IRS Provides Final 2016 ACA Forms, Instructions and Good Faith Transition Relief

The IRS recently released the final forms and instructions large employers will use to meet their 2016 Employer Mandate reporting obligations under the Affordable Care Act (ACA). They have also extended the good faith transition relief for 2016 returns.

Here are the final versions of the following forms:

Form 1095-C: The individual employee statement is used to report details and enrollment information for health coverage for full-time employees (as defined by the ACA) and to report self-funded coverage.

Form 1094-C: This transmittal form is used to report aggregate employer-level information on a monthly basis including full-time employee count and if coverage was offered to “substantially all” full-time employees.

The IRS also released the final instructions for completing the 2016 forms. Most instructions are similar to the draft version released earlier this year. Here are some changes that should be duly noted.

Requests for a Waiver of the Electronic Filing Requirement: If you want to request a waiver for the electronic filing requirement (for filers of 250+) you must submit Form 8508 at least 45 days before the due date of the return to the IRS. Waivers will not be processed until January 1, 2017.

Increased 2016 Penalty Amounts: If you fail to distribute Form 1095-C (employee statement) to each employee and/or file a copy of the statement with the IRS using Form 1094-C, you are subject to a penalty of $260 per violation, up to $3,193,000.

Affordability Safe Harbors:  Safe harbor codes (2F, 2G and 2H) must not be entered on line 16 of Form 1095-C for any month where the employer did not offer minimum essential coverage to at least 95% of its full-time employees/dependents (for any month when the “No” box is checked on Form 1094-C, Part III, column (a)).

Post-Employment Coverage: If coverage is offered after termination of employment (COBRA and retiree coverage) it should not be entered as an offer of coverage on Form 1095-C, line 14.

Enrollment by Non-Full-Time Employees in Self-Funded Coverage: If you have other individuals besides full-time employees to report on your self-funded plan, use code 1G. This code must appear in either the “All 12 months box” or in every monthly box.

New Conditional Offer Codes for Form 1095-C: To better describe conditional offers of coverage for an employee’s spouse, new codes 1J and 1K can be entered into line 14 of 1095-C.

Important Dates to Remember

• February 28, 2017 – If filing paper copies with the IRS (employers filing less than 250 returns) a copy of each individual statement (1095-C) plus the employer’s Form 1094-C must be filed by this date. To obtain a 30 day extension for filing with the IRS, complete Form 8809 on or before the forms’ due date.
• March 2, 2017 – Deadline Extended! Individual statements (Form 1095-C) need to be distributed to employees by this date.
• March 31, 2017 – If filing electronically with the IRS (required for employers filing 250+ returns) a copy of each individual statement (1095-C) plus the employer’s Form 1094-C must be filed by this date. To obtain a 30 day extension for filing with the IRS, complete Form 8809 on or before the forms’ due date.

Good Faith Transition Relief

The IRS has also extended last year’s good faith transition relief for 2016 returns. If employers have made good-faith efforts to comply with ACA information-reporting requirements, they are not subject to certain penalties. This applies only to missing and inaccurate information and failure to comply with due dates is still subject to penalties.

For more information on this topic, contact your National Insurance Services Employee Benefits Consultant.