Affordable Care Act (ACA) Updates: Changes in the Deadlines and Forms for 2016

If you have at least 50 full-time employees (including full-time equivalent employees), you are considered an Applicable Large Employer (ALE) according to the Affordable Care Act (ACA) and must offer full-time employees ACA compliant health care coverage or pay a penalty.

You need to report information to the IRS about the health care coverage offered to your full-time employees using Forms 1094-C and 1095-C. You must also distribute copies of Form 1095-C to your full-time employees, which contains information they may need to report as part of their income tax submission. In this post our Employer Solutions group relates the full details of the ACA changes.

Deadline to provide 1095-C to Employees Extended

On November 18, 2016, the IRS announced an automatic extension in the due date for furnishing 2016 Forms 1095-C to employees from January 31, 2017 to March 2, 2017. In addition, the IRS extended good faith penalty relief for inaccurate or incomplete forms for the 2016 coverage year; this provides relief from IRS penalties based on good faith efforts to comply with information-reporting requirements. The March 31 e-file and February 28 paper deadlines for filing with the IRS have not been extended.

Other Changes

Form revisions.   On Form 1094-C, line 22, box B is designated “Reserved.” The Qualifying Offer Method Transition Relief is not applicable for 2016. On Form 1095-C, the language “Do not attach to your tax return. Keep for your records.” was inserted under the title of the form to inform the recipient that Form 1095-C should not be submitted with the return. On line 15 the heading was revised to read “Employee Required Contribution (see instructions).” Other minor clarifying changes were made to both forms.

Changes to codes.   Code 1I for Form 1095-C, line 14, and code 2I for Form 1095-C, line 16, are no longer applicable and have been reserved. New codes 1J and 1K have been added for Form 1095-C, line 14. For more information, see the instructions for Form 1095-C, line 14 and line 16.

Transition relief.   Several forms of transition relief were available to employers for 2015 under sections 4980H and 6056, but only limited transition relief continues to apply in 2016. References to transition relief that applied only in calendar year 2015 have been removed. Descriptions of the remaining forms of transition relief have been amended to clarify for which months in 2016 the transition relief applies. For a description of the relief and when it applies, see Section 4980H Transition Relief for 2015 Plan Years.

Substitute Statements. Substitute Forms 1095-C furnished to individuals may be printed in portrait layout, but the final instructions specify that those filed with the IRS must be in landscape.

Full-Time Employee Count. The final instructions correct an apparent omission regarding the full-time employee count reported on Part III of Form 1094-C. In Part III, column (b), “Section 4980H” was inserted before “Full-Time Employee Count for ALE Member” to remind filers that the section 4980H definition of “full-time employee” applies for purposes of this column, not any other definition that an ALE Member may use for other purposes. Employers may use either the monthly or look-back measurement method.  No other methods or full-time employee definitions are permitted.

COBRA Reporting. A small change to the note following the example of COBRA reporting for dependents of a terminated employee emphasizes that dependent coverage offers are treated differently for purposes of reporting and Code § 4980H. For Code § 4980H purposes, an ALE is treated as having offered minimum essential coverage (MEC) to an employee’s dependents for an entire plan year so long as the dependents had an effective opportunity to enroll—even if they declined coverage. However, if, following an employee’s termination, the ALE does not offer COBRA coverage to dependents who declined enrollment, the ALE will report that it did not offer coverage to dependents for the period following termination

Enrollment by Non-Full-Time Employees.  ALEs will use Code 1G to report enrollment of individuals other than full-time employees in a self-insured health plan. A note has been added to the final instructions to emphasize that Code 1G applies for the entire year or not at all.

Non-MEC Enrollment. The Form 1095-C final instructions include a reminder not to use Code 2C, the enrollment code, if the employee’s coverage is not MEC (e.g., coverage consisting solely of certain excepted benefits).

Affordability Safe Harbors. The final instructions caution that ALEs should not enter an affordability safe harbor code on line 16 of Form 1095-C for any month in which they offer MEC to less than 95% of full-time employees (as reported on Form 1094-C).

For assistance or more information with My Workforce Analyzer – Sage’s ACA reporting tool – contact your Net at Work Account Manager or contact the Net at Work Employer Solutions team at www.netatwork.com