IRS Releases Final ACA Employer Reporting Forms & Instructions (1094-B, 1094-C, 1095-B, and 1095-C)
The Internal Revenue Service (“IRS”) has finalized Forms 1094/1095-B and 1094/1095-C for the 2018 tax year, as well as their related instructions, which are required to be filed under the Affordable Care Act.
As provided in previous Client Alerts, information reporting requirements are applicable under two Internal Revenue Code (“Code”) sections as follows:
- Section 6055 for insurers, self-insuring employers, and certain other providers of minimum essential coverage; and
- Section 6056 for applicable large employers.
By way of background, the IRS requires applicable large employers and sponsors of self-insured health plans to report on the health coverage offered and/or provided to individuals beginning calendar year 2015. Although the reporting requirements extend to other entities that provide “minimum essential coverage” (such as health insurance issuers), this Client Alert focuses on the requirements imposed on employers.
Employers who are deemed applicable large employers, as well as employers of any size who offer self-funded health coverage, must carefully review and study these instructions, which set forth numerous details, definitions and indicator codes that must be used to complete the requisite forms. The instructions address the “when, where and how” to file, extensions and waivers that may be available, how to file corrected returns, and potential relief from penalties imposed for incorrect or incomplete filing.
The IRS utilizes information from these returns to determine which individuals were offered minimum essential coverage, whether individuals were eligible for premium tax credits in the Marketplace, as well as to determine any penalties to be imposed on employers under Pay or Play (Code section 4890H; Shared Responsibility for Employers Regarding Health Coverage, 26 CFR Parts 1, 54, and 301, 79 Fed. Reg. 8543 (Feb. 12, 2014)). Due to the impact of proper reporting, a clear understanding of these forms and instructions is essential.
Code section 6056 applies to applicable large employers (generally employers with at least 50 full-time employees, including full-time equivalent employees). Information with respect to each full-time employee (whether or not offered coverage) must be reported on Form 1095-C. Transmittal Form 1094-C must accompany the Forms 1095-C; all the Forms 1095-C together with the Transmittal Form 1094-C constitute the Code section 6056 information return that is required to be filed with the IRS. For applicable large employers who self-insure, there is a separate box to complete which incorporates the information required under Code section 6055.
Code section 6055 applies to employers of any size who self-insure. Non-applicable large employers with self-funded plans must report their information on Form 1095-B, as well as on Transmittal Form 1094-B. All of the Forms 1095-B together with the Transmittal Form 1094-B constitute the Code section 6055 information return that is required to be filed with the IRS. Again, if the employer who self-insures is also an applicable large employer, the employer will instead use Forms 1095-C and 1094-C, which include a section for self-insured plans.
Employers subject to these requirements must report in early 2019 for the entire 2018 calendar year.
Additionally, employers must provide informational statements to the individuals for whom they are reporting. Form 1095-C or Form 1095-B (as applicable) may be used as this informational statement.
The links to the Final Forms and Instructions are below:
2018 Forms for Applicable Large Employers (Code Section 6056):
- 2018 Instructions for Forms 1094-C and 1095-C: www.irs.gov/pub/irs-prior/i109495c–2018.pdf
- 2018 Form 1094-C: www.irs.gov/pub/irs-pdf/f1094c.pdf
- 2018 Form 1095-C: www.irs.gov/pub/irs-pdf/f1095c.pdf
2018 Forms for Employers who Self-Fund (Code Section 6055):
- 2018 Instructions for 1094-B and 1095-B: www.irs.gov/pub/irs-prior/i109495b–2018.pdf
- 2018 Form 1094-B: www.irs.gov/pub/irs-pdf/f1094b.pdf
- 2018 Form 1095-B: www.irs.gov/pub/irs-pdf/f1095b.pdf
These instructions and forms reflect only minor changes, such as a few formatting modifications and the reflection of indexed penalty amounts for reporting failures. The increased penalties are now as follows for 2018 tax year returns (and may be waived in certain circumstances):
- The penalty for failure to file a correct information return is $270 for each return for which the failure occurs, with the total penalty for a calendar year not to exceed $3,275,500.
- The penalty for failure to provide a correct payee statement is $270 for each statement for which the failure occurs, with the total penalty for a calendar year not to exceed $3,275,500.
- Special rules apply that increase the per-return and per-statement and total penalties with no maximum limitations if there is intentional disregard of the requirement to file the returns and furnish recipient statements.
Additionally, the instructions for Forms 1094-B and 1095-B also now state that health insurance issuers and carriers are encouraged (but not required) to report coverage in catastrophic health plans enrolled in through the Marketplace for months in 2018.
The remainder of the provisions remain intact, including the mandatory electronic filing for Forms reaching the 250-return threshold.
Deadlines for distribution and filing are:
- January 31, 2019 to furnish returns to individuals
- February 28, 2019 for paper filing with the IRS
- April 1, 2019 for electronic filing with the IRS
There is no current indication of filing deadline relief, so it is essential to ensure your reporting and collection of data procedures are intact.
If you should have questions regarding employer reporting requirements or other ACA mandates, the Employee Benefits team at Fraser Trebilcock can assist.
Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2018 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or firstname.lastname@example.org.