Instructions for completing the 2016 forms 1094-C and 1095-C were released by the IRS at the beginning of August. The IRS has cautioned that it is a revision or an early release draft of an IRS regulation, and they are providing it as a courtesy.
The Affordable Care Act established reporting requirements under Sections 6055 and 6056 of the Internal Revenue Code. ACA is a common compliance matter for which employers turn to experts for assistance. These requirements apply to applicable large employers (ALE) and mandate the reporting of information pertaining to offering health insurance coverage to full time employees (FTEs) and the rules for minimum essential coverage (MEC.) This information is reported on IRS Forms 1094-C and 1095-C.
An Applicable Large Employer represents an employer with 50 or more full time equivalents. Section 6056 maintains that large employers must report on the coverage offered to their FTEs during the year. They must also provide a statement of coverage information to their FTEs. For those with self-insured plans, they must also report MEC information for each person covered under the employer’s self-insured plan.
Non-ALE employers report MEC information on the recently revised Forms 1094-B and 1095-B.
Though employers should review the document in its entirety for a complete understanding, here is a high level overview of the types of changes the new draft instructions entail:
The revisions in the new draft instructions indicate that each ALE member has only one authoritative transmittal if multiple Forms 1094-C are filed.
A list for 1094-C and 1095-C corrections is provided which includes correcting name errors or EIN errors of ALE members. It also indicates corrections for errors reported for the premium amounts.
Employee Required Contribution
Employee Required Contribution defines an employee’s share of the monthly cost for the lowest costing, self-only, minimum essential coverage providing the minimum value offered to the employer by the ALE member. The employee share is the portion of the employer’s monthly cost for self-only coverage.
ALE members with non-calendar year plans and 50-99 FTEs are exempted from penalties under Code Section 4980H. ALE Members with 100 or more FTEs now have a decreased requirement in offering health coverage from 95 percent of FTEs to 70 percent of FTEs.
FTE Count Calculation
Instructions are provided in the revisions for calculating an ALE member’s number of FTEs in order to complete Form 1094-C taking into account the monthly measurement period or the look-back measurement method.
Coding Changes for Form 1095-C
A number of new codes, code changes and their explanations are included in the new draft instructions.
Guidelines for reporting COBRA information on Form 1095-C are included such as continuing to offer COBRA coverage to employees after a reduction in hours and how to properly code employees who terminate employment. It also includes instructions for reporting non-COBRA coverage, post-employment.
For those with employees that are part of a collective bargaining agreement, the employees may be treated as having received an offer of health coverage if the employer is otherwise obligated to contribute to a multi-employer plan under the agreement. Further stipulations include the plan being affordable and having minimum value. It must also offer dependent coverage.
For the 2016 calendar year, the forms are required to be filed by February 28, 2017, or March 31, 2017, if filing electronically.
The revisions indicate that each FTE must receive a Form 1095-C by January 31st of each year.
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