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2016 1094-C and 1095-C Forms and Draft Instructions Have Been Released

021.jpgI am sure you all have been eagerly awaiting the issuance of the 2016 Affordable Care Act (ACA) forms (1094-C & 1095-C) and draft instructions. Under the ACA, Applicable Large Employers (ALEs) will complete and file these forms in early 2017 (don’t assume the deadline will be extended again this year) to report to the IRS coverage offers, including self-insured coverage, extended during 2016. 


Form 1094-C & Instructions

  • Box B: The 1094-C is the summary of data reported on the 1095-Cs for all applicable employees. The only significant change is on Line 22, Box B, “Qualifying Offer Method Transition Relief,” which was available only for 2015 coverage.  Since this option is no longer available, Box B is now “Reserved.”   
  • ALE Member Filing: In the draft Instructions there is clarification on page 2 along with examples as to when and how an ALE Member may file multiple Forms 1094-C. Below is the text from that form:

“A Form 1094-C must be filed when an ALE Member files one or more Forms 1095-C. An ALE Member may choose to file multiple Forms 1094-C, each accompanied by Forms 1095-C for a portion of its employees, provided that a Form 1095-C is filed for each employee for whom the ALE Member is required to file. If an ALE Member files more than one Form 1094-C, one (and only one) Form 1094-C filed by the ALE Member must be identified on line 19, Part I as the Authoritative Transmittal, and, on the Authoritative Transmittal, the ALE Member must report certain aggregate data for all full-time employees and all employees, as applicable, of the ALE Member.”

  • Multiple ALE Members: The following page (Page 3) explains when one employee may be reportable by multiple ALE Members.  It can be a confusing read, even with the new explanation and example.  Probably the best advice I can give is to seek out your ACA consultant or HNI benefits representative if you think you may have this particular situation present.'
  • Paper Filing Date: Also on page 3, the IRS confirms that the filing deadlines for the paper filing date will be February 28, 2017 and the e-filing date will be March 31, 2017.  As I indicated in the introduction, this means that as of this time, no extensions like last year are currently being contemplated.
  • Failure to File Penalty: On page 4 the IRS slipped in the fact that the failure to file penalty increases from $250 to $260 per Form but there is a clarification in the Instructions as to how this penalty is assessed.  An employer could establish reasonable cause for failure to file electronically or it can file up to 250 returns on paper and those returns will not be subject to a penalty for failure to file electronically.
  • Form 1095-C Delivery: Page 6 clarifies that Form 1095-C must be delivered to those required employees by January 31, not February 1st as was the case for 2015.
  • Non-Calendar Year Plans: Page 9 discusses the fact that employers who sponsor non-calendar year plans may have a few months in 2016 where it is still eligible for 2015 transition relief (both the 50-99 FTE count and the 70% coverage offering) due to the fact that those months may be part of the 2015-2016 plan year.  This is also discussed in detail within the Instructions for 1095-C on pages 17 -19.

Form 1095-C & Instructions

The changes to the Form 1095-Citself are minor so I will not add further confusion by discussing them. The draft Instructions, however, are another story.

  • Inflation-Adjusted Affordability Figure: The Instructions now clarify that the 9.5% affordability figure is inflation-adjusted.  As a reminder, the figure is 9.66% for plans beginning in 2016 and 9.69% for plans beginning in 2017.  
  • Don't Leave Line 14 Blank: On page 10 the IRS stresses in much greater detail never to leave Line 14 blank for any employee, even for months before and after employment.
  • COBRA: Nearly all of the information on Page 11 is new with the discussion centering around conditional offers of spousal coverage, COBRA and how to code on Line 14 COBRA coverage offers and retiree coverage offers (including an example) and post- employment coverage. 
  • On page 12 there are explanations of three, Form 1095-C, Line 14, Series 1 Code changes, including the addition of two new codes:
    • Code 1I, Qualifying Offer Transition Relief, has been deleted. 
    • Code 1J has been added: “Minimum essential coverage providing minimum value offered to employee and at least minimum essential coverage conditionally offered to spouse; minimum essential coverage not offered to dependent(s).”
    • Code 1K has been added: “Minimum essential coverage providing minimum value offered to employee; at least minimum essential coverage offered to dependents; and at least minimum essential coverage conditionally offered to spouse.”
  • Employee Required Contribution: There were also some changes in the definitions that begin on page 14. A link to the IRS page on § 4980H employer aggregation rules was added, a comprehensive definition of “Employee Required Contribution” for affordability determinations was added and the definition of “Full-Time Employee” was significantly expanded. I think the latter two changes are particularly relevant, especially if the employer is using the look-back measurement period which I believe is the case for all HNI clients. This definition clarifies that under the look-back measurement method, an employee is a full-time employee for each month of the stability period selected by the ALE Member if the employee was employed an average of least 30 hours of service per week with the ALE Member during the measurement period preceding that stability period.

If there is ever any doubt as to whether you caught all of the most important changes to the Instructions, familiarize yourself with the information under the “What’s New” discussion on page 1 of the Instructions. 


HNI U: ACA Update October 25th, 2016 - WEBINAR