Editor’s Note: These updated forms and instructions should be passed to your club’s accountant to ensure full compliance with the Affordable Care Act.
On August 7 the Internal Revenue Service (IRS) issued new drafts of forms and instructions for 2015 Forms 1094-B and 1095-B, and Forms 1094-C and 1095-C. Clubs will use the Forms 1094-C and 1095-C to report health insurance coverage they offer employees. Although Forms 1094-C and 1095-C are largely unchanged from previous versions, the instructions included some noteworthy revisions.
These forms affect employers under the Affordable Care Act’s (ACA) Employer Mandate (clubs with 50 or more full-time employees), and will start being collected on Feb. 28, 2016 (or March 31, 2016 for those filing electronically) using information from the 2015 calendar year.
The IRS will issue final versions of these forms and instructions in the upcoming months. Until then, clubs should rely on the 2015 draft Forms and Instructions in planning how to comply with these new IRS reporting requirements.
For the new draft of Form 1094-C, please click here. For the new draft of Form 1095-C, please click here.
Here is a list of the latest changes to these forms:
Form 1095-C
Clubs may now enter the health care plan’s start month on Form 1095-C. It is optional for the 2015 Form 1095-C but is mandatory for 2016 reporting.
On line 15 of Form 1095-C, employers may now report average amounts to determine the monthly employee contribution. This is helpful for clubs that use pay employees weekly or biweekly.
COBRA Coverage Clarified on Form 1095-C
A club can report a former employee on its health care plan if a COBRA continuation coverage offer has been made and the former employee has accepted health care coverage from the club. Clubs may use the corresponding indicator code on Line 14 to do this.
This also includes reporting current employees who have been offered COBRA continuation coverage.
“98% Offer Method” Clarified
The 98 Percent Offer Method applies to employers that can claim to have offered the minimum required coverage to at least 98 percent of its employees and dependents. When determining if a club qualifies for a “98% Offer Method,” the club may exclude employees in a Limited Non-Assessment Period (typically a time after a change in status or the firm month of employment).
A club that uses this method does not need to identify whether an employee it is filing a Form 1095-C is full-time or not or the total number of full-time employees from Part III of Form 1094-C.
Instructions on How to Correct Forms 1094-C and 1095-C
The new instructions also tell employers how they can identify and report errors on their tax forms. If Form 1095-C has been incorrectly submitted to the IRS, the employer must file a new Form 1095-C—not just the corrected information. Employers must then write an “X” in the corrected checkbox. This form is then filed with a Form 1094-C Transmittal—not marked as “corrected.”
Like the W-2, employees must be given a copy of Form 1095-C. When issuing a corrected 1095-C to an employee, issue him or her a new 1095-C with the word “corrected” written on it.
Form 1094-C should only be corrected if it is the Authoritative Transmittal. Like a corrected Form 1095-C, to correct a 1094-C, it must be a new form and have an “X” in the corrected checkbox.
Requesting an Extension
Clubs may receive an automatic 30-day extension to file by completing Form 8809. This can be submitted by mail or electronically. To be considered for an extension, Form 8809 must be filed before the filing deadline and will require an explanation for why the ACA reporting must be filed late.
Increased Penalties
Penalties on Forms 1094-C, 1095-C and the W-2 have also been increased. If a club does not file an information return, the fine has been raised to from $100 to $250. If a club does not furnish a correct payee statement, the fine has been raised from $100 to $250. The maximum fine for these infractions have risen from $3 million to $6 million for each year they are not filed.
Employers may avoid these fines if it can prove that it made its best efforts to comply with the reporting this information.
A Necessary Evil
Although these instructions present increased burdens on clubs, it is imperative that clubs become aware of new filing changes as they come out. NCA will ensure that you are informed of any future changes to the ACA and ACA reporting.
For additional information, please contact your club accountant or contact Brad Steele at 202-822-9822 or [email protected].