The submission of ACA forms 1094-1095 and required documentation certainly has been one of the most significant changes in IRS reporting since the concept of W-2 wages, which began in 1943.
As IRS continues to modify the ACA 1095 and 1094 forms (as evidenced this past June in their drafts), employers and other third-party administrators are wise to keep up. The draft IRS instructions for the 2016 tax year (for filing in early 2017) were released this past summer, and penalties loom for any lack of attention to detail in filing requirements and deadlines.
Reporting Forms 1095 and 1094
Forms 1094-B and 1095-B are used by coverage providers to report health plan enrollment as required by Code § 6055. Forms 1094-C and 1095-C are used by applicable large employers (ALEs) to report information relevant to Code § 4980H, also known as employer shared responsibility, as required by Code § 6056. The Affordable Care Act added section 6055 and 6056 to the Internal Revenue Code, which requires applicable large employers to file information returns with the IRS and provide statements to their full-time employees about the health insurance coverage the employer offered.
As you may have noticed, for 2016 filings, we go back to the original earlier IRS deadlines. In the good news category, however, the IRS has addressed cleaning up its own social security number database so that identification of TIN errors should be a simpler process. (There were also past issues regarding CORRECT names and social security numbers that had been returned as errors.)
For those eying the election as a potential rollback for ACA, there is no good news. The new president will be sworn in on Jan. 20, 2017, but the ACA 1095 forms to employees will be due on Jan. 31, 2017. Thus, there is no time for repeals or modifications to the law, should the political climate change.
Additional Codes
The most interesting changes to follow are those that involve additional codes–1J and 1K–for line 14 on the newly released draft instructions for 1095s. At PSST, we review all lines and categories as they are proposed to ensure accuracy. The 1095C largely remains the same, except for the two line 14 codes that show conditional offers of coverage to an employee’s spouse. The only real change for the 1094C form is the removal of the line 22 box for “qualifying offer method transition relief.”
Poverty Guidelines Increase
One new addition to 2016 reporting was that the poverty guidelines increased slightly to $11,880, having some impact on offers that meet minimum requirements.
Aggregated ALE Groups vs. ALE Members
The draft instructions for the 1094 and 1095 offered more extensive examples of employee reporting for Aggregated Groups, and information on COBRA and post-employment coverage.The forms offer more examples of Aggregated ALE (applicable large employer) groups and who is to file in those corporate structures. An Aggregated Applicable Large Employer (ALE) refers to a group of affiliated entities that are under common control, for example: parent and subsidiary. An Aggregated ALE Group refers to a group of ALE Members treated as a single employer under section 414(b), 414(c), 414(m), or 414(o). An ALE Member is a member of an Aggregated ALE Group for a month if it is treated as a single employer with the other members of the group on any day of the calendar month.
For those grappling with COBRA, there are more complete instructions available from the IRS. The draft instructions contain a few clarifications regarding COBRA coverage by citing (a) how to report for the month in which an employee terminates with an ALE member and, (b) that an ALE member is treated as having made an offer to the employee’s dependents for an entire plan year, if the ALE member provided the employee an effective opportunity to enroll dependents at least once for the plan year.
This year, the value of the use of an ACA tracking and a reporting platform will increase greatly as it is clear the IRS forms rely heavily on good data input and clean parsing and aggregation. ACA-Track works with each client on all aspects of appropriate adjustments and advise as to which procedures will work best for reporting accuracy and compliance. To view the IRS draft forms, please visit: https://www.irs.gov/pub/irs-dft/f1095c–dft.pdf and https://www.irs.gov/pub/irs-dft/f1094c–dft.pdf
Remember to check our webinar schedule for further ACA reporting updates.
