With the end of the year fast approaching, the subject of Affordable Care Act (ACA) reporting for 2015 is taking center stage at Creative Benefits. Clients are racing to get their 1094-C and 1095-C forms in order. This sense of urgency is warranted – the Internal Revenue Service (IRS) just announced final ACA reporting rules at the end of October.
There is some good news – the IRS recognizes the magnitude of what they are asking of employers and are giving applicable large employers time to implement compliance strategies. The IRS is offering transition relief for 2015. For this reason, we’re calling 2015 the year of “Do the best you can.” We’re not saying “Take ACA reporting lightly”; we’re saying the IRS knows this is a transition year and that it takes time for employers to adjust –- thus some easier standards in 2015.
At Creative Benefits we see this as an opportunity to get it right. We’ve invested significant resources into helping clients comply with ACA reporting. We’re also helping clients set up for the future, because the better clients do this year with their reporting, the easier next year will be. Helping employers build a good foundation to make next year’s filings “plug and play” is very important because by the end of 2016, the expectation will be that the “bugs” are worked out. At that point, relief from the IRS will be a thing of the past. So take advantage of this opportunity to establish a solid foundation. If there are ACA reporting mistakes, there is time to fix them before penalties apply.
As for those late decisions about final rules announced in October, here is a partial summary:
ACA Final Rules for Reporting:
1. Employees who work for more than one employer in an aggregated group of ALEs may receive more than one 1095-C. The employer providing the greatest number of hours of work in the month shall be considered the primary employer for reporting purposes in that particular month. However, employment is determined each month; if the employee works a greater number of hours for a different employer of the aggregated group for one month, the employee will receive a 1095-C from that employer as well.
2. An offer of coverage of a spouse is considered an offer of coverage even if there is some reasonable and objective condition to providing coverage. For example, an offer of coverage to a spouse conditioned on the spouse not having coverage with his or her own employer is still considered an offer of coverage.
3. When does an employer count an employee for the purposes of 1094-C? The employer may choose the first day of the month, the last day of the month, or the first day of the first payroll period during the month. The employer may choose the last day of the first payroll period during the month, but only if the first day and the last day fall within the same month.
4. If an employee terminates employment during the month and the offer of coverage ends before the end of that month, the employer still reports an offer of coverage for that month if the employee is otherwise eligible.
5. Clarification of reporting COBRA coverage: If an employee is offered COBRA due to a termination of employment, the offer is not an offer of coverage. The proper coding for 1095-C, Line 14 is 1H – no offer of coverage. For an employee offered COBRA coverage due to a reduction in hours worked, the employer should use the same coding as an offer of coverage to an active employee working similar hours and offered coverage.
About the author: Ann Duke, Esq. is General Counsel with Creative Benefits, Inc. She provides consultative services to employers and their employees.