IRS releases TY 2016 Draft Forms for Applicable Large Employer ACA reporting

The IRS has released draft forms for Affordable Care Act (ACA) reporting under Code Secs. 6055 and 6056 for tax year (TY) 2016. These draft forms reflect changes from the forms used for TY 2015 and will likely reflect what compliance under the final version will entail.

Under the ACA, health insurance issuers or sponsors have reporting requirements that they must meet. These requirements mandate that applicable large employers (ALEs), are to provide the IRS with information about the health insurance coverage that they either provide or offer to their employees. This information must be filed annually. For the 2016 tax year, the deadline to file is no later than February 28, 2017 for paper filing, and March 31, 2017 for electronic filing.

ALEs are to use Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, to report an employer’s summary information to the IRS, as well as to transmit Forms 1095-C to the IRS. In addition, ALEs, use Form 1095-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, to report specific information about each employee to the IRS.

The 2016 draft instructions provide that unlike for 2015 reporting, transition relief is limited with respect to Code Sec. 4980H. For TY 2016, transition relief is only applicable if the ALE, or any member of an ALE member’s aggregated ALE group, offers coverage under a health plan with a plan year beginning on a date other than January 1, and only for calendar months in 2016 that fall within the 2016 plan year.

In addition, draft instructions also provide that each ALE Member in an Aggregated ALE Group under common control must file its own Forms 1094-C and 1095-C using its own separate employer identification number even if the ALE member has fewer than 50 full-time employees. For TY 2016, No Authoritative Transmittal should be filed for an Aggregated ALE Group.

The Form 1094-C and 1095-C have also received the following changes.

• Form 1094-C explicitly makes clear that the definition of full-time employee is the one provided under Code Sec. 4980H;
• Qualifying Offer Method Transition Relief has been deleted from Form 1094-C, as it is no longer applicable for 2016;
• For Form 1095-C, two new codes, 1J and 1K, have been added to indicate conditional offers of coverage made to an employee’s spouse;
• On Form 1095-C, Code 1I, Qualifying Offer Transition Relief 2015, has been removed; Form 1095-C added language to inform individuals that Form 1095-C should not be submitted with income tax returns.