1094 tax form

Action:

The Internal Revenue Service (IRS) released draft instructions for completing forms 1094-C and 1095-C on Aug. 2, 2016. The instructions will guide employers in completing revised draft Forms 1094-C and 1095-C, which were released by the IRS on July 7, 2016.

In addition, the IRS released draft instructions for completing Forms 1094-B and 1095-B on Aug.10, 2016. The draft forms themselves were released on June 22, 2016.

Background:

The Affordable Care Act (ACA) created reporting requirements under sections 6055 and 6056 of the Internal Revenue Code. These rules require an applicable large employer (ALE) to use IRS Forms 1094-C and 1095-C to report information about offers of health insurance coverage to full-time employees and the provision of minimum essential coverage (MEC).

Key requirements include:

  • Employers who provide MEC, including employers with self-insured plans, must file a return with the IRS and furnish a statement to covered individuals that reports the months of coverage.
  • Every applicable large employer member (ALEM – generally, an employer that employed on average at least 50 full-time employees or equivalents) must file a return with the IRS and furnish a statement to full-time employees that reports the terms and conditions of health care coverage offered during the year. ALEMs that sponsor self-insured plans report information on both Forms 1094-C and 1095-C.
  • Employers providing MEC who are not ALEMs, will use the “B forms” (1094-B and 1095-B) to report certain information to the IRS and to covered individuals in order to help the IRS administer the individual shared responsibility payment.

Summary of Changes

While the draft instructions and draft 2016 Forms 1094-C and 1095-C are similar to the 2015 forms and instructions, there are several notable changes summarized in a Benefits Blueprint prepared by Groom Law Group.

In addition, a comparison of 2016 draft instructions for Forms 1094-B and 1095-B with the 2015 instructions reveals a number of changes summarized here by the American Benefits Council:

  • Under the 2016 draft instructions, MEC does not include coverage consisting solely of excepted benefits, such as vision and dental coverage not part of a comprehensive health insurance plan, workers’ compensation coverage and coverage limited to a specified disease or illness.
  • The 2016 draft instruction revises the wording in the section on supplemental coverage reporting (“more than one type of minimum essential coverage” has been changed to “more than one minimum essential coverage plan or program”), but the basic rules or examples have not been changed, nor do the instructions clarify how reporting applies to Health Reimbursement Arrangements (HRAs) that are only available to retirees enrolled in Medicare. The instructions refer to the proposed regulations under Code Section 6055 for more information on reporting for supplemental coverage (which also do not clarify this issue).
  • With respect to the electronic filing requirement, the 2016 draft instructions clarify that the “250 or more” return threshold applies to each type of return filed separately for original and corrected forms. An example has also been added: In an instance where you have 150 Forms 1095-B to correct, you may file the corrected returns on paper because they fall under the 250 threshold, even if you originally filed 250 or more Forms 1095-B electronically. But if you had 300 Forms 1095-B to correct, they must be filed electronically.
  • Under the 2016 draft instructions, when issuing a corrected Form 1095-B to a recipient, the filer can write, print or type “CORRECTED” on the form. (The 2015 instructions did not include print or type.)
  • The 2016 draft instructions reflect the increased penalties for the failure to file or furnish correct forms ($250 is increased to $260 and the $3 million maximum is increased to $3,139,000).

Next Steps:

The 2016 forms are draft versions only and should not be filed with the IRS. We suggest that you prepare for your 2016 filings by reviewing the recently released draft updates, as well as changes and updates made to the 2015 instructions.

Pin It on Pinterest