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November 2016

IRS Releases Final ACA Forms and Instructions for 2016

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IRS Releases Final ACA Forms and Instructions for 2016

The IRS recently released the final forms and instructions large employers will use to meet their 2016 Employer Mandate reporting obligations under the Patient Protection and Affordable Care Act (ACA). Employers may now view final versions of the following:
• Form 1095-C: individual employee statement used to report details of the health coverage offered to each employee who qualified as full-time under the ACA during 2016 and, for self-funded coverage, to report 2016 enrollment information for all participants covered under a self-funded plan.

• Form 1094-C: transmittal form used to report aggregated employer-level information on a month-by-month basis, including full-time employee count and whether the employer offered coverage during 2016 to "substantially all" full-time employees as defined by the ACA.

The IRS also released final instructions for use in completing the 2016 forms. While the final instructions are substantially similar to the draft version released earlier this year, employers should take note of the following changes:

•    Requests for a Waiver of the Electronic Filing Requirement: to request a waiver of the electronic filing requirement for filers of 250 or more Forms 1095-C, an employer must submit Form 8508 to the IRS at least 45 days before the due date of the return. Waiver requests will not be processed until January 1, 2017.
•    Increased 2016 Penalty Amounts: each failure to distribute a Form 1095-C employee statement to employees and/or to file a copy of each statement with the IRS using Form 1094-C is subject to a penalty of $260/violation, up to a cap of $3,193,000.
•    New Conditional Offer Codes for Form 1095-C: new codes 1J and 1K may be entered on line 14 of the 1095-C to more accurately describe conditional offers of coverage to an employee’s spouse.
•    Enrollment by Non-Full-Time Employees in Self-Funded Coverage: Code 1G is used to report enrollment of individuals other than full-time employees in a self-funded health plan. The final instructions clarify that code 1G must either appear in the "All 12 months box" or in every monthly box.
•    Affordability Safe Harbors: The final instructions warn employers not to enter an affordability safe harbor (codes 2F, 2G and 2H) on line 16 of Form 1095-C for any month in which the employer did not offer minimum essential coverage to at least 95% of its full-time employees and their dependents (that is, any month for which the "No" box is checked on Form 1094-C, Part III, column (a)).

• Post-Employment Coverage: the instructions clarify that coverage offered after termination of employment (including COBRA and retiree coverage) should not be entered as an offer of coverage on line 14 of the 1095-C. However, an offer of COBRA coverage to an employee who remains employed should be coded as an offer of coverage using the appropriate line 14 code on the 1095-C.

Individual statements (Form 1095-C) must be distributed to employees no later than January 31, 2017, and a copy of each Form 1095-C must be filed with the IRS along with the employer’s Form 1094-C transmittal no later than February 28, 2017 if on paper (permitted for employers filing fewer than 250 returns) or March 31, 2017 if filing electronically (required if filing 250 or more returns).