October 15, 2019
We are halfway through October and the IRS still has not released the draft Forms or instructions for the 1094-C and 1095-C. In the past, the draft Forms and instructions for the 1094-C and 1095-C have been released in August and then finalized in September. The remainder of this article discusses why the draft Forms and instructions could have been delayed this year and how it could create some problems for States trying to implement their own reporting requirements in 2020.
The likely culprit behind the delay is that the individual mandate is no longer in place in 2019. As a result, for the first time since their inception, there could be significant changes coming to the Forms and instructions for the 1094-C and 1095-C. The IRS appears to be wrestling with what changes, if any, it should make. One major change that could occur is part III of the Form 1095-C, a section only completed by self-insured employers, could be abandoned. It should be noted the Forms 1094-B and 1095-B could also be abandoned entirely and neither the Forms nor the instructions related to those Forms have been released to date. Part III of the Form 1095-C and the Forms 1094-B and 1095-B were used to enforce the individual mandate so their usefulness at the Federal level is miniscule if not nonexistent. Additionally, line 14 code 1G on the Form 1095-C is no longer relevant as it is unnecessary to enforce the employer mandate which is the sole purpose of the Forms 1094-C and 1095-C at this point. It is still perplexing why these changes have delayed the release of the draft Forms and instructions for two months.
The IRS does not necessarily have to make any changes to the Forms or the instructions. Instead, the IRS could make part III of the Form 1095-C optional for self-insured employers. This change would allow the Federal Form 1095-C be used to satisfy the new State reporting requirements that go into effect in 2020. For example, the State of New Jersey enacted its own individual mandate in 2019 in response to the Federal individual mandate being repealed. The State of New Jersey appears to have anticipated part III of the Form 1095-C still being in existence when its reporting obligations kick in during the first quarter of 2020. However, that may not be the case and could cause New Jersey to have to scramble to create a new Form for its reporting obligations.
The delay of the Forms and the draft instructions to the 1094-C and 1095-C could signal significant changes are on the way. If changes are made, States will have to go back to the drawing board and possibly use a previous iteration of the Form 1095-C to collect the necessary data to enforce the new State individual mandates. Accord Systems is closely monitoring the situation and anticipates having simple solutions for employers to comply with both Federal and State reporting obligations. Should you have any questions or you are looking for a new partner for Forms 1094-C and 1095-C reporting, please contact us.
About the author – Ryan Moulder serves as General Counsel at Accord Systems, LLC and is a Partner at Health Care Attorneys 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 Affordable Care Act arena and has written and spoken on a variety of ACA topics as it relates to compliance for companies.
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