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ACA 2016 Changes: IRS Forms 1095-c & 1094-c

ACA Changes

*This article remains accurate as of December 2016.

Although President-Elect Trump and his recent appointments are promising to “Repeal and Replace” the ACA, Obamacare is still intact as we enter the 2016 reporting season. The good news is that, similar to last year, the IRS has extended the deadline for distribution of the individual 1095-Cs to March 2, 2017, and has extended the same “Good Faith” relief as it did in 2016.

However, it remains important to make sure you are on top of the updates that have taken place this year, as even the “Good Faith” still requires employer proof. The list below highlights the form 1095-C and 1094-C changes for 2016.

Aggregated ALE Groups

Although technically not a change, the draft 2016 Form 1095-C and its instructions remind us that each ALE member must file its own Form 1094-C (and associated 1095-Cs) under its own separate employer identification number (EIN).  There is no single, authoritative transmittal that may be filed to cover an entire aggregated ALE group.

In addition, if a full-time employee works for more than one member of an ALE group in any calendar month, then the ALE member for whom the employee worked the greatest number of hours must report for that employee for that calendar month.

Line 16 Changes

For 2015, many attorneys and ACA advisors cautioned employers that if they entered code 1A (an offer of coverage to employee, spouse, and dependents) on line 14, then they must also enter a code in line 16 to avoid audit or inquiry.

The draft 2016 instructions confirm that if code 1A is entered on line 14; then by definition the offer of coverage is deemed to fall within an affordability safe harbor (even if no code is entered on line 16).  This clarifies the anxiety and confirms an employer may leave line 16 blank.

New Codes for Conditional Offers of Spousal Coverage

The draft instructions explain two new codes for line 14 of Form 1095-C: codes 1J and 1K.  The new codes reflect conditional offers of coverage to an employee’s spouse.  For 2015 reporting, all offers to an employee’s spouse were reported the same, regardless of whether the offer was subject to a condition.

For 2016, the IRS will distinguish between a conditional offer of coverage.  A conditional offer is an offer of coverage that is subject to one or more reasonable, objective conditions (for example, an offer to cover an employee’s spouse only if the spouse is not eligible for coverage under a group health plan sponsored by another employer). Conditions attached to an offer may impact the spouse’s eligibility for a premium tax credit.

COBRA and Other Post-Employment Coverage

The draft instructions clarify reporting of COBRA coverage by (1) describing how to report for the month in which an employee terminates with an ALE member and (2) confirming that an ALE member is treated as having made an offer to the employee’s dependents for an entire plan year if the ALE member provided the employee an effective opportunity to enroll dependents at least once for the plan year (even if the employee declined to enroll the dependents and therefore the dependents did not receive an offer of COBRA coverage).

The draft instructions further explain an offer of post-employment (non-COBRA) coverage to a former employee (or the employee’s spouse or dependents) for coverage that would be effective after the employee has terminated employment (e.g., at retirement) should not be reported as an offer of coverage on line 14 of Form 1095-C.

Definitions. A new definition is included for:

“Employee Required Contribution” for ALE members that make employer contributions or payments.

“Full-Time Employee” makes clear that the full-time employee determination for purposes of filing the C Forms must be made based on Code § 4980H and the related regulations. In addition, the revised definition stresses that an ALE member is required to report complete information for all 12 months for any employee who was a full-time employee for one or more months out of the year (e.g., a midyear hire).

Multi-employer Plan Relief Extended for 2016

The draft instructions for Form 1095-C, Part II, line 14 extend the existing interim relief for multiemployer plans for another year.  Employers qualifying for the relief will not need to obtain eligibility and offer information from multiemployer plans for 2016 filings. The instructions state that this approach may change for 2017 and later years.

Expiration of Certain 2015 Transition Relief

Certain transition relief under Code § 4980H was limited to the 2015 calendar year (e.g., the qualifying offer method transition relief) or a 2015 plan year.  The draft instructions include information only on transition relief for qualifying non-calendar year plans having some portion of the year during 2016.

If 2016 reporting feels overwhelming, take steps now to keep 2017 from catching you off guard. With the changes that are sure to happen next year, maintaining and understanding the requirements will remain important and complex. Contact our team today to learn more about how we can help you get on track before it’s too late.


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