Updated January 4, 2017
Make sure you are up-to-date with the IRS new rules on 6055/6056 from our partner United Benefits Advisor (UBA)
Under the Patient Protection and Affordable Care Act (ACA), individuals are required to have health insurance while applicable large employers (ALEs) are required to offer health benefits to their full-time employees. In order for the Internal Revenue Service (IRS) to verify that (1) individuals have the required minimum essential coverage, (2) individuals who request premium tax credits are entitled to them, and (3) ALEs are meeting their shared responsibility (play or pay) obligations, employers with 50 or more full-time or full-time equivalent employees and insurers are required to report on the health coverage they offer.
Final instructions for both the 1094-B and 1095-B and the 1094-C and 1095-C were released in September 2016, as were the final forms for 1094-B, 1095-B, 1094-C, and 1095-C. In December 2016, the IRS updated its longstanding Questions and Answers about Information Reporting by Employers on Form 1094-C and Form 1095-C.
When? Which Employers?
Reporting will be due early in 2017, based on coverage in 2016. All reporting will be for the calendar year, even for non-calendar year plans. The reporting requirements are in Sections 6055 and 6056 of the ACA. Draft instructions for both the 1094-B and 1095-B, and the 1094-C and 1095-C were released in August 2016. The final instructions are substantially similar to the draft instructions.
6055 Requirements: Forms 1094-B and 1095-B
IRS Form 1095-B is used to meet the Section 6055 reporting requirement. Section 6055 reporting relates to having coverage to meet the individual shared responsibility requirement. Form 1095-B is used by insurers, plan sponsors of self-funded multiemployer plans, and plan sponsors of self-funded plans that have fewer than 50 employees to report on coverage that was actually in effect for the employee, union member, retiree or COBRA participant, and their covered dependents, on a month-by-month basis. Filers use Form 1094-B as the transmittal to submit the 1095-B returns.
6056 Requirements: Forms 1094-C and 1095-C
IRS Form 1095-C is primarily used to meet the Section 6056 reporting requirement. The Section 6056 reporting requirement relates to the employer shared responsibility / play or pay requirement. Information from Form 1095-C is also used to determine whether an individual is eligible for a premium tax credit. Employers with 50 or more full-time or full-time equivalent employees complete much of Form 1095-C to report on coverage that was offered to the employee and eligible dependents. In addition, to save large employers that sponsor self-funded plans from having to complete two forms, a Part III has been included in Form 1095-C. Large employers with self-funded plans use that part of the form to report information about actual coverage that otherwise would be reported on Form 1095-B. Employers with 50 or more full- time or full-time equivalent employees with fully insured plans will skip section III, and their carrier will complete a separate B series form to report that information for them.
Form 1094-C is used in combination with Form 1095-C to determine employer shared responsibility penalties.
Employers with 50 or more full-time or full-time equivalent employees must provide Form 1095-C to virtually all employees who were full time (averaged 30 hours per week) during any month during the year, even if coverage was not offered to the employee or the employee declined coverage. (If the full- time employee never became eligible during the year, most likely because the employee is a variable- hours employee in an initial measurement period, the form does not need to be provided).
The 2016 instructions for Forms 1094-C and 1095-C include some form revisions and code changes. The Qualifying Offer Method Transition Relief is not applicable for 2016. Clarification language was added to remind filers of the definition of “full-time employee” and to inform recipients that the form should not be submitted with their returns. New codes 1J and 1K were added to address conditional offers of spousal coverage.
For the 1094-B and 1095-B forms, there are a few form revisions. Clarification language was added to remind recipients that the form should not be submitted with their returns. Also, the form is updated to reflect the rule that a taxpayer identification number (TIN) may be entered.
1094-C and 1095-C Highlights
- Who Must File
- Extensions and Waivers
- Full-Time Employee Count
- Correcting Forms 1094-C and 1095-C
- Extensions to Furnish Statements to Employees
- 98 Percent Offer Method
- Qualifying Offer Method
- Plan Start Month Box
- Multiemployer Plan Relief
- Reporting Offer of Coverage for the Month in Which an Employee is Hired
- Reporting Offer of Coverage for the Month in Which an Employee Terminates Employment
- COBRA Coverage
- Post-Employment (Non-COBRA) Coverage
- Line 15 Calculations
- Break in Service
- HRA Reporting
- Conditional Offer of Spousal Coverage
1094-B and 1095-B Highlights
- Who Must File
- Correcting Forms 1094-B and 1095-B
- Coverage in More than One Type of Minimum Essential Coverage
Download the original release Here.