The IRS has announced the forms that are to be used by employers with at least 50 full-time employees (or the equivalent) to meet the reporting requirements mandated by Section 6056 of the Internal Revenue Code. The mandated reporting is to help the IRS enforce the Affordable Care Act’s (ACA’s) shared responsibility (“play-or-pay”) provision for large employers and the individual mandate. The agency also wishes to confirm the eligibility of individuals who seek tax credits to help them afford coverage bought on a public Health Insurance Marketplace.
Forms for All
Form 1094-C is what employers will need to file with the IRS. Meanwhile, Form 1095-C is what employers will need to provide to employees. Both have recently been issued in draft form “for your information as a courtesy,” according to the IRS. Unfortunately, the IRS hasn’t provided instructions on how to fill them out — at least not as of this writing.
A draft of Form 1095-B has also been released. It will be completed by insurance carriers and furnished to covered individuals, as well as by employers not subject to the play-or-pay provision.
Form 1094-C is titled “Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns.” Self-insured employers will need to complete the entire form. Employers with fully insured plans will share the form-completion responsibilities with their insurance carriers.
One section of Form 1094-C requests a monthly breakdown of the number of full-time employees and all employees, as well as whether minimum essential coverage was offered during each period. Employers are also obligated to identify all other companies of common ownership whose data might be aggregated for ACA compliance purposes.
Form 1094-C also provides a place for employers with at least 50 but fewer than 100 full-time employees or the equivalent to indicate that they’re eligible to avoid penalty for any coverage shortcomings in 2015. This is thanks to the “transition relief” made available to those employers under the final play-or-pay regulations the IRS issued earlier this year.
Note, however, that determining an employer’s eligibility for transition relief is based on its employee count during 2014. And the final regulations seek to prevent employers from gaming the system by cutting back their workforces this year just to defer being subject to the play-or-pay provision until 2016. Employers in that 50-to-99 employee bracket will also be required to file a form attesting to their eligibility for relief in 2015.
Form 1095-C, “Employer-Provided Health Insurance Offer and Coverage,” must be completed by employers and sent to each employee. The form requires identification of the category of coverage offered (from a list of nine possibilities) and data on the employee’s monthly share of the lowest cost monthly premium for single minimum value coverage. The form also requires information on each family member covered, including their Social Security numbers and the months they were covered.
Deadlines and Penalties
The forms won’t need to be provided until 2016 (for the 2015 calendar year). But, as an employer, you’ll need to start collecting the data as of the beginning of 2015. So be sure to have your data collection and recordkeeping systems geared up by then. The actual deadline schedule for filing the forms with the IRS is the same as that for W-2s: Feb. 28, or March 31 when submitted electronically.
A maximum penalty of $200 per form may be assessed, subject to a $3 million cap (which is relevant only to employers with at least 15,000 full-time employees or the equivalent) for failing to file the required forms. Therefore, it is critical to comply with the information-filing requirements.
Contact your TBC tax advisor or benefits advisor for more information on what you should be doing now to be prepared to comply in 2015.