By Caitlin Gadel, Attorney at Law Seaton Peters Revnew
Beginning in 2016, certain employers are required to report information to the IRS about the health insurance they offered (or did not offer) to full-time employees in 2015. On September 16, 2015, the IRS released the final versions of Form 1094-C and Form 1095-C, along with instructions for each of them. In general, these forms give the employer the chance to demonstrate their compliance with certain provisions of the Affordable Care Act (“ACA”) and avoid ACA monetary penalties. This article provides information to help employers fill out these forms. For additional information regarding the purpose of these forms and which employers are required to submit the forms, see IRS Forms 1094-C and 1095-C: ACA Deadlines Are Approaching. Are You Ready?
Due Dates Extended
On December 28, 2015 the IRS announced that it was delaying the due dates for furnishing and filing Forms 1094-C and 1095-C. The IRS extended the due date for giving employees Form 1095-C from February 1, 2016 to March 31, 2016. The IRS also extended the due date for filing the forms from February 29, 2016 to May 31, 2016, if not filing electronically, and from March 31, 2016 to June 30, 2016, if filing electronically. Employers that do not comply with these extended due dates are subject to monetary penalties for failure to timely furnish and file.
Form 1094-C: Transmittal Form
Form 1094-C serves a “transmittal form” for the 1095-Cs. The 1094-C acts as a cover page and gives theIRS additional information about the employer. In addition to reporting general information about the employer (like address, and TIN), employers need to report the number of full-time employees for each calendar month in 2015 and the total number of employees (including part-time and seasonal employees) for each calendar month in 2015. To determine the number of full-time and total employees, employers may use the first day of the month, the last day of the month, the first day of the first payroll period in the month, or the last day of the last payroll period in the month.
While the 1094-C includes numerous important terms, there is one in particular that employers should pay special attention to: 4980H Transition Relief (Box 3 on line 22). For the purposes of Form 1094-C, 4980H Transition Relief refers to the rule that certain employers with 50-99 full-time employees (including full-time employee equivalents) are not assessed an Employer Shared Responsibility penalty in 2015. Additionally, for the purposes of this form, 4980H Transition Relied also applies to certain employers with 100 or more full-time employees (including full-time employee equivalents) that qualify for a reduced penalty in 2015. Most employers qualify for one of the two 4980H transition relief rules and those that do qualify should be sure to indicate so on Form 1094-C.
Form 1095-C: Employer Provided Health Insurance Offer and Coverage
Form 1095-C is used to report specific information for each full-time employee. If an employee worked at least 130 hours in one calendar month during 2015, the employer must fill out Form 1095-C for that employee.
The form is divided into three parts. Part I includes identifying the employee and the employer. The employer information should match the information used on Form 1094-C.
Part II includes information about the type and cost of insurance coverage offered to the employee in each month of 2015. Employers need to be sure they are reporting what was offered to the employee, and not necessarily the type and cost of coverage that the employee actually enrolled in. Additionally, employers need to pay special attention to Line 16. Employers should be sure to report on Line 16, for each calendar month, if an employee was either not employed or not full-time. This tells the IRS that the employee should not trigger an Employer Shared Responsibility penalty for those months when the employee was not employed or not working full-time.
Part III is only required for employers who offer self-insured major medical plans. Employers that offer traditional fully-insured medical plans do not need to fill out Part III.
If an employer files 250 or more Forms 1094-C and 1095-C, it is required to file electronically. For these forms, the IRS created a new electronic filing system called the Affordable Care Information Return System (AIR). Electronic filers must apply for a transmitter control code online and cannot use any existing IRS electronic fining identification number or IRS electronic transmitter identification number. Additionally, in certain circumstances, the IRS requires testing of the AIR system before submitting any forms. Employers are encouraged to begin familiarizing themselves with the AIR system as soon as possible to prepare for the filing season. For information on the testing procedures, transmission formats, business rules, and validation procedures for returns transmitted electronically through the AIR system, see Affordable Care Act Information Returns (AIR) Program.