A New Year, A New Rule: A Simplified Method for Furnishing Forms 1095-C to Employees

The Internal Revenue Service (“IRS”) recently released the final 2025 Instructions for Forms 1094-C and 1095-C (“2025 Instructions”). Though self-insured employers and applicable large employers have been required to file Forms 1094-C and 1095-C with the IRS—and furnish copies of the Forms 1095-C to their employees—for over a decade, we regularly assist employers who have questions about (or have received proposed penalty notices related to) these forms. This article will discuss the simplified alternative method for furnishing Forms 1095-C to employees, the purpose of the Forms 1094-C and 1095-C, the importance of timely and accurately filing them with the IRS, and what to do if your business receives a proposed Internal Revenue Code Section 4980H Employer Shared Responsibility Penalty (“ESRP”) notice.

1. What’s in the 2025 Instructions that can make your life easier?

The 2025 Instructions provide an alternative method for furnishing Forms 1095-C to employees. Rather than mailing the 2025 Form 1095-C to employees (or other individual), an applicable large employer (“ALE”) or self-insured employer can instead post a reasonably assessable, clear and conspicuous notice on its website informing employees they may request a copy of their Form 1095-C. We recommend the notice include an email address, mailing address, and a phone number that can be used to request a copy. To utilize this alternative method of furnishing the Form 1095-C, the following requirements must be satisfied:

• The notice must be posted on the employer’s website no later than March 2, 2026 (which is the usual deadline for furnishing the forms including the automatic 30 days extension), and remain posted in the same location until October 15, 2026.

• A Form 1095-C must be furnished to a requesting employee (or other individual) no later than the later of:

  
  

(i) January 31, 2026; or

(ii) 30 days after the date of the request.

In practice, unless an employer is posting the notice prior to January 31, 2026, the 30 day deadline will most likely apply.

Utilizing this alternative method can help employers ease their filing burdens and help them avoid the failure to furnish correct information return penalties discussed below.

2. Why and when are you required to file and furnish the Forms 1094-C and 1095-C?

An employer with 50 or more full-time employees (including full-time equivalent employees) is considered an ALE. ALEs must offer minimum essential health coverage that meets certain requirements to full-time employees and their dependents. The Forms 1094-C and 1095-C are used to report information regarding whether such coverage was offered to an ALE’s employees. The Forms 1094-C and 1095-C are used by the IRS to determine whether employers are liable for ESRPs. Employees use the Forms 1095-C to evidence health coverage and determine premium tax credit eligibility.

The Forms 1094-C and 1095-C for the 2025 calendar year must be filed with the IRS by March 31, 2026, if filed electronically—which is generally required for all ALEs unless a waiver applies.

The Forms 1095-C for the 2025 calendar year must be furnished to each full-time employee by March 2, 2026. As discussed in our prior article, the alternative method discussed above is available pursuant to the Paperwork Burden Reduction Act passed at the end of 2024. Employees may also consent to receiving copies of their Form 1095-C electronically if the stringent requirements in the Treasury Regulations are satisfied. Unless an ALE or self-insured employer opts to utilize the alternative method discussed above or receives an affirmative consent to electronically furnish the Form 1095-C, it must be delivered by hand or mail.

3. What’s the big deal if you don’t comply?

There can be severe penalties imposed if an ALE fails to comply with its obligations related to Forms 1094-C and 1095-C.

First, if an ALE doesn’t file the Forms 1094-C and 1095-C with the IRS, the IRS may propose ESRPs based on the number of Forms W-2 filed by the ALE for the calendar year. For the 2025 calendar year, if an ALE fails to offer group health plan coverage to at least 95% of its full-time employees and any full-time employee receives a premium tax credit (“PTC”) or cost sharing reduction, Internal Revenue Code (“Code”) Section 4980H(a) imposes a penalty of $2,900 ($241.67 per month) for each of the ALE’s full-time employees (less thirty full-time employees). If an ALE offers full-time employees coverage that is not “affordable” or does not provide “minimum value,” Code Section 4980H(b) imposes a penalty of $4,350 ($362.50 per month) for each full-time employee receiving a PTC or cost-sharing reduction. (As discussed in our previous article, these penalty amounts will substantially increase for the 2026 calendar year.) When the ESRPs are proposed based on the number of Forms W-2 an ALE filed for a calendar year instead of the number of full-time employees, the amounts can be staggering.

Second, the failure to file and the failure to furnish information return penalties also apply to Forms 1094-C and 1095-C. For the 2025 calendar year, the penalty for the failure to file correct Forms 1094-C and 1095-C with the IRS is generally $340 per return (capped at $4,098,500). The penalty for the failure to furnish a correct Form 1095-C to an employee is generally $340 per return (capped at $4,098,500). These penalties may be waived if the failure was due to reasonable cause and not willful neglect, but they can be increased if there was an intentional disregard for the rules.

As one can imagine, these penalties add up quickly!

4. You received a proposed ESRP notice—now what?

You generally have 90 days to respond to a proposed ESRP notice, so do not ignore it! If you believe the proposed ESRP notice is an error or you don’t understand it, contact ERISA counsel for assistance. In our experience, proposed ESRP notices are often received because the employer did not complete the Forms 1094-C and 1095-C correctly. In these situations, we have been successful in negotiating with the IRS to reduce the proposed ERSP amounts for our clients.

If you have questions as the Form 1094-C and 1095-C filing season approaches, reach out to your Boutwell Fay LLP attorney.

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© Boutwell Fay LLP 2025, All Rights Reserved. This handout is for information purposes only and may constitute attorney advertising. It should not be construed as legal advice and does not create an attorney-client relationship. If you have questions or would like our advice with respect to any of this information, please contact us. The information contained in this article is effective as of October 2025.