Everything You Need to Know About Affordable Care Act 1095-C Filing

As quarter one of 2015 comes to a close, we’re seeing a surge in questions regarding IRS Affordable Care Act (ACA) forms, ACA reporting guidelines, and how employers will need to file come 2016. Specifically, many are seeking guidance on how to complete form 1095-C for individual ACA returns. In this blog, we’ll be painting a picture of how we understand ACA reporting will be executed next January at the company level, walk through completing form 1095-C, and shed some light on what employers and HR professionals can do to prepare for the administrative requirements entailed in Affordable Care Act IRS filing.

Related Blog: How to Complete the 1094-C For IRS Affordable Care Act Reporting

We can break down ACA IRS reporting into five phases: Data Compilation, Form Completion, Form Review, Individual 1095-C Return Furnishing, and IRS filing. For an illustrated blog on ACA IRS reporting responsibilities for employers and healthcare carriers based on plan funding arrangements, see How to Complete IRS Affordable Care Act Forms or download our detailed IRS ACA Reporting White Paper.

Data Compilation

Aside from the basic demographic information needed to populate the 1095-C individual return form, the enrollment information is the most dynamic data that employers need to capture before filling out the returns. Specifically they will need to know:

• Coverage enrollment dates, or termination of coverage dates
• Documented acceptance or waivers of coverage
• When full-time employees became eligible for employer sponsored coverage
• Employee share of lowest cost monthly premium for self-only minimum value plan offered by the employer
• Employee wage information (this will not go into the report, but will be used for determining how to complete the section of the report on Affordability)
• Identify if the coverage offer was made solely to the employee, or extended to dependents and/or spouses
  • If so, and this is a self-funded plan, have you made 3 documented attempts to capture dependent social security numbers? If you were unable to attain covered dependents SSNs after 3 attempts, you must acquire their dates of birth.
  • Coverage dates for dependents

As stated in previous blogs, compliance with the Affordable Care Act is an ongoing process, not a single event. The data required for final form completion is extensive, and should be gathered on an ongoing basis throughout the reporting year. For more information on choosing an online benefits enrollment system and total workforce management solution that streamlines and fully automates ACA data tracking, click here.

Fill out the 1095-C Return Forms

In a previous blog, we addressed how employers with self-insured plans have the option of using the 1095-B or 1095-C forms to report on Section 6055 Obamacare reporting requirements. For the purpose of this blog, we’ll be looking at the specifics of filling out the 1095-C form only.

There are 3 parts to the 1095-C return form. Part I is fairly intuitive, consisting of basic employee and employer demographic information.

Part II encompasses the Section 6056 reporting requirements of the ACA, where employers communicate how and when they offered coverage to full-time employees.

Line 14 of Part II is arguably the most complex and time intensive portion of the form to fill out. In order to track employer compliance with the Employer Shared Responsibility portion of the Affordable Care Act, the IRS has created codes that communicate the type of coverage-offer that the employer made to the employee, his or her spouse, and his or her dependents. This code is the primary way that the IRS will determine if an individual and his or her spouse and dependents are eligible for a premium tax credit, or if an employer is subject to a penalty under the ACA’s “Pay or Play” provision.

Line 15 of Part II is where the employer communicates the employee’s contribution to the lowest cost single coverage minimum value plan that the employer offers. Of note, this has nothing to do with the actual coverage that the employee is enrolled in. The ACA only wants to ensure that an affordable option has been offered by the employer.

Line 16 is where the employer will fill out the applicable safe harbor code used to determine affordability of the lowest cost single only employer sponsored plan.

Part III of the 1095-C form is for employers reporting on self-funded plan arrangements. The dependent and coverage enrollment information included in Part III would otherwise be reported by the carriers on 1095-B return forms. This is where employers will need to make three documented attempts to obtain Social Security Numbers (SSNs) for covered dependents before defaulting to dates of birth. For more on how employers will complete the 1095-C form for covered non-employees, such as non-Medicare retirees and COBRA enrollees, see the following ACA IRS Reporting White Paper.

Review the Forms

This is not an extensive step in the ACA IRS reporting process, but it is certainly worth noting. The 2015 CBO revenue projections for the Affordable Care Act over the next decade anticipate administrative filing penalties to be the ACA’s largest revenue generator. With that in mind, employers wishing to avoid the $100/filing error should build in some time to review forms prior to furnishing them to employees or filing with the IRS.

Individual Form Furnishing

Employers must furnish employees and covered non-employees their applicable 1095-C return statements no later than March 31 (or the next business day if that date falls on a weekend). The forms can be furnished with employee W2 statements. Employers must provide paper statements to all who request such, and may only provide electronic statements once they have confirmed that an effective electronic means is available (much like when furnishing electronic W2 statements). In fully insured plans, carriers are responsible for providing covered individuals with 1095-B Coverage Information Returns by January 31.

ACA IRS Return Form Filing

Applicable Large Employers with less than 250 return forms to file may file by paper no later than February 28. Those with 250 or more return forms must file electronically (e-file) with the IRS. For electronic filers, the IRS has released XML schemas for mandatory ACA e-filing organizations to build their e-filing capability. Expecting the bulk of e-filing to be executed by third party administrators and business process firms, the IRS has also forecasted the release of Publication 5165 Affordable Care Act Guide for Software Developers and Transmitters for the summer of 2015.

Related Blog: How to Complete the 1094-C For IRS Affordable Care Act Reporting

UPDATE!

AS OF DECEMBER 29, 2015, THE IRS HAS EXTENDED DUE DATES TO THE FOLLOWING..

March 31: Issue forms 1095-C to employees
May 31: Employer 1094/1095-C & 1094/1095-B Deadline for IRS paper filing
June 30: Employer 1094/1095-C & 1094/1095-B Deadline for IRS electronic filing