1095-C Vs. 1095-B: Distinguishing the Differences and Their Impact on Your Business

In the realm of business operations, particularly concerning the provision of health insurance to employees, two forms often become the center of discussion: 1095-C and 1095-B. Both forms are crucial under the Affordable Care Act (ACA) and serve as evidence of health coverage. But what exactly differentiates these two, and why should businesses be concerned about them? This article aims to distinguish between 1095-C and 1095-B and elucidate their implications for your business.

The Basics: What are Forms 1095-C and 1095-B?

The ACA, often referred to as Obamacare, requires certain employers to offer health insurance to their employees. In alignment with this requirement, the Internal Revenue Service (IRS) introduced forms to report coverage details. These are where the 1095 forms come into play.

  1. Form 1095-B: This form is primarily issued by health insurance providers, including insurance companies outside the Marketplace, government agencies such as Medicaid, and small employers not subject to the employer mandate.
  2. Form 1095-C: This is designated for applicable large employers (ALEs), generally businesses with 50 or more full-time employees, including equivalents. ALEs must provide their full-time employees and the IRS with details of the health care coverage they offer.

Distinguishing the Differences: Key Points of Variation

  1. Issuer of the Form:
  • 1095-B: Issued by insurance companies or smaller employers not obligated by the ACA’s employer mandate.
  • 1095-C: Issued by ALEs to report information about the health coverage they offer.
  1. Contents of the Form:
  • 1095-B: This form provides details about the employee’s coverage, including who was covered and the periods of coverage.
  • 1095-C: Besides providing details similar to the 1095-B, the 1095-C also includes information about the offer of coverage made to the employee, and whether it was of minimum value and affordable.
  1. Responsibility:
  • 1095-B: It’s primarily the responsibility of the insurance provider. However, if a small employer offers a self-insured health plan, they might be required to issue this form.
  • 1095-C: Solely the responsibility of the ALE, regardless of whether they offer a fully insured or a self-insured plan.

The Impact on Your Business

  1. Compliance with the ACA:
  • 1095-B: If you’re a small business providing a self-insured health plan, it’s crucial to issue the 1095-B to remain compliant with the ACA requirements.
  • 1095-C: For ALEs, correctly filling out and distributing the 1095-C is imperative. Errors or failures to comply can lead to substantial penalties.
  1. Employee Queries: Employees often have questions about their health coverage, especially during tax season. They may require these forms to prove they had coverage and avoid individual mandate penalties. Being proactive in distributing these forms helps maintain transparency and reduces potential confusion.
  2. Yearly Review and Strategy Planning: For businesses, the process of preparing and issuing these forms can be an excellent opportunity to review the health coverage provided and make necessary adjustments for the forthcoming year. This strategic planning can lead to better decision-making in terms of health plan offerings and potential cost savings.
  3. Potential IRS Penalties: Non-compliance isn’t an option. Failure to distribute the forms or errors within them can result in significant fines from the IRS. It’s crucial to be accurate and timely in your reporting responsibilities.


The distinctions between 1095-C and 1095-B may seem subtle but are of significant consequence for businesses. While both forms serve as evidence of health insurance coverage, their issuance responsibilities differ based on the size and nature of the employer. Understanding these nuances not only ensures compliance with the ACA but can also facilitate smoother business operations, enhance transparency with employees, and aid in strategic planning. In a world where regulatory obligations continuously evolve, staying informed is the best strategy for any business.