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Thursday, August 21, 2014

IRS Releases Draft ACA Reporting Forms


The Affordable Care Act (ACA) requires large employers and all self-insured employers to collect and report information about the health coverage they provide, starting with the 2015 calendar year. The IRS released drafts of the reporting forms for employers in July, and draft instructions are expected by the end of August. 

The forms and instructions are important because they can help employers determine their information collection processes. Employers need to have collection processes in place by the end of 2014 in order to gather monthly data in 2015 about their employees’ full- or part-time status, and their health coverage and health plan enrollment. 

Two types of forms
The draft forms are the 1095-B and 1095-C information returns, used for reporting the information required under Internal Revenue Code (IRC) Sections 6055 and 6056, and the 1094-B and 1094-C transmittal forms. Similar to the process for Form W-2 reporting, employers will prepare an information return for each applicable employee, and then file the returns with the IRS via a single transmittal form. Form 1094-B is used for transmitting 1095-B returns and Form 1094-C is used for 1095-C returns. 

Note that the latest IRS rules include a simplified reporting option that streamlines some of the data that employers must provide. The option is for employers that provide any of their full-time employees (FTEs) a “qualifying offer” of minimum-value coverage (employee-only) combined with an offer of coverage for the employee’s dependents. To review details on the Sec. 6055 and Sec. 6046 reporting requirements and the simplified reporting alternative, see our March Tax Alert, “IRS Releases Latest Rules on ACA Reporting.” 

Who files what
Small employers—those with fewer than 50 FTEs or FTE equivalents—are not subject to the reporting requirements unless they are self-insured. Small employers with self-insured health plans will use Form 1095-B and Form 1094-B. Large employers—those with 50 or more FTEs or FTE equivalents—will use Form 1095-C, a combined form with a top section for Sec. 6056 requirements and a bottom section for Sec. 6055 requirements. 

Large employers who are self-insured fill out both sections, and those who are not self-insured fill out only the top. 

Filing deadlines and fines
Employers must file returns for each calendar year by Feb. 28 (or March 31 for electronic filing) of the following year. Employers with 250 or more returns are required to file electronically. Employers also must provide a copy of the Form 1095-C, or a substitute statement, to each employee by Jan. 31. This can be provided electronically with the employee's consent. 

For the 2015 calendar year, for example, employers must file the forms with the IRS by Feb. 28 or March 31, 2016, and provide statements to employees by Jan. 31, 2016. Employers will be fined up to $200 per return for missing these deadlines. 

Armanino Tax Insights and Alerts are provided as an educational service by Armanino LLP for clients and friends of the firm. The communication is an overview only, and should not be construed as legal or tax advice or advice to take any specific action. Individuals should consult with their personal tax/legal advisors before making any tax/legal-related decisions. 

IRS Circular 230 Disclosure. IRS regulations generally provide that, for the purpose of avoiding federal tax penalties, a taxpayer may rely only on formal written advice meeting specific requirements. Any tax advice does not meet those requirements and is not intended or written to be used, and cannot be used, for the purpose of avoiding federal tax penalties or promoting, marketing or recommending to another party any transaction or matter addressed herein.

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