Consumer Directed HealthSelect (HealthSelect) participants (Part 3 of Form 1095-C).
For employees enrolled in health maintenance organizations (HMOs), you must complete only Parts 1 and 2 of Form 1095-C.

ERS strongly recommends that you consult with your agency’s or institution’s attorney to determine exactly what will be required of you.

The greatest difficulty most employers have with Form 1095-C reporting requirements is tracking Enrollment Information required to complete Part 3 of the form. Most employers do not track this information internally because they rely on the medical coverage provider(s) to do so.

As the administrator of HealthSelect of Texas and Consumer Directed HealthSelect, the State of Texas’ self-funded plan, ERS has the Enrollment Information of all the HealthSelect participants, but not the Offer of Coverage Information. You, as an employer, have Offer of Coverage Information, but not Enrollment Information. As per the Health Insurance Portability and Accountability Act of 1996 (HIPAA) restrictions, ERS cannot disclose employees’ medical coverage Enrollment Information to employers, which is required to complete Part 3 of Form 1095-C.

However, the IRS allows a governmental entity to delegate another governmental unit to report Enrollment Information. ERS is offering to serve as the Designated Governmental Entity (DGE) for all agencies and institutions that participate in the Texas Employees Group Benefits Program (GBP). As DGE, ERS can report Part 3 of Form 1095-C for HealthSelect Enrollment Information on behalf of State of Texas employers through its contract with Blue Cross and Blue Shield of Texas (BCBSTX), the third-party administrator of HealthSelect plans.

By designating ERS as DGE, you will be required to report only Parts 1 and 2 of Form 1095-C for HealthSelect participants, while ERS/BCBSTX will report Part 3 information for HealthSelect participants.

ERS sent an email on October 5, 2015, inviting all the state agencies and higher education institutions participating in GBP to provide the name, title and email address of the person authorized to sign the DGE delegation on behalf of the employer. Typically, this is the Chief Financial Officer, Payroll Officer, Human Resources Director or Executive Director. That email includes all the instructions to complete the form that will delegate ERS as the DGE. Don’t forget to include the Employer Identification Number of all organizations that will be covered under your agency’s/institution’s delegation.

You also can log in to ERS’ Benefits Coordinator Community Group (BCCG) and go to the Reporting tab to find a copy of the email, the DGE delegation form and a copy of a special edition of the Texas Comptroller of Public Account’s e-newsletter, FMXtra. 

The IRS will link the EIN on an employee’s W-2 with the EIN on his or her Form 1095-C to determine if the employer has met 1095 reporting requirements and has offered minimum acceptable coverage. If an employer identified on a W-2 is found to have provided insufficient information, it is subject to a penalty of $500 per Form 1095-C report up to a maximum of $3,000,000 per tax year. There is an unlimited liability for failure to report medical coverage.

As part of the DGE delegation, ERS will provide its identification information and EIN for delegating agencies/institutions to use in their Form 1095-C reporting. This will allow the IRS to link HealthSelect members’ Form 1095-B and Form 1095-C reporting, showing the IRS that delegating agencies/institutions have met their employer mandate for medical coverage.

On May 11, 2015, the Texas Comptroller of Public Accounts sent a special edition of its FMXtra e-newsletter with information about requirements for state agencies and higher education institutions, as well as requirements for GBP health plans. You can find a copy of this edition of the newsletter under the Reporting tab of the BCCG, via a link titled “13202 FMXtra Special Edition 201505” (login required). 

For more complete guidance on your agency’s or institution’s responsibilities, please consult your legal counsel.