Plan now for 2016 ACA information reporting

October 18, 2016

The IRS has released final Affordable Care Act information reporting forms—Forms 1095-C, 1094-C and 1095-B—for 2016 information reporting purposes. The good news: Except for the expiration of transition relief, which applied to 2015 reporting, not much has changed on the forms. Final instructions have also been released.

What’s new. The forms include two new Line 14 codes on the 1095-C—Codes 1J and 1K—that you should use when you’re making conditional offers of coverage to employees’ spouses and dependents. The instructions flesh this out.

  • A conditional offer is an offer of coverage that’s subject to one or more reasonable, objective conditions (e.g., you offer to cover an employee’s spouse only if the spouse isn’t eligible for Medicare or another group plan).
  • You can use the new codes to report conditional offers to employees’ spouses as offers of coverage, regardless of whether spouses meet your reasonable, objective conditions.
  • The same isn’t true for dependents, however. You can’t report conditional offers of coverage as offers to dependents, unless you know that they meet your reasonable, objective conditions. All or nothing: Offers of coverage are treated as made to dependents only if your offers are made to all of employees’ dependents, regardless of how many dependents they actually have, during any particular calendar month.

Conditional offers could affect a spouse’s eligibility for the premium tax credit only if all conditions to the offer are satisfied (i.e., the spouse was actually offered coverage and was eligible for it).

To help employees and spouses who receive conditional offers determine their eligibility for the premium tax credit, you should provide a list of the conditions that apply to spousal offers of coverage. Note: You’re generally not on the hook for a free-rider penalty if spouses receive premium tax credits.

The Qualifying Offer Transition Relief checkbox on Line 22 of the 1094-C has been dropped from the 2016 form, since it applied for 2015 reporting only. To account for noncalendar year plans, checkboxes for other types of transition relief remain on the 2016 form.

The only change to the 1095-B is on Line 9; it’s now reserved. Last year, Line 9 was used to report SHOP coverage. Several clarifications were made in Part II in the Instructions to the Recipient, on Page 2.

Forms 1095-C reporting. Employers with insured plans must provide full-time employees with their 1095-C copies by Jan. 31, 2017 March 2, 2017 (Deadline was extended by IRS in November 2016.)

Paper forms are due to the IRS on Feb. 28; e-filed forms are due on March 31. (These deadlines did not change.) You will need the following information to ensure that employees’ forms are correct:

  • The type of coverage offered, for Line 14 reporting
  • The monthly premium for the lowest-cost self-only coverage, for Line 15 reporting
  • Your affordability safe harbor, for Line 16 reporting
  • Social Security numbers for employees’ dependents, for Part III reporting. Idea: Modify your open enrollment form now to capture this information.

Form 1094-C reporting. The 1094-C is the transmittal for your 1095-Cs. You’ll need the following information to complete it correctly:

  • The number of months during which you offered minimum essential coverage (all 12 months or the exact months)
  • The total number of full-time employees each month
  • The total number of full-time and part-time employees each month.