IRS Form 1095-B provides information about health insurance coverage. The Affordable Care Act (ACA), also known as Obamacare, requires that insurance providers send this form to those whose coverage meets the minimal standards of the law.
ACA and small businesses
The Affordable Care Act (ACA) requires businesses to offer health insurance to their employees if they have at least 50 full-time workers or “full-time equivalents.” A full-time equivalent is a combination of part-time workers whose hours add up to a full-time workload (30 hours/week). For example, if you have three part-time employees who each work 10 hours/week, they add up to one full-time equivalent (3 x 10 = 30 hours = 1 FTE).
Small businesses with less than 50 full-time employees or full-time equivalents won’t be impacted by the ACA requirement. But if your company chooses to provide health insurance, you may be able to qualify for tax credits designed to help offset the cost of offering medical coverage to your workers.
What the 1095-B reports
The ACA also requires most Americans to have health insurance that provides a basic level of benefits, called minimum essential coverage. People enrolled in a health plan that provides minimum essential coverage will receive a copy of Form 1095-B from their insurer at the end of the year, which describes their coverage and the months that it was in effect.
A “self-insured” employer is an employer who pays their workers’ medical bills, rather than going through an insurance company. In this case, the employer is also the insurer, and responsible for producing Form 1095-B.
According to the Self-Insurance Institute of America, being self-insured requires a company to have significant financial resources and, in general, is not a viable option for most small businesses.
The 1095-C requirement
Businesses that are required to offer insurance—those that have at least 50 full-time workers or equivalents—are in turn required to send out an additional form describing the coverage available to employees, called a 1095-C. The employer must provide a copy of Form 1095-C to the IRS and to every employee eligible for coverage, including those who don’t participate in the employer’s insurance plan.
A business does not have to prepare 1095-C Forms if it is not required by the ACA to provide health insurance. Therefore, even if a small business with fewer than 50 full-time workers chooses to offer insurance, it is not required to send 1095-C Forms to employees or to the IRS.