Human Resources News & Insights

You saw this coming: New ACA forms and instructions from the IRS

With less than six months to go until the bulk of the ACA reporting deadlines kick in, the IRS has released new versions of the reporting forms as well as some important details on what’s expected of employers when it comes to the actual reporting process.  

First, here are updated versions of the four IRS reporting forms all applicable large employers (ALEs) should be very familiar with at this point:

  • Form 1094-B— Transmittal of Health Coverage Information Returns.
  • Form 1094-C— Transmittal of Employer Health Insurance Offer and Health Coverage Returns.
  • Form 1095-B— Health Coverage.
  • Form 1095-C— Employer Provided Health Insurance Offer and Coverage Insurance.

Then, there’s the deadlines that correspond with these reporting forms. A copy of the applicable Form 1095, or a substitute statement, must be given to each employee by January 31 every year and can be provided electronically with the employee’s consent. But since January 31 falls on a Sunday in 2016. The 2016 deadline has been moved to February 1.

Employers must file the returns with the IRS for the 2015 year by Feb. 29, 2016 (March 31 if filed electronically). Any employer filing at least 250 returns must file electronically. The deadline for future year’s returns will be Feb. 28.

Extra HRA obligations?

In the final instructions, the IRS addressed one major confusion point: Employers’ reporting obligations for major medical plans tied to a health reimbursement arrangement (HRA). Based on the draft instructions the agency had issued earlier in the summer, employers were worried there would be additional reporting obligations for HRA plan sponsors with fully insured health plans.

However, in the section titled of the instructions titled “Coverage in More Than One Type of Minimum Essential Coverage,” the agency laid those concerns to rest. According to the IRS, employers with fully insured plans with an HRA that have employees enrolled in both plans aren’t required to report the cover under the HRA. This is also true for firms with self-insured plans with HRAs.

Note: If a health plan and an HRA are sponsored by different employers, each employer will have to separately report the coverage. An example of how this would happen: An employee is enrolled in both his own employer’s HRA and his spouse’s employer’s non-HRA self-insured group health plan.

COBRA considerations

Another favorable clarification centers on COBRA offers. Under the final IRS instructions, COBRA offers made to terminated employees are not reported as offers of overage under any circumstances even if a former employee elects that COBRA coverage.

Not having to report COBRA coverage offers shields employers from potential Shared-Responsibility Reporting penalties.

This clarification is a reversal of the IRS’ initial guidance that said employers would have to report the offer of COBRA coverage based on former employees’ elections.

Finally, tucked away in the instructions are some useful tips on truncation or shortening of the Employee Identification Numbers (EINs) on the statements provided to individuals as well as what to do when there are missing taxpayer IDs.

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