Small business filing requirement for employee healthcare: Form 1095-B

Aside from W-2s, 1099s, and other common tax documents small businesses need to issue to employees at year-end, some small businesses need to issue Form 1095-B, Health Coverage. This form isn't required for all small businesses—just self-insured small businesses that provide health coverage for their employees.

To clear up any confusion as you prepare information returns after year-end, here are answers to a few common Form 1095 questions.

What is Form 1095-B?

Form 1095-B is typically mailed by insurance companies to their employees who have health coverage for themselves or their family members that isn't reported on another form. Those other forms are:

• Form 1095-A, Health Insurance Marketplace Statement. The Health Insurance Marketplace issues Form 1095-A to people who enrolled in health insurance coverage for themselves or their family members through the Marketplace.
• Form 1095-C, Employer-Provided Health Insurance Offer and Coverage. Larger employers (those with 50 or more full-time employees or full-time equivalent employees) issue Form 1095-C. It supplies information about the health coverage offered by the company and whether the employee enrolled in the coverage.

These forms were created to prove that individuals had minimum essential coverage as required under the Affordable Care Act (ACA). Starting in 2019, individuals no longer owe a penalty—known as the Shared Responsibility Payment—to the federal government if they don't have minimum essential coverage. However, some states have their own individual health insurance mandate, and the paperwork is still required.

Who issues Form 1095-B?

Typically, insurance companies issue Form 1095-B. However, in some cases, small businesses need to issue the form themselves. This is the case for small businesses that provide self-insured health coverage for employees but have fewer than 50 employees.

Self-insured health insurance is a form of employer-sponsored healthcare that doesn't use traditional insurance carriers to cover payments for medical care. Instead, employees pay premiums to the employer, and the company uses those payments to pay for employee medical claims.

Self-funded health coverage is more common among larger businesses with thousands of employees because they're more likely to have the cash reserves to absorb big claims. However, they've grown in popularity among small businesses looking for more control over their employee benefits costs.

If your small business provides self-insured health coverage for employees and works with a third-party administrator (TPA) to process claims and handle other administrative aspects of the plan, the TPA may assist with filing Form 1095-B. However, you're still ultimately responsible for ensuring the forms are issued accurately and on time.

When is Form 1095-B due?

The annual deadline to provide Form 1095-B to employees is January 31. Employers are also required to file a copy of Form 1095-B with the IRS, and that deadline is February 28 for paper filing or March 31 if the forms are filed electronically.

Keep in mind that businesses that file 250 or more information returns—including W-2s, 1099s, and 1095-B forms—in any calendar year must file those returns electronically.

If you need more time, you can request a 30-day extension by submitting Form 8809, Application for Extension of Time to File Information Returns by the normal form due date.

Get help from a professional

Completing Form 1095-B and other information returns isn't overly complicated, but it can be time-consuming for small business owners required to submit them. If you need help, be sure to work with a qualified tax professional. They can assist with navigating IRS requirements and alleviate a big part of the tax compliance burden.