IRS Releases Final 2015 ACA Reporting Forms and Instructions
On September 16th, the Internal Revenue Service (IRS) published final Forms 1094-B and 1095-B, Forms 1094-C and 1095-C, and corresponding form instructions for tax year 2015. Forms 1094-C and 1095-C will be used by employers to report offers of health insurance coverage made to their full-time employees. The final forms did not include any major changes from the prior draft versions; however, the final instructions provide some clarification on reporting.
Internal Revenue Code (IRC) Section 6056 under the Affordable Care Act (ACA) requires applicable large employers (ALEs) to report to the IRS whether they offer their full-time employees and their employees' qualified dependents the opportunity to enroll in minimum essential coverage (MEC) under an eligible employer-sponsored plan. An ALE is an employer that employed (any combination of workers within a controlled group) an average of at least 50 full-time employees (including full-time equivalent employees) during the preceding calendar year. Employees are considered full-time in any month that they are credited with at least 30 hours of service per week, on average, or 130 hours of service in the month.
Form 1094-C is the transmittal report which accompanies and summarizes Forms 1095-C.
Form 1095-C will identify each employee who was full-time for one or more months, and report for each month the details of any health care coverage offered. For self-insured plans, Form 1095-C will also be provided to covered individuals. The first Forms 1095-C must be furnished to employees by January 31, 2016 (covering 2015), and must be filed with the IRS in accordance with existing deadlines for Forms W-2. Electronic filing is required if at least 250 forms are filed.
Form 1095-B generally identifies each covered individual (including any spouse and qualified dependents) and their respective months of coverage. Insurers and other providers of health care coverage, including multiemployer plans, will file and furnish Forms 1095-B to report details of all individuals with insured health coverage to the IRS, as required by IRC Section 6055. Self-insured ALEs will issue and file a combined Section 6055/6056 report using Form 1095-C, Part III.
The ACA information on Form 1095-C is arranged in three rows of coded information, by month, for each full-time employee.
- The first row (Line 14) on the form identifies whether the ALE offered minimum essential coverage (MEC) to the employee and any spouse and qualified dependents, and whether such coverage provided minimum value.
- The second row (Line 15) reports the employee’s share of the lowest-cost monthly premium for self-only minimum value coverage.
- The third row (Line 16) includes any information needed to determine whether the employer may be liable for a shared responsibility payment. For example, codes are entered to identify employees who were not employed or who were not full-time during a month, or who enrolled in coverage offered. Other codes identify transitional or “safe-harbor” relief (e.g., employees in limited non-assessment periods or coverage meeting affordability safe-harbor tests).
Revisions to Form Instructions
Using Multiemployer Arrangement Interim Guidance – The final instructions for Form 1095-C clarify that Codes 1H (no offer of coverage) and 2E (multiemployer interim rule relief) can be used on Lines 14 and 16, respectively, without regard to whether the employee was eligible to enroll or enrolled in coverage under the multiemployer plan for 2015. In future years, ALE members relying on the multiemployer arrangement interim guidance may be required to report offers of coverage made through a multiemployer plan in a different manner.
Reporting on Offers of COBRA – These final instructions removed the requirement to report an offer of COBRA on Form 1095-C made to a former employee upon termination, even when the employee enrolled in that coverage. The requirement remains to report an offer of COBRA that is made to an active employee due to a reduction in hours.
Total Employee Count for ALE Member – A fifth option was added to the instructions for ALE members to use when calculating their total employees on a monthly basis for Form 1094-C, Part III, Column (c). The option to use the 12th day of each month is now permitted in addition to the existing methods of using the first or last day of each month, the first day of the first payroll period that starts during each month, or the last day of the first payroll period that starts each month.
Applicable Large Employer (ALE) Definition – The definition of ALE was updated with regards to determining whether or not an employer is an ALE for a given year and therefore subject to IRC Section 4980H. Instructions clarify that employers may disregard an employee for any month in which the employee has coverage under a plan described in Section 4980H(c)(2)(F) – generally, TRICARE or Veterans Administration coverage. However, if an employer qualifies as an ALE, such employees are treated as any other employee; e.g., they should be included in full-time employee determinations, and subject to reporting on Forms 1095-C, etc.
Reporting Health Reimbursement Arrangements (HRA) as Minimum Essential Coverage (MEC)– The final instructions provided direction on when an HRA should be reported as MEC. An ALE member with a self-insured major medical plan and an HRA is required to report the coverage of an individual enrolled in both types of MEC under only one of the arrangements. An ALE member with an insured major medical plan and an integrated HRA is not required to report the HRA coverage, if the individual is eligible for the HRA because the individual enrolled in the insured major medical plan. An ALE member with an HRA must report coverage under the HRA on Form 1095-C, Part III for any individual that is not enrolled in a major medical plan of the ALE member (for example, if the individual is enrolled in a group health plan of another employer, such as spousal coverage).
For more information on the changes discussed, please review the 2015 Instructions for Forms 1094-C and 1095-C at http://www.irs.gov/pub/irs-pdf/i109495c.pdf