Final Version of ACA Reporting Forms Issued by IRS (Benefit Minute)

Posted in: Benefit Minute, Employee Benefits

The Internal Revenue Service has released final forms and instructions for ACA reporting requirements related to enrollment in minimum essential coverage (MEC) and the offer of MEC by employers subject to the employer mandate. These forms and instructions were previously issued in draft form, and there are only limited changes to the final forms. The information in these reporting forms will be used to enforce the individual mandate and the employer mandate, and to determine eligibility for premium tax credits. Reporting is required for coverage offered and enrollment in coverage for calendar year 2015 (2014 reporting was voluntary).

Reporting Enrollment in MEC
Health insurance carriers will file Form 1095-B, Health Coverage for all fully insured employer-sponsored coverage (this is the responsibility of the insurance carrier, not the plan sponsor). In addition, Form 1095-B will also be used to report enrollment in employer-sponsored self-insured plans if the employer is not subject to the employer mandate. Combined reporting on Form 1095-C (see below) will be used by plan sponsors of self-insured plans that are an applicable large employer members and therefore subject to the employer mandate. The reporting includes all covered individuals (including name and social security number) by month. Form 1094-B, Transmittal of Health Coverage Forms must also be filed by health insurance carriers and other entities required to provide Form 1095-B.

Form 1095-B must be furnished to covered individuals by January 31 of the following calendar year and must be filed with the IRS along with the Form 1094-B by February 28 of the following year (March 31 if filed electronically). Electronic filing is required if 250 or more returns of the same type are being filed. Communication procedures, business rules, transmission formats, and validation procedures for electronic returns are currently under development.

Reporting Offer of MEC
Applicable large employer members will use Form 1095-C, Employer-Provided Health Insurance Offer and Coverage to report month-by-month information about offers of and enrollment in health coverage for their employees. Required codes (listed in the Form 1095-C instructions) will be used to indicate the offer of coverage status and whether any ACA safe harbors apply that would relieve the employer from penalty exposure.

In addition, an applicable large employer member will also file Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns. Form 1094-C will be used to report summary information to the IRS and to transmit the Forms 1095-C. This reporting is required even if an applicable large employer member does not offer health coverage to any employees.

Parts I and II of Form 1095-C must be completed in all cases. Part III (Covered Individuals) takes the place of Form 1095-B for self-insured plans of applicable large employer members and will be used to report the enrollment of covered individuals (including dependents) by month. To the extent that employees who are not full time are covered under a self-insured plan, these individuals must also be included in the Form 1095-C reporting.

Form 1095-C must be furnished to employees by January 31 of the following calendar year and must be filed with the IRS along with the Form 1094-C by February 28 (March 31 if filed electronically).

The final instructions for Form 1095-C clarify the following:

  • A Form 1095-C must be provided to any employee who was full time (as determined under the ACA) for any month of the year and information must be reported for all 12 months.
  • An employee in a waiting period is not a full time employee.
  • An offer of coverage must be for the entire calendar month (unless coverage terminates on date employment terminates).
  • An offer to a spouse includes an offer subject to a reasonable, objective condition, whether or not the condition is met.
  • An offer of coverage code must be entered for each month.
  • The monthly cost of low cost minimum value option must include any cents.
  • Only one safe harbor code (if applicable) used per month.
  • Special rules apply to multiemployer arrangements.
  • In Part III reporting, an individual is reported as enrolled for the month if enrolled for at least one day of the month.

The final instructions for Form 1094-C clarify the following:

  • Each applicable large employer member has its own reporting obligation (even if several related employers are covered under the same health plan). Special rules apply to Designated Government Entities.
  • Reporting is required for all 12 months of calendar year 2015 even if an employer qualifies for transition relief.
  • The full time employee count for the month excludes any full time employees who are in a waiting period.
  • The total employee count must be as of the first day or the last day of each month or the first day or last day of the first pay period of the month (same day must be used for all months).

Non-employees Enrolled in a Self-insured Plan
The final instructions for Form 1095-C also state that employers who have non-employees (COBRA participants, retirees, self-employed individuals) enrolled in a self-insured plan may use either Form 1095-B or Form 1095-C to report covered individuals. Most employers will likely find it more convenient to use Form 1095-C for these non-employees.

© PSA Insurance and Financial Services. Group insurance products offered through PSA Financial, Inc. The Benefit Minute provides general information for your reference. Please see your benefits consultant to review your specific situation.

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