By Debbie Haines, Partner
In order to collect the necessary information to enforce and administer the Affordable Care Act (ACA) the Internal Revenue Service (IRS) has developed two new forms, Forms 1094-B/1095-B and 1094-C/1095-C. Reporting is first required for 2015 information, with the first reports due in early 2016. However, gathering the required data and accurately completing the forms presents a complex task for employers and coverage providers. This article will take an in-depth look at each of the requirements, as well as share the consequences of filing incorrectly.
WHAT ARE FORMS 1094-C AND 1095-C?
Forms 1094-C and 1095-C together satisfy the requirement for Applicable Large Employers (ALEs)* to file information returns with the IRS and provide statements to their full-time employees about the health insurance coverage offered by the employer. Form 1094-C provides employer-level information, while Form 1095-C provides individualized information. Both forms are filed with the IRS; Form 1095-C is also furnished to employees.
* An Applicable Large Employer is any company or organization that has an average of at least 50 full-time employees or “full-time equivalents” or “FTE.” For the purposes of the Affordable Care Act, a full-time employee is someone who works at least 30 hours a week. If you are not an Applicable Large Employer (that is a small employer) you will only need to file Forms 1094-C and 1095-C if you have a self-insured health plan.
FORM 1094-C: TRANSMITTAL TO IRS
Form 1094-C is filed with the IRS by each ALE to accurately report employer-level information. It is also used to transmit Form 1095-C employee statements to the IRS. Although Form 1094-C serves as the transmittal for Form 1095-C, it is more than “just” a transmittal. The form reports a considerable amount of substantive information, including the ALE’s number of full-time employees, whether minimum essential coverage was offered to enough full-time employees, whether the ALE is a member of an aggregated ALE group (and, if so, the other members of the group) and whether the ALE is eligible for any 2015 transition relief.
An ALE that is required to file 250 or more Forms 1095-C must file Forms 1094-C/1095-C electronically through the ACA Information Returns (AIR) filing system. This new system is completely separate and distinct from systems used for other IRS electronic filings (such as the FIRE system used for filing Form W-2). The due date for electronic filings is March 31, 2016 but has been temporarily extended to June 30, 2016. ALEs that file fewer than 250 of these forms may file on paper, but are encouraged to file electronically. The regular due date for paper filings is February 29, 2016. This due date has been temporarily extended to May 31, 2016.
Many paid payroll services offer help with these forms, as ALEs are permitted to contract with and use third parties to facilitate filing the forms with the IRS and furnishing statements to employees, but the fundamental reporting obligation generally remains with the ALE.
FORM 1095-C: EMPLOYER-PROVIDED HEALTH INSURANCE OFFER AND COVERAGE
An ALE must furnish a Form 1095-C to each employee who was a full-time employee for at least one month during the year. Form 1095-C is filed with the IRS in addition to being furnished to employees. In addition to providing identifying information about the employer and employee, it sets forth information about the health coverage offered (including affordability information), monthly premiums and months the employee (or, for a self-insured plan, other covered individual) was enrolled. If furnished on paper, Form 1095-C may be furnished to individuals by first-class mail or hand-delivery. It may be furnished electronically only if the recipient affirmatively consents to receive the statement electronically in accordance with applicable requirement. For either method, Form 1095-C must be furnished by January 31 of each year (February 1, 2016, because January 31, 2016, is a Sunday).This deadline has also been temporarily extended to March 31, 2016. If mailed, the individual need not receive it by the deadline so long as it is postmarked by the deadline.
CONSEQUENCES OF FILING FAILURES
Failure to timely furnish or file these forms — or filing incorrect forms — can result in penalties of $250 per form. Some penalty relief is available for incomplete or incorrect 2015 Forms 1094-C and 1095-C, but only if the employer is making a good faith effort to comply with the reporting requirements.
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