In October the IRS published FINAL versions of ACA information reporting forms and Instructions for 2016: 1094-C, 1095-C, 1094-B, 1095-B. This article updates the August 26 article I posted here about the Draft versions of these forms. The Final versions have either minor or no changes from the Draft versions. Links to the final forms and Instructions are below.
As all readers are no doubt aware, these IRS forms are the information reporting 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 Instructions (now 19 pages, up from 17 last year) are much needed in completing the forms.
Links to the Forms and Instructions
Some Changes on the Forms
Line 22, box B was “Qualifying Offer Transition Relief.” It is now “Reserved” since that transition relief applied only for the 2015 reporting year.
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. (The indexed percentage is 9.66 for 2016, see page 13 of the Instructions.)
Line 14, new Series 1 Codes 1J and 1K are for conditional offers of coverage to employee’s spouse, and existing Code 1I is changed to “Reserved.” It was “Qualifying Offer Transition Relief,” which was available only for 2015 filings.
Details on Conditional Offers of Spousal Coverage
There are two new codes on Form 1095-C, line 14:
- 1J is Minimum essential coverage (MEC) providing minimum value offered to employee; MEC conditionally offered to spouse; and MEC NOT offered to dependent(s).
- 1K is Minimum essential coverage (MEC) providing minimum value offered to employee; MEC conditionally offered to spouse; and MEC offered to dependent(s).
Page 11 of the Instructions explains these new codes: “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.”
The reason for these new codes is to address an unexpected issue that arose in the 2015 filings:
- If an individual was offered coverage from his/her employer (“A”) that was not affordable or did not provide at least minimum value, that individual would potentially be eligible for a subsidy to buy insurance in the marketplace.
- However, if that individual’s spouse had employee-plus-spouse coverage available from her/his employer (“B”), but that coverage was available only to spouses who did not have coverage available from their own employers, employer B’s “conditional” offer of spousal coverage would indicate that the spouse would not be eligible for a subsidy. (Employer B would have used codes 1A, 1D or 1E as applicable, in the 2015 filing.)
- In 2015 the spouse could have appealed this through the Marketplace (if they understood the issue or that an issue even existed). The new codes 1J and 1K resolve this issue.
Changes to 2016 Due Dates (in 2017)
The Instructions changed the due dates back to the original due dates in the law, rather than the delayed dates that applied in 2016 for the 2015 filings. Since then, however, the IRS has once again extended the date for furnishing 1095-Cs to participants and employees, but has not (so far) extended the dates for filing the forms with the IRS. (See Notice 2016-70, published 11-18-16.)
- March 2: Date by which Forms 1095-C for 2016 are to be furnished to full-time and enrolled employees, per Notice 2016-70. Instructions say notices are due to recipients by January 31, 2017. (Page 6 of Instructions)
- February 28: Date by which paper filings are due to IRS.
- March 31: Date by which e-filings are due to IRS.
- For 2016 filings, extensions will be available only by request, and page 3 of Instructions includes information 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.)
Changes to Penalties
Page 4 discusses e-filing rules in more detail than last year and notes increased penalty amounts.
- Penalty for late or inaccurate filing increased from $250 to $260 per Form, to a maximum of $3,193,000. See page 6 also.
- Penalty for intentionally disregarding filing requirements increased from $500 to $530 per form, with no cap.
Some Additional Changes in the Instructions
- 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.)”