Draft Forms for 2016 ACA Reporting Released

You made it through the first round of Affordable Care Act (ACA) reporting.  Now are you ready for the revised forms for Internal Revenue Code Sections 6055 and 6056?

The Internal Revenue Service (IRS) released the 2016 draft forms with a few revisions.  Draft instructions for the 2016 forms have not yet been released.

• Forms 1094-B and 1095-B are to be used by entities reporting under Section 6055, including self-insured plan sponsors that are not applicable large employers (ALEs).
• Forms 1094-C and 1095-C are to be used by ALEs to report under Section 6056, as well as for combined Section 6055 and 6056 reporting by ALEs who sponsor self-insured plans.

Keep in mind that these 2016 forms are draft versions only, and should not be filed with the IRS or relied upon for filing. The IRS may make changes prior to releasing final 2016 versions.

Forms generally must be filed with the IRS no later than Feb. 28 (March 31, if filed electronically) of the year following the calendar year to which the return relates. The individual statements generally are due on or before Jan. 31 of the year immediately following the calendar year to which the statements relate. However, the deadlines for filing and furnishing forms for 2015 were extended several months.

2016 Draft Forms

The 2016 draft forms are largely unchanged from the 2015 versions. However, the following minor changes were included in the 2016 draft versions. This is just a general overview of the larger revisions; the 2016 drafts forms also include several minor changes and clarifications.

Additional “Offer of Coverage” Codes The Form 1095-C includes “Offer of Coverage” codes (Code Series 1), which specify the type of coverage, if any, offered by the employer to an employee, the employee’s spouse and the employee’s dependent(s). The IRS previously stated that they intended to include additional codes in 2016 and beyond, which an employer would use, if applicable, to indicate that the employer’s offer of coverage to an employee’s spouse is a conditional offer (for example, an offer of coverage that is available to a spouse only if the spouse certifies that he or she does not have access to health coverage from another employer).

As a result, the 2016 draft Form 1095-C includes the following two additional “Offer of Coverage” codes:

• Code 1J can be used if: (1) minimum essential coverage providing minimum value was offered to the employee; (2) minimum essential coverage was conditionally offered to the employee’s spouse; and (3) minimum essential coverage was not offered to the employee’s dependent(s).
• Code 1K can be used if: (1) minimum essential coverage providing minimum value was offered to the employee; (2) minimum essential coverage was conditionally offered to the employee’s spouse; and (3) minimum essential coverage was offered to the employee’s dependent(s).

Plan Start Month The 2015 Form 1095-C included a “Plan Start Month” box, which was optional for 2015, but was expected to be required for 2016 and beyond. However, the 2016 draft Form 1095-C provides that the “Plan Start Month” box will remain optional on the 2016 Form 1095-C. As a result, for 2016, ALEs can choose to:

• Add this field and provide plan year information;
• Add this field and enter “00”; or
• Leave this new field out (thus using the 2015 format).

To provide plan year information in the “Plan Start Month” box, employers should enter the two-digit number (01 through 12) indicating the calendar month during which the plan year begins of the health plan in which the employee is offered coverage (or would be offered coverage, if the employee were eligible to participate in the plan). For example, an employer would enter “01” for a calendar-year plan.

If more than one plan year could apply (for instance, if the employer changes the plan year during the year), enter the earliest applicable month. If no coverage is offered to the employee, enter “00”.

Reserved Fields Relating to 2015 Transition Relief For reporting under Section 6056, a transition relief rule was available in 2015 under the Qualifying Offer Method (an alternative method of reporting). An ALE that was eligible for this transition relief was required to:

• Certify by checking Box B on Line 22 of Form 1094-C that the employer is eligible for, and is using, the Qualifying Offer Method Transition Relief for 2015; and
• Use the “Offer of Coverage” Code 1A on Line 14 of Form 1095-C for each employee for any months in which the employer was eligible for the transition relief.

However, the Qualifying Offer Method Transition Relief rule was only available for 2015 offers of coverage. As a result, the 2016 draft Form 1094-C reserved Box B, making it unavailable for employers in 2016. In addition, the 2016 draft Form 1095-C reserved Code 1I for 2016.

This blog is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.