February 20, 2017
If an employer has not already done so, it will soon be completing the Forms 1094-C and 1095-C for the 2016 calendar year. Despite being the second year these Forms are required to be filed by Applicable Large Employers (ALE), there is still a significant amount of confusion surrounding the deadlines and details related to the Forms. This article is intended to provide a reminder of five important issues related to the Forms 1094-C and 1095-C.
Despite the President, the Executive Order, What Your Friend Said, Etc. ALEs Still Must Complete Forms
Ever since President Trump took office, there has been a lot of noise regarding the Affordable Care Act (ACA) being repealed. President Trump even signed an executive order within hours of being in office calling for the prompt repeal of the ACA. The IRS recently announced how it planned to adhere to the executive order directive to reduce the potential burden of the ACA by disclosing it would continue to accept individual returns that do not indicate if the taxpayer was covered by health insurance for the year. It is critical that employers realize none of these actions or any actions taken to date has changed the rules for which employers must file the Forms 1094-C and 1095-C. Put simply, all ALEs must file or risk paying penalties.
Deadlines – Employee Statements (March 2, 2017) then Statements to IRS (March 31, 2017 if Filed Electronically)
The deadline to furnish the employee statements was automatically extended to March 2, 2017 by Notice 2016-70. There are no extensions to the March 2, 2017 deadline. However, it is better to furnish the employee statements late than completely ignore the requirement.
The deadline to file the Forms 1094-C and 1095-C with the IRS is February 28, 2017 if the employer is filing on paper. If an employer is filing electronically, the deadline is March 31, 2017. An employer will be granted an automatic 30 day extension for filing the Forms 1094-C and 1095-C with the IRS by completing the Form 8809 by the original filing deadline. With the 30 day automatic extension, the deadline for filing on paper is March 30, 2017. With the 30 day automatic extension, the deadline for filing electronically is April 30, 2017. However, April 30, 2017 is a Sunday. Therefore, employers filing electronically with the benefit of the extension would have until May 1, 2017 to file the Forms 1094-C and 1095-C with the IRS. Again, it is better to file late than completely ignore the requirement.
Each ALE Member Must File Its Own Form 1094-C
Each ALE member must file its own Form 1094-C and the Form 1095-C for the requisite employees who were employed by it during the calendar year. This is true even if a State law requires the employer to aggregate each employer in the controlled group for certain reporting purposes such as workers’ compensation laws. Many payroll providers have struggled to grasp this concept and have incorrectly filed one Form 1094-C for the entire controlled group. The section 4980H penalties are assessed against each ALE member. This is the reason each ALE member must complete a separate Form 1094-C. Simple errors like this could make an employer’s filing look suspicious and increase the chances of an audit.
All 12 Months on Line 14 Must Be Completed with a Code
All 12 months on line 14 of the Form 1095-C should be completed with one of the code options. If an employee was not employed during a particular month, code 1H should be entered on line 14 (and code 2A on line 16). Under no condition should line 14 be left blank for a particular month. Lines 15 and 16 should be left blank in certain scenarios. However, a blank line 16 usually signifies the employer being exposed to a potential section 4980H penalty.
There are many code combinations that an employer can enter on lines 14, 15, and 16. An employer must make sure the code combination it is entering for a particular month is accurately detailing the correct information to the IRS.
Part III of the Form 1095-C Must Be Completed If an Employer Sponsors a Self-Insured Plan
Part III should only be completed by an employer who sponsors a self-insured plan in which the employee or another individual enrolled. If the employee is enrolled in coverage for any day of the year, he/she should be listed on line 17. All other family members who are enrolled for any day of the year should be listed on the subsequent lines. For part III, if an individual is covered for one day in a calendar month, that month should be checked in column (e). This is different than part II where an employee needs to be offered coverage for each day of a calendar month for it to count as an offer of coverage. Part III only requires one day of coverage because it is replacing part IV of the Form 1095-B for the employee. Part IV of the Form 1095-B only requires an employee to be covered for one day of the month for a box to be checked so it is logical that part III of the Form 1095-C has a similar requirement.
All ALEs must file the Forms 1094-C and 1095-C by the deadlines discussed above. All employers should continue to make their best efforts to complete the Forms accurately. Please let us know if you have any questions or need assistance filing the Forms 1094-C and 1095-C.
About the author – Ryan Moulder serves as General Counsel at Accord Systems, LLC and is a Partner at Health Care Attorney's P.C. Ryan received his LL.M. from Georgetown University Law Center and his J.D. from Saint Louis University School of Law. He has distinguished himself as a leader in the newly created Affordable Care Act arena and has written and spoken on a variety of ACA topics as it relates to compliance for companies.
The information contained on this site is not, nor is it intended to be, legal advice. An attorney should be consulted for advice regarding your situation. Copyright © 2017 by Accord Systems, LLC. All rights reserved. You may reproduce materials available at this site for your own personal use and for non-commercial distribution. All copies must include this copyright statement.