New ACA reporting forms released by IRS: 7 things you need to know

In a painful reminder that ACA reporting season isn’t as far away as most would like it to be, the IRS has released the final forms and instructions employers need to start getting comfortable with. 
On the bright side: At least the feds aren’t springing revised forms on you at the last minute. Unlike last year, when the IRS was a little late to the game with the final forms, prompting the agency to push back the filing deadlines, employers now get their hands on the completed documents bright and early.
Here are the final versions of the forms employers and insurers need to comply with the ACA reporting requirements:

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

Here are the final versions of the instructions for completing these forms:

For the most part, the forms and instructions mirror the proposed versions issued earlier this summer, but they do contain changes from the 2015 versions.
Most notably:

  1. End of “good faith” relief. For the 2015 reporting year, non-compliance penalties could be waived if an employer showed it made a “good faith” effort to comply with the regulations and deadlines. That “good faith” standard is going away. For 2016, employers will have to show “reasonable cause” for why it failed to comply in order to receive relief from penalties.
  2. Elimination of some “transition relief.” Next year, the non-calendar-year transition relief for plan years starting in 2014 that applied in 2015 will no longer apply. The instructions also made changes to “Section 4980H Transition Relief.” This relief exempted applicable large employers (ALEs) from 4980H penalties and reduced the mandatory coverage offering threshold from 95% to 70% of full-time workers. It also exempted ALEs from having to offer coverage to dependents if certain requirements were met. For 2016, this relief is still available for non-calendar year plans through the end of the plan year. But the relief is not available for calendar year plans in 2016. These plans must meet the 95% threshold and offer dependent coverage during each month of the plan year.
  3. New COBRA-related coding. To clear up confusion about how to report COBRA offers of coverage, the IRS updated the instructions in this area. Example: Offers of COBRA coverage to former employees (and their family members) should not be entered as offers of coverage on Line 14. But, an offer of COBRA coverage to an employee who remains employed should be entered as an offer of coverage.
  4. New spousal coverage indicator codes. Likewise, the IRS created new codes for indicating when coverage offerings were made to employees’ spouses. The 2016 forms include codes 1J and 1K on Part II, Line 14 of Form 1095-C.
  5. Term “ALE Member” added. Last year, the ACA reporting forms were filed by the “employer,” but that term has been replaced by “ALE Member” in most cases. The feds changed this term to highlight the fact that each separate ALE Member must file its own forms.
  6. Deadlines return to normal. Forms must be filed with the IRS no later than Feb. 28, 2017 (or March 31 if filing electronically). Statements to individual employees have to be provided by Jan. 31, 2017.
  7. Penalties are increasing. Failing to provide forms in a timely manner to the IRS or employees can result in fines of $260 per return (up from $250) — with an annual maximum of just under $3.2 million.

Info: For more details on the reporting process, check out HR Morning’s plain-English breakdown of the reporting requirements for 2015 and beyond.