IRS Issues Draft Instructions for Forms 1094-C and 1095-C for 2015
Below was written by Larry Grudzien. In my opinion, it is best to have someone help with these filings for this year. Most payroll companies will do it (if you sign up by September/October timeframe). There are also a number of companies who will help (I have 5 on my desk that will do it). If you want help, let me know and I can direct you to an appropriate service. You can also rely on Larry's expertise in this matter.
By Larry Grudzien, Attorney-At-Law
708-717-9638, larry [at] larrygruidzien [dot] com
August 9, 2015
On August 6, 2015, IRS released draft instructions for Forms
1094-C and 1095-C for 2015. The following is an overview of important
provisions to consider in the completion of the forms:
1. Who Must File:
If an employer is
offering health coverage to employees other than under a self-insured plan,
such as through an insured health plan or a multiemployer health plan, the
issuer of the insurance or the sponsor of the plan providing the coverage is
required to furnish the information about their health coverage to any enrolled
employees, and the employer should not complete Form 1095-C, Part III for those
employees.
2. One Form 1095-C for Each Employee
of Each Employer:
For each full-time
employee of an employer, there must be only one Form 1095-C filed for
employment with that employer. For example, if an employer separately reports
for each of its two divisions, the employer must combine the offer and coverage
information for any employee who worked at both divisions during the calendar
year so that a single Form 1095-C is filed for the calendar year for that
employee which reports information for all twelve months of the calendar year
from that employer.
In contrast, a
full-time employee who works for more than one employer that is a member of the
same Aggregated ALE Group (that is, works for two separate ALE Members) must
receive a separate Form 1095-C from each employer, unless the ALE Member is not
treated as the employer for any calendar month in the calendar year as
described later.
For any calendar
month in which a full-time employee works for more than one ALE Member of an
Aggregated ALE Group, only one ALE Member is treated as the employer and only
that ALE Member reports for that employee for that calendar month (and the
other ALE Member is not required to report for that employee for that calendar
month). If under these rules, an ALE member is not required to report for an
employee for any month in the calendar year, the employer is not required to
report for that full-time employee for that calendar year.
3.
Form 1094-C, Column (c) Total Employee Count for ALE member:
An employer must
choose to use one of the following days of the month to determine the number of
employees per month and must use that day for all months of the year: (1) the
first day of each month; (2) the last day of each month; (3) the first day of
the first payroll period that starts during each month; or (4) the last day of
the first payroll period that starts during each month (provided that for each
month that last day falls within the calendar month in which the payroll period
starts). If the total number of employees was the same for every month of the
entire calendar year, enter that number in line 23, column (c) "All 12
Months" or in the boxes for each month of the calendar year. If the number
of employees for any month is zero, enter 0.
4.
Form 1095-C, line 14:
An employer offers
health coverage for a month only if it offers health coverage that would
provide coverage for every day of that calendar month. Thus, if an employee
terminates coverage before the last day
of the month, the employee does not actually have an offer of coverage for that
month. See Line 16, code 2B later for how the employer may complete Line 16 in the event an employee terminates
coverage before the last day of the month.
5.
Form 1095-C, line 14:
For reporting offers
of coverage for 2015, an employer relying on the multiemployer arrangement
interim guidance should enter code 1H on line 14 for any month for which the
employer enters code 2E on line 16 (indicating that the employer was required
to contribute to a multiemployer plan on behalf of the employee for that month
and therefore is eligible for multiemployer interim rule relief). For reporting
for 2015, Code 1H may be entered without regard to whether the employee was
eligible to enroll in coverage under the multiemployer plan. For 2016 and
future years, reporting for offers of coverage made through a multiemployer
plan may be reported in a different manner.
6.
Form 1095-C, Line 14:
An offer of COBRA
continuation coverage that is made to a former employee upon termination of
employment is reported as an offer of coverage using the appropriate indicator
code on line 14 only if the former employee enrolls in the coverage. If the
former employee does not enroll in the coverage (even if a spouse or dependent
of the former employee independently enrolls in the coverage), code 1H (No
offer of coverage) should be entered for any month for which the offer of COBRA
continuation coverage applies.
An offer of COBRA
continuation coverage that is made to an active employee (for instance, an
offer of COBRA continuation coverage that is made due to a reduction in the
employee's hours that resulted in the
employee no longer being eligible for coverage under a plan) is reported in the
same manner and using the same code as an offer of that type of coverage to any
other active employee.
7.
Form 1095-C, Line 16:
If an employee is in
an initial measurement period, enter code 2D (employee in a section 4980H(b)
Limited Non-Assessment Period) for the month, and not code 2B (employee not a
full-time employee). For an employee in a section 4980H(b) Limited
Non-Assessment Period for whom the employer is also eligible for the
multiemployer interim rule relief for the month code 2E, enter code 2E
(multiemployer interim rule relief) and not code 2D (employee in a Limited Non
Assessment period.
8.
Form 1095-C, Line 16:
Enter code 2E for any
month for which the multiemployer interim guidance applies for that employee.
Under the interim guidance regarding multiemployer arrangements, an employer is treated as offering health
coverage to an employee if the employer is required by a collective bargaining
agreement or related participation agreement to make contributions for that
employee to a multiemployer plan that offers, to individuals who satisfy the
plan's eligibility conditions, health coverage that is affordable and provides
minimum value, and that also offers health coverage to those individuals'
dependents or is eligible for the section 4980H transition relief regarding
offers of coverage to dependents.
Codes 2F through 2H:
Although employers may use the section 4980H affordability safe harbors to
determine affordability for purposes of the multiemployer interim guidance, an
employer eligible for the relief provided in the multiemployer interim guidance
for a month for an employee should enter code 2E (multiemployer interim rule
relief), and not a code for the section 4980H affordability safe harbors (codes
2F, 2G, or 2H).
9.
Form 1095-C, Part III:
If two or more
employees employed by the same employer are spouses or employee and dependent,
and one employee enrolled in a coverage option under the plan that also covered
the other employee(s) (for example, one employee spouse enrolled in family
coverage that provided coverage to the other employee spouse and their employee
dependent child), the enrollment information should be reflected only on the
Form 1095-C for the employee who enrolled in the coverage (but would report the
other employee family members as covered individuals.
10.
Form 1095-C, Part III:
This part may be
completed by an employer offering self-insured health coverage for any other
individual who enrolled in the coverage under the plan for one or more calendar
months of the year but was not an employee for any calendar month of the year,
such as a non-employee director, a retired employee who retired in a previous
year, a terminated employee receiving COBRA continuation coverage who
terminated employment during a previous year, and a non-employee COBRA
beneficiary (but not including an individual who obtained coverage through the
employee's enrollment, such as a spouse or dependent obtaining coverage when an
employee elects COBRA continuation coverage that is family coverage). If the Form
1095-C is used with respect to an individual who was not an employee for any
month of the calendar year, Part II must be completed by using Code 1G in the
"All 12 Months" box or the box for each month of the calendar year
11. Employee, Definition:
For this purpose, an
employee is an individual who is an employee under the common-law standard for
determining employer-employee relationships. An employee does not include a
sole proprietor, a partner in a partnership, an S corporation shareholder who owns
at least 2-percent of the S corporation, a leased employee within the meaning
of section 414(n) of the Code, or a worker that is a qualified real estate
agent or direct seller. If an employee is an employee of more than one employer
of the same Aggregated ALE Group during a calendar month, the employee is
treated as an employee of the employer for whom the employee has the greatest
number of hours of service for that calendar month; if the employee has an
equal number of hours of service for two or more employers of the same
Aggregated ALE Group for the calendar month, those employers must treat one of
the employers as the employer of that employee for that calendar month.
12. Limited Non-Assessment Period, Definition:
A Limited
Non-Assessment Period generally refers to a period during which an ALE
Member will not be subject to an
assessable payment under section 4980H(a), and in certain cases section
4980H(b), for a full-time employee, regardless of whether that employee is
offered health coverage during that period.
The first five
periods described below are Limited Non-Assessment Periods only if the employee
is offered health coverage by the first day of the first month following the
end of the period, and are Limited Non-Assessment Periods for section 4980H(b)
only if the health coverage that is offered at the end of the period provides
minimum value.
First Year as ALE
Period. January through March of the first calendar year in which an employer
is an ALE, but only for an employee who was not offered health coverage by the
employer at any point during the prior calendar year. For this purpose, 2015 is
not the first year an employer is an ALE, if that employer was an ALE in 2014
(notwithstanding that transition relief provides that no employer shared
responsibility payments under section 4980H will apply for 2014 for any
employer).
Waiting Period under
the Monthly Measurement Method. If an employer is using the monthly measurement
method to determine whether an employee is a full-time employee, the period
beginning with the first full calendar month in which the employee is first
otherwise (but for completion of the waiting period) eligible for an offer of
health coverage and ending no later than two full calendar months after the end
of that first calendar month.
Waiting Period under
the Look-Back Measurement Method. If an employer is using the look-back
measurement method to determine whether an employee is a full-time employee and
the employee is reasonably expected to be a full-time employee at his or her
start date, the period beginning on the employee's start date and ending not
later than the end of the employee's third full calendar month of employment.
Initial Measurement
Period and Associated Administrative Period under the Look-Back Measurement
Method. If an employer is using the look-back measurement method to determine
whether a new employee is a full-time employee, and the employee is a variable
hour employee, seasonal employee or part-time employee, the initial measurement
period for that employee and the administrative period immediately following
the end of that initial measurement period.
Period Following
Change in Status that Occurs During Initial Measurement Period Under the
Look-Back Measurement Method. If an employer is using the look-back measurement
method to determine whether a new employee is a full-time employee, and, as of
the employee's start date, the employee is a variable hour employee, seasonal
employee or part-time employee, but, during the initial measurement period, the
employee has a change in employment status such that, if the employee had begun
employment in the new position or status, the employee would have reasonably
been expected to be a full-time employee, the period beginning on the date of
the employee's change in employment status and ending not later than the end of
the third full calendar month following the change in employment status. If the
employee is a full-time employee based on the initial measurement period and
the associated stability period starts sooner than the end of the third full
calendar month following the change in employment status, this Limited
Non-Assessment Period ends on the day before the first day of that associated
stability period.
First Calendar Month
of Employment. If the employee's first day of employment is a day other than
the first day of the calendar month, then the employee's first calendar month
of employment is a Limited Non-Assessment Period.
13.
Offer of Health Coverage, Definition
An employer makes an
offer of coverage to an employee if it provides the employee an effective
opportunity to enroll in the health coverage (or to decline that coverage) at
least once for each plan year. An employer makes an offer of health coverage to
an employee for the plan year if it continues the employee's election of
coverage from a prior year but provides the employee an effective opportunity
to opt out of the health coverage. If an employer provides health coverage to
an employee but does not provide the employee an effective opportunity to
decline the coverage, the employer is treated as having made an offer of health
coverage to the employee only if that health coverage provides minimum value
and does not require an employee contribution for the coverage for any calendar
month of more than 9.5 percent of a monthly amount determined as the mainland
federal poverty line for a single individual for the applicable calendar year,
divided by 12.
For purposes of
reporting, an offer to a spouse includes an offer to a spouse that is subject
to a reasonable, objective condition, regardless of whether the spouse meets
the reasonable, objective condition. For example, an offer of coverage that is
available to a spouse only if the spouse certifies that the spouse does not
have access to health coverage from another employer is treated as an offer of
coverage to the spouse for reporting purposes. Note that this treatment is for
reporting purposes only, and generally will not affect the spouse's eligibility
for the premium tax credit if the spouse did not meet the condition and
therefore did not have an actual offer of coverage.
An employer offers
health coverage for a month only if it offers health coverage that would
provide coverage for every day of that calendar month. For reporting purposes,
this means that an offer of coverage does not occur for a month if an
employee's employment terminates before the last day of a calendar month and
the health coverage also ends before the last day of that calendar month (or
for an employee who did not enroll in coverage, the coverage would have ended
if the employee had enrolled in coverage).
An employer offers
health coverage to an employee if it, or another employer in the Aggregated ALE
Group, or a third party such as a multiemployer or single employer Taft-Hartley
plan, a multiple employer welfare arrangement (MEWA), or, in certain cases, a
staffing firm, offers health coverage on behalf of the employer.
For a copy of the
instructions, please click on the link below:
