The IRS has released draft 2015 instructions for Forms 1094-B, 1095-B, 1094-C and 1095-C that will be used by employers and coverage providers to report certain information to full-time employees and the Internal Revenue Service (IRS).
By way of background, the Affordable Care Act (ACA) added Sections 6055 and 6056 to the Internal Revenue Code. These new sections require employers, plans, and health insurance issuers to report health coverage information to the IRS and to participants annually. The Section 6055 reporting requirements apply to insurers, employers that sponsor self-insured group health plans, and other entities that provide minimum essential coverage (such as multiemployer plans). The Section 6056 reporting requirements apply to “applicable large employers” or “ALEs” (generally, employers with 50 or more full-time employees) and require reporting of health care coverage provided to the employer’s full-time employees.
Reporting under Sections 6055 and 6056 will involve one or both of two sets of forms – the “B-Series” (Forms 1094-B and 1095-B) and the “C-Series” (Forms 1094-C and 1095-C). Each set of forms includes a transmittal form (Forms 1094-B and 1094-C), which serves as a cover page and provides aggregate information, and an individualized form (Forms 1095-B and 1095-C) for each employee for whom the employer is required to report.
ACA reporting became mandatory for responsible entities starting in 2015. The first forms will be provided in early 2016 reflecting the 2015 calendar year. The forms that must be filed and distributed depend on whether the employer is an ALE and the type of coverage provided. Employers filing 250 or more of a particular form are required to file with the IRS electronically. The following table summarizes the responsible parties and forms applicable to the ACA’s reporting requirements.
2015 Draft Instructions
The draft forms and instructions can be found here:
• Form 1094-B
• Form 1095-B
• B-Series Instructions
• Form 1094-C
• Form 1095-C
• C-Series Instructions
Highlights of changes/clarifications contained in the draft forms and instructions are discussed below.
• Form Revisions. For 2015, form 1094-C is reorganized to move line 19 (the Authoritative Transmittal question) into Part I of the form. Line 23 of Part III of form 1094-C is also revised to allow for an entry in the “All 12 Months field.” Form 1095-C is revised to include a first month of the plan year indicator (plan start month) in Part II and “Covered Individuals Continuation Sheet” in Part III.
• Increased Penalties. The draft instructions reflect the newly increased penalty structure (generally increasing penalties from $100 per return to $250 per return, and increasing the penalty cap from $1.5M to $3M).
• Hand Delivery. The draft instructions clarify that hand delivery is an acceptable method of delivery. Electronic delivery is permissible with the recipient’s affirmative consent.
• ALE Determination Transition Relief. The draft instructions reiterate that employers may determine their ALE status for 2015 over a period of at least six consecutive months in 2014 (rather than having to use the entire calendar year when determining average employee count).
• COBRA Coverage (for Terminating Employees). The instructions provide that COBRA coverage offered to a terminating employee is reported as an offer of coverage only if the terminating employee enrolls in COBRA. If the former employee does not enroll in COBRA, the employer should use code 1H in line 14 of form 1095-C (the “no offer” code) even if the employee’s spouse or dependent enrolls in COBRA.
• COBRA Coverage (for Reductions in Hours). The instructions provide that COBRA coverage offered to an employee who has experienced a reduction in hours that resulted in a loss of coverage under the plan is reported in the same manner and using the same code as an offer of that type of coverage to any other active employee.
Stacy Barrow advises UBF clients on various topics around ERISA and the ACA. One of the nation’s leading experts on the Affordable Care Act, Stacy uses a practical, business-focused approach to counsel his clients on all matters related to employee benefit plans. Stacy also has extensive technical knowledge and experience designing and implementing health and welfare plans that meet the numerous and intricate requirements of applicable federal and state law.