IRS Releases Final Forms and Instructions to Comply With ACA Employer Reporting Requirements
In February 2015, the IRS released “final” versions of both the forms and instructions for purposes of “individual mandate reporting” under Section 6055 of the Internal Revenue Code (Code) and “pay or play reporting” under Section 6056 of the Code. These forms and instructions replace drafts released by the IRS in 2014. While there were only minor changes to the actual forms and instructions to Forms 1094-B and 1095-B, there were some helpful updates to the instructions to Forms 1094-C and 1095-C.
|Individual Mandate Reporting (Section 6055 Reporting)
Form 1094-B can be found here.
Form 1095-B can be found here.
Instructions to Forms 1094-B and 1095-B can be found here.
FAQs about individual mandate reporting can be found here.
|Pay or Play Reporting (Section 6056 Reporting)
Form 1094-C can be found here.
Form 1095-C can be found here.
Instructions to Forms 1094-C and 1095-C can be found here.
FAQs about pay or play reporting can be found here.
Updates to Instructions to Forms 1094-C and 1095-C
Authoritative Transmittals Large employers may file more than one Form 1094-C (e.g., separate Forms 1094-C for the employer’s separate divisions) if one Form 1094-C is marked as the “authoritative transmittal.” The authoritative transmittal must include aggregate employer-level data for both divisions. The non-authoritative transmittal, however, is not required to include certain information that is required of the authoritative transmittal, such as information about other members in the employer’s controlled group and what type, if any, of “transitional relief” the employer qualifies for.
Reporting For Non-Employees It was previously unclear whether large employers that sponsor self-funded plans should use Form 1095-B or Form 1095-C to report information regarding non-employees (i.e., non-employee directors, retirees or COBRA qualified beneficiaries) who are enrolled in the employer’s self-funded plan. The final instructions indicate that large employers may use either Form 1095-B or Form 1095-C to report information for these non-employees.
Multiple Employers in the Same Controlled Group Each employer within a controlled group that constitutes a single large employer must separately prepare a Form 1095-C for each full-time employee that works for the employer during the calendar year. So, employers within a controlled group may be required to separately prepare Form 1095-C for the same full-time employee, if the employee works for multiple employers in the controlled group within the same calendar year.
Under the draft instructions it was unclear which employer should report for a full-time employee who works for two different employers in the same controlled group during the same calendar month. The final instructions clarify that the employer for which the employee works the greatest number of hours in a month is obligated to report for that employee. (If the employee works for each employer for an equal number of hours in a month, the employers may designate the employer that reports for the employee.)
Employee Count Large employers are required to include the total number of employees (including non-full-time employees) in each calendar month (the purpose of this information is not clear). The final regulations clarify that employers may count employees for this purpose as of: (1) the first day of the month; (2) the last day of the month; (3) the first day of a the first payroll period that starts during each month; or (4) the last day of the first payroll period that starts during each month, provided that the last day of the payroll period falls within the same month in which the payroll period starts.
Actual Offers of Health Coverage The final “pay or play regulations” (see our Priority Alert here for more information on these regulations) offer various forms of “transition relief” in which a large employer will be “deemed” to offer health coverage to certain full-time employees (i.e., adding dependent coverage, coverage under certain multiemployer plans and transition relief offered to certain non-calendar year plans). Employers must only report “actual” offers of health coverage rather than “deemed” offers of health coverage under the transition relief.
Simplified Reporting If an employer makes a “qualifying offer” (i.e., the offer of coverage is of “minimum value” and is “affordable” based on the federal poverty level safe harbor to a full-time employee and the employee’s spouse and dependents, if applicable, for all 12 calendar months) to a full-time employee, the employer may provide the employee with an alternative simplified statement instead of a copy of the actual Form 1095-C. The final regulations clarify that employers that sponsor self-funded health plans cannot provide this alternative simplified statement to full-time employees who actually enroll in the employer’s self-funded health plan.
There is also a qualifying offer method that only applies in 2015, which allows employers to provide full-time employees with a similar alternative simplified statement. Again, employers that sponsor self-funded health plans cannot provide this alternative simplified statement to employees who actually enroll in the employer’s self-funded health plan. NOTE: Even if an employer may provide its full-time employees with an alternative simplified statement under one of these qualifying offer methods, the employer must still file a copy of the actual Form 1095-C with the IRS. In other words, the employer is not relieved from preparing the Form 1095-C under these simplified reporting options.
The final versions of the forms and instructions provide helpful guidance to previously unanswered questions regarding the employer reporting requirements. But, they also confirmed previous suspicions that the employer reporting requirements are complicated. As a result, employers should begin to develop a compliance plan now. Miller Johnson is hosting thee workshops in August 2015 to assist employers understand these employer reporting requirements.