The Internal Revenue Service (IRS) has updated and expanded its questions and answers regarding the Affordable Care Act (ACA) reporting requirements.
The following information is included in the Q&As:
- A substitute Form 1095-C may be furnished to the recipient, and if the employer is filing using paper, substitute Forms 1094-C and 1095-C may be filed with the IRS. The substitute forms must include all of the information required on Form 1094-C and Form 1095-C and the substitute forms filed with the IRS must be in landscape format.
- IRS Notice 2016-70 provided an automatic 30-day extension to March 2, 2017 to provide Form 1095-C to full-time employees. The due date for filing forms with the IRS was not extended, but employers can obtain an extension by submitting a Form 8809.
- An employee covered under TRICARE or a Veterans Administration health program is not counted in determining whether an employer is an applicable large employer. A Form 1095-C still must be furnished to every full-time employee, including a full-time employee who has coverage under TRICARE or a Veterans Administration health program.
- An employer that participates in a multiple employer welfare arrangement is considered to offer that coverage to its employees and must comply with the reporting requirements.
- If an employee is not offered coverage for an entire month, then an employer should use code 1H (no offer of coverage) for that month. For example, if a newly-hired employee is not offered coverage for the entire first month of employment, the employer should use code 1H on line 14 for the month and code 2D (limited non-assessment period) on line 16. The rules are different for Part III (for self-funded employers). In Part III, employers should report individuals as having coverage for a month if the individual was covered for any day of the month.
- Self-funded employers can either use Form 1095-C or 1095-B to report enrollment for individuals who were not full-time employees during the year. Form 1095-C requires a Social Security number, so if an employer does not have a Social Security number, the employer will have to use Form 1095-B.
- When an employer reports having made a Qualifying Offer (code 1A on line 14), no entry is required on either line 15 or line 16.
- Form 1095-C must be filed with the IRS; however, as an alternative to furnishing the employee with a copy of Form 1095-C, the employer may furnish a statement containing certain information and stating that because the employee received a Qualifying Offer for all 12 months of the year, the employee is not eligible for a premium tax credit. However, an employer that sponsors a self-funded health plan may not use this alternative for any employee who has enrolled in the coverage because the employer is required to report that coverage in Part III of Form 1095-C.
- An offer of COBRA continuation coverage that is made to a former employee is not reported as an offer of coverage in Part II of Form 1095-C. If the employer is otherwise required to complete a Form 1095-C because, for example, the individual was a full-time employee for one or more months of the year, the employer should use code 1H on line 14 for any month that the former employee was offered COBRA. For those same months, the employer should use code 2A (employee not employed during the month) on line 16, even if the employee enrolled in COBRA coverage. Note, however, that an employer that provides COBRA through a self-funded health plan must report enrollment in Part III.
- An offer of COBRA that is made to an active employee due to a reduction in hours is reported differently than an offer of COBRA to a former employee. In this case, the employer should report the offer of coverage in Part II. If a full-time employee who was offered spouse and dependent minimum value coverage, but elected self-only coverage, then lost coverage due to a reduction in hours, the employer should report an offer of coverage to the spouse and dependents if the employee had an opportunity to enroll them for the plan year.
- An offer of post-employment coverage that is made to a former employee upon termination of employment (such as at retirement) is not reported as an offer of coverage in Part II of Form 1095-C.