The IRS has released the final forms and instructions that employers will use for 2016 reporting under the Affordable Care Act (ACA). The 2016 forms are due in early 2017.

Applicable large employers (ALEs) will use the following:

Employers that self-fund a minimum essential coverage plan will use the following:

Background

Applicable large employers (ALEs), who generally are entities that employed 50 or more full-time and full-time-equivalent employees in the prior year, are required to report information about the health coverage they offered or did not offer to certain employees in 2016. To meet this reporting requirement, the ALE will furnish Form 1095-C to the employee or former employee and file copies, along with transmittal Form 1094-C, with the IRS.

Employers, regardless of size, that sponsored a self-funded (self-insured) health plan providing minimum essential coverage in 2016 are required to report coverage information about enrollees. To meet this reporting requirement, the employer will furnish Form 1095-B to the primary enrollee and file copies, along with transmittal Form 1094-B, with the IRS. Self-funded employers who also are ALEs may use Forms 1095-C and 1094-C in lieu of Forms 1095-B and 1094-B.

Information is reported on a calendar-year basis regardless of the employer’s health plan year or fiscal year.

Due Dates

The due date to furnish 2016 forms to individuals is January 31, 2017, while the due date to file copies with the IRS, including the appropriate transmittal form, will depend on whether the employer files electronically or by paper. Entities that provide 250 or more forms to individuals are required to file electronically with the IRS.

Although the IRS had extended the deadlines last year to help employers deal with the new and complex reporting requirements, that is unlikely to happen again. The due dates for 2016 reporting are:

  • January 31, 2017: Deadline to furnish 2016 Form 1095-C (or 1095-B, if applicable) to employees and individuals.
  • February 28, 2017: Deadline for paper filing of all 2016 Forms 1095-C and 1095-B, along with transmittal form 1094-C or 1094-B, with the IRS.
  • March 31, 2017: Deadline for electronic filing of all 2016 Forms 1095-C and 1095-B, along with transmittal form 1094-C or 1094-B, with the IRS.

Changes for 2016

The 2016 forms and instructions are very similar to the prior year’s materials, although there are some changes for items that no longer apply or to simplify or clarify the information. Some of the changes include:

  • Removing references to transition relief options that are no longer available to ALEs.
  • Confirming the multiemployer interim relief rule remains in place for ALEs that contribute to a multiemployer plan (e.g., union trust).
  • Clarifying the instructions for ALEs that are part of an Aggregated ALE Group, including examples of employees that work for more than one member of the group in the same year.
  • Providing examples of reporting COBRA coverage offers for terminated employees and for family members when the employee is still working.
  • Clarifying the rules for reporting self-funded minimum essential coverage when the individual is covered under more than one such plan.
  • Allowing use of Taxpayer Identification Numbers (TINs) in place of Social Security numbers (SSNs) when reporting coverage of non-employees (e.g., family members).
  • Updating references for items that have been adjusted for inflation, such as the affordability percentage (9.66 percent for 2016).

In general, the forms are nearly identical to the versions used last year. The instructions, however, have been revised in several areas for changes and to provide clearer information and examples to assist employers.

Penalties

Failure to provide timely and correct forms to individuals or the IRS can result in significant penalties. The IRS may impose a penalty of $260 per late or incorrect form (up to almost $3.2 million annually in some cases). The IRS may waive or reduce the penalties for employers whose failures are due to reasonable cause and employers that make legitimate efforts to complete the forms as soon as possible.

Summary

The deadlines for 2016 ACA reporting are fast approaching and it is unlikely the IRS will extend the due dates. Employers are encouraged to work with experienced vendors, tax advisors, and payroll administrators to review how the ACA reporting requirements apply to their situation. The required forms are important IRS documents and preparers should use the same level of care that would apply to employee W-2s.

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