Form 1094-C: The Next Reporting Challenge

Time management conceptAcross the board, we’re observing a recurring theme: Affordable Care Act (ACA) compliance is complex and time consuming. The employers who are successful with the process are those that allow time to navigate a course full of twists and turns. “Don’t put off ’til tomorrow what you can do today” is what Benjamin Franklin said. It’s wise advice for many endeavors, including ACA reporting.

The next major hurdle for employers is completion of Form 1094-C. This form is the cover sheet attached to all the 1095-C forms. The submission deadline is May 31 for paper forms and June 30 for e-Filing.

Many employers have contacted Creative Benefits with questions about two specific sections of the 1094-C. The sections causing confusion are those dealing with Controlled Groups and Qualifying Offer Language. Let’s look at these sections more closely.

Aggregated Large Employers

A Controlled Group is an employer that is part of an aggregated large group (ALE). Determining whether or not an employer is part of a Controlled Group is tricky, and most employers need the help of an accountant or attorney to make this designation correctly. We discussed details about classification and common classification errors in an earlier blog.  Employers that have determined that they are part of a controlled group document this in the 1094-C reporting. The 1094-C identifies the entities in the group, how they interrelate, and how they have each provided coverage.

Qualifying Offer Language:  Line 22

This section confuses people, but it is simply a notation about what method of 1095-C reporting the employer has used to report a qualifying offer. The IRS intended this to provide some reporting relief to employers. However, as always, the IRS giveth and it taketh away. Where the IRS offers reporting “relief” to employers, such relief is limited, complicated, and typically more cumbersome than simply providing detailed 1095-C reporting. For example, there is relief for employers offering “qualified offers” for all 12 months of a year to any employee. That relief allows an employer to send a letter or provide an abbreviated form rather than provide a 1095-C.   Practically, this adds another layer of administration to separate employees who have received such offers for all 12 months and handle them differently. It does not mitigate most of the reporting requirements. What may have been well-intentioned is administratively burdensome.

The most broad transition relief is choosing Box C on the form. That must be accompanied by a notation in Part III, Column (e): if you have fewer than 100 employees, put (a); if you have more than 100 employees, put (b). This is easiest to use, but it is available only in 2015 (at least at the date of this writing). We will certainly re-visit this with our clients as we prepare for 2016 reporting in the 4th quarter.

Complying with ACA requirements is a daunting challenge. Creative Benefits helps by getting you the latest information and guiding you through the process correctly. If you have any questions about filing the 1094-C or other ACA issues, contact Creative Benefits. We are always happy to discuss your needs and show how our in-house team of benefits and compliance experts can help your company navigate the ACA reporting process.

About the author: Ann Duke, Esq. is General Counsel with Creative Benefits, Inc. She provides consultative services to employers and their employees. She has an extensive background as both outside and in-house counsel in guiding companies through the understanding and implementation of complex regulatory system requirements.  Ann currently concentrates on employment-related compliance, including ACA, ERISA, and Federal and State workplace requirements.