Authored by Dannae L. Delano
Dec 11, 2015
While many employer requirements under the Affordable Care Act (ACA) have been delayed, there are still key forms that must be filed by early 2016. Applicable Large Employers (ALE), or employers who averaged 50 or more full-time and full-time equivalent employees in 2014 must complete Forms 1094-C and 1095-C to report offers of health insurance coverage made to their full-time employees in 2015. An ALE must comply with these requirements even if it has between 50-99 full-time and full-time equivalent employees and is not subject to the employer shared responsibility provisions of the ACA in 2015.
ALEs are required to report to the IRS (using Form 1094-C and copies of the Forms 1095-C it completes for its full-time employees) on or before Feb. 29, 2016. If an employer files electronically, it has until March 31, 2016. (Employers filing more than 250 returns are required to file electronically). Similar to the Form W-2 reporting system, ALEs must also report to their full-time employees (Form 1095-C) on or before February 1, 2016. Failure to meet any of the reporting requirements can result in penalties being assessed by the IRS that more than doubled this summer. ALEs that sponsor self-funded coverage must complete an additional part of the Form 1095-C to comply (this blog does not address non-ALEs that sponsor self-funded coverage).
To comply with the new reporting requirements, ALEs must navigate complicated forms with little guidance. The IRS final instructions for the 2015 1094-C and 1095-C must be read carefully and completely. Employers who have called the IRS for help completing the forms report being on hold for hours only to be told that the agents answering the phones have not been trained on the forms and cannot help them.
The following are my top five tips for completing Forms 1094-C and 1095-C for 2015:
5. An offer of coverage subject to a condition is considered an offer of coverage in 2015 – where an ALE offers coverage subject to an objective condition it is still considered an offer of coverage for reporting purposes only. For example, if spousal coverage is offered only if the employee’s spouse does not have coverage available through his or her own employer, then it is still considered an offer of spousal coverage. This is true even if the spouse has other coverage and cannot enroll in the ALE’s plan. This may change in future years, however, through the addition of new codes that can be indicated.
4. Line 16 can be left blank – if none of the 2 series codes applies to an employee, then Line 16 will be left blank. This can occur, for example, for a full-time employee that declines to enroll in coverage and for whom an employer is not using one of the 3 affordability safe harbors.
3. Line 15 is not completed in some circumstances – Line 15 is only completed if Codes 1B, 1C, 1D or 1E is entered for Line 14.
2. Code 2C should be entered even if another 2 series code applies in most circumstances – If an employee is enrolled in the offered coverage, Code 2C should be entered in Line 16. However, Code 2C will not be used in Line 16 where Code 2E applies because the ALE contributes to a collectively bargained multiemployer plan in which the union employee is enrolled.
1. An employer who charges employees less than $92/month (including $0.00) for employee-only coverage can use the Qualifying Offer Method – If the Qualifying Offer Method is used, it should be indicated on Line 22 of the 1094-C; Code 1A should be entered on Line 14; and Line 15 should not be completed. Only ALEs who charge employees less than 9.5% of the federal poverty line for the lowest level employee-only coverage offered can use the Qualifying Offer Method. If an ALE charges employees more than $92/month (not payroll period) for its lowest level employee-only coverage, then the ALE must enter Code 1B, 1C, 1D or 1E depending on which most accurately describes its coverage and complete Line 15. If an ALE sponsors a noncalendar year plan and effective as of the first day of the plan year in 2015 it charged employees less than $92/month for its lowest level employee-only coverage and it offered coverage to 95% or more of its full-time employees, the same reporting results may apply except that on Line 22 of the 1094-C, the Qualifying Offer Method Transition Relief should be indicated.