Update: On Dec. 14, 2016, an updated version of this article was published.
View the updated guidance »
The IRS recently published draft versions of ACA information reporting forms for 2016: 1094-C, 1095-C, 1094-B, 1095-B. In case any reader is not already painfully aware of these forms, they are the IRS forms that “applicable large employers” (ALEs), self-insured plans and insurers file with the IRS to provide information on what individuals were offered coverage and when, and (on the C series) whether coverage was affordable and provided minimum value. The IRS also published updated Instructions (now 19 pages, up from 17 last year). The IRS may well publish subsequent drafts of these 2016 forms and Instructions before the final version is published, but so far the changes to the forms are fairly minimal, and the changes to the Instructions are helpful.
Below are links to the draft 2016 forms, and following that are some of the changes.
2016 Instructions for 1094-C and 1095-C
Some of the Changes
Form 1094-C: Line 22, box B was “Qualifying Offer Transition Relief.” It is now “Reserved” since that transition relief applied only for the 2015 reporting year.
Form 1095-C: Immediately under the form title of “Employer-Provided Health Insurance Offer and Coverage” is a new line: “Do not attach to your tax return. Keep for your records.” It sounds like the IRS might have received a few too many Form 1095-C’s attached to taxpayers’ 1040’s.
Line 15 has been shortened to “Employee Required Contribution (see instructions).” On the 2015 form, the longer title was “Employee Share of Lowest Cost Monthly Premium, for Self-Only Minimum Value Coverage.”
Part III now says “SSN or other TIN” rather than only “SSN.”
The “Instructions for Recipient” note that the 9.5% Affordability percentage is inflation-adjusted and directs the reader to IRS.gov. [For the actual percentages, see page 13 of the Instructions, noted below.]
Line 14, Series 1 Codes are listed in the “Instructions for Recipient.” See the separate (long) Instructions (below) for additional information on conditional offers.
- Code 1I, “Qualifying Offer Transition Relief,” is replaced by “Reserved,” the same as on Form 1094-C, Line 22.
- New Code 1J reports, “Minimum essential coverage providing minimum value offered to you; minimum essential coverage conditionally offered to your spouse; and minimum essential coverage NOT offered to your dependent(s).”
- New Code 1K indicates, “Minimum essential coverage providing minimum value offered to you; minimum essential coverage conditionally offered to your spouse; and minimum essential coverage offered to your dependent(s).”
Instructions: (These are just a few of many changes.)
2016 Due Dates and Penalties (in 2017):
- Page 3: the paper filing date will be February 28, 2017 and the e-filing date will be March 31, 2017. For 2016 filings, extensions will be available only by request, and page 3 includes instructions about where to get and how to use Form 8809 for that purpose. (For 2015, extensions were automatic and requests for additional extensions were not allowed.)
- Page 6: Forms 1095-C for 2016 are to be furnished to the employee recipients by January 31, 2017, not by February 1, as in 2016.
- Page 4 discusses e-filing rules in more detail than last year and notes that the penalty increased from $250 to $260 per Form. See page 6 also.
Conditional Offers of Spousal Coverage:
- Page 11 of Instructions, Specific to 1095-C, Line 14, Series 1 code changes: “New codes 1J and 1K address conditional offers of spousal coverage (also referred to as coverage offered conditionally). A conditional offer is an offer of coverage that is subject to one or more reasonable, objective conditions (for example, an offer to cover an employee’s spouse only if the spouse is not eligible for coverage under Medicare or a group health plan sponsored by another employer). Using new codes 1J and 1K, an ALE Member may report a conditional offer to a spouse as an offer of coverage, regardless of whether the spouse meets the reasonable, objective condition.”
- Page 13 of the Instructions: Affordability rate is 9.56% for plan years beginning in 2015 and 9.66% for plan years beginning in 2016.
Terminated Employees May be Considered Full-time:
- Page 9: an employee who terminates during a 2016 stability period — and whose hours in the associated, prior measurement period would render the individual a full-time employee — must be reported on Form 1094-C as a full-time employee, regardless of his or her average hours of service during 2016.
- Page 15 includes a longer explanation of what “Full-Time Employee” means, perhaps to correct common employer filing errors for 2015. This section reads in part:
- “Under the look-back measurement method, an employee is a full-time employee for each month of the stability period selected by the ALE Member if the employee was employed an average of least 30 hours of service per week with the ALE Member during the measurement period preceding that stability period. (The look-back measurement method for identifying full-time employees is available only for purposes of determining and computing liability under section 4980H, and not for purposes of determining if the employer is an Applicable Large Employer.)”