“Piling On”: IRS Issues Instructions on ACA Reporting Requirements

On August 28, 2014, the IRS issued draft instructions on the reporting requirements for employers subject to the employer shared responsibility provisions. The draft instructions for Forms 1094-C and 1095-C are thirteen pages in length, filled with mind-numbing complexity that will cause fits for all large employers.

Employers with at least fifty full-time employees (including full-time equivalent employees) will be required to utilize IRS Forms 1094-C and 1095-C to report information to the IRS regarding offers and enrollment in health coverage. Form 1094-C must be used to report to the IRS summary information for each employer and to transmit Forms 1095-C to the IRS. Form 1095-C is used to report information about each employee.

The Form 1094-C requires an employer to certify the eligibility of full-time employees for health coverage. The instructions describe the various types of transition relief that are available to applicable large employers for 2015.   This form must be filed by the employer under penalties of perjury.

The Form 1095-C requires large employers to provide the name, address, social security number, months of coverage and the employee’s share of the lowest cost monthly premium for health coverage.

Large employers are required to file Forms 1094-C and 1095-C by February 28 following the calendar year if the employer is filing paper copies. If the employer files electronically, the forms are due by March 31. In general, employers that are filing 250 or more Forms 1095-C during the calendar year must file the returns electronically. The first returns will be due in 2016; however, the IRS is permitting employers to file voluntarily in 2015. I am not quite sure why any employer would voluntarily file in 2015.

In addition, large employers will be required to provide each full-time employee with Form 1095-C. The employer generally must mail the statement to the employee’s last known permanent address. It is also permissible to furnish the statement electronically if the employer obtains affirmative consent from the employee.

The IRS will not impose penalties under Internal Revenue Code §§ 6721 and 6722 for 2015 returns and statements filed and furnished in 2016 on employers that can show that they have made good faith efforts to comply with the information reporting requirements. This reprieve may represent the only real piece of good news that came from this most recent IRS publication.

About Jim Hamilton

I am an employee benefits partner with Bose McKinney & Evans LLP. My broad-based practice covers health and welfare arrangements, insurance, executive compensation and federal and state taxation. Among other areas, I have specific experience with PPACA, HIPAA, COBRA, ERISA and numerous other state and federal laws affecting employee benefit plans.
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