TurboTax / Tax Calculators & Tips / All Tax Guides / Small Business Taxes / How Does IRS Form 1095-B Affect Small Businesses?

How Does IRS Form 1095-B Affect Small Businesses?

Updated for Tax Year 2015


OVERVIEW

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.

Self-insured companies

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.

Get every deduction you deserve

TurboTax Deluxe searches more than 350 tax deductions and credits so you get your maximum refund, guaranteed.

For only $54.99*
Start for Free

Looking for more information?

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


Security is built into everything we do
Here's how
* Important Offer Details and Disclosures
  • Filing Deadline: IRS filing deadline for tax year 2015 is April 18, 2016 (except for residents of Massachusetts or Maine, where the IRS filing deadline for tax year 2015 is April 19, 2016).
  • Try for Free/Pay When You File: TurboTax online and mobile pricing is based on your tax situation and varies by product. Free 1040EZ/A + Free State offer only available with TurboTax Federal Free Edition; Offer may change or end at any time without notice. Actual prices are determined at the time of print or e-file and are subject to change without notice. Savings and price comparisons based on anticipated price increase expected 3/18/16. Special discount offers may not be valid for mobile in-app purchases.
  • TurboTax CD/Download products: Price includes tax preparation and printing of federal tax returns and free federal e-file of up to 5 federal tax returns. Additional fees apply for efiling state returns. E-file fees do not apply to New York state returns. Savings and price comparison based on anticipated price increase expected 3/18/16. Prices subject to change without notice.
  • Anytime, anywhere: Internet access required; standard message and data rates apply to download and use mobile app.
  • Fastest refund possible: Fastest tax refund with efile and direct deposit; tax refund timeframes will vary.
  • Pay for TurboTax out of your federal refund: A $X.XX Refund Processing Service fee applies to this payment method. Prices are subject to change without notice. This benefit is available with TurboTax Federal products except the TurboTax Home & Business/QuickBooks Self-Employed bundle offers.
  • About our TurboTax Product Experts: Customer service and product support vary by time of year.
  • About our credentialed tax experts: Live tax advice service is available via phone for your toughest tax questions; fees may apply. Service, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice. Not available for TurboTax Business customers.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2014 TurboTax products.
  • Most Popular: TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations.