IRS Releases Final ACA Reporting Forms for 2016

The Internal Revenue Service (IRS) has released final 2016 forms for reporting under Internal Revenue Code Sections 6055 and 6056. The Affordable Care Act (ACA) requires Applicable Large Employers (ALEs) to report to the IRS on offers of medical coverage made to full-time employees. The ACA also requires employers of all sizes that sponsor self-funded health plans to report to the IRS on all individuals covered under the self-funded plan during the calendar year.

  • Forms 1094-B and 1095-B are used by entities reporting under Section 6055, including self-insured plan sponsors that are not applicable large employers (ALEs). Final 2016 versions of these forms and final instructions were released on Sept. 26, 2016.
  • Forms 1094-C and 1095-C are used by ALEs to report under Section 6056, as well as for combined Section 6055 and 6056 reporting by ALEs who sponsor self-insured plans. Final 2016 versions of these forms and final instructions were released on Sept. 30, 2016.

Fortunately, the final forms do not differ significantly from the forms used for 2015 reporting. Minor changes were made to the forms, including the addition of two new “Offer of Coverage” codes for use on Form 1095-C. The instructions also included some clarifications.

Key Changes for 2016:

  • Waivers from Electronic Filing – The 2016 instructions state that reporting entities are encouraged to file Form 8508 requesting a waiver at least 45 days before the due date of the return, but no later than the return’s due date. The instructions also note that the IRS does not process waiver requests until January 1 of the calendar year that the returns are due. The 2015 instructions had indicated that waiver requests had to be filed at least 45 days before the due date of the returns.
  • Reporting Penalties – The 2016 instructions include adjusted penalty amounts for failures to file returns and furnish statements. The adjusted penalty amount is $260 per violation, with an annual maximum of $3.2 million. Penalty amounts can be increased or decreased, depending on the situation. Lower annual maximums continue to apply for small businesses.
  • Transition Relief – Several forms of transition relief were available to ALEs for 2015 under Sections 4980H and 6056, but only limited transition relief continues to apply in 2016. References to transition relief that applied only in 2015 have been removed. Descriptions of the remaining forms of transition relief have been amended to clarify for which months in 2016 the transition relief applies. This year, all ALEs are subject to the employer mandate provisions and the threshold offer of coverage is up from 70% to 95%.
  • New Offer of Coverage Codes 1J and 1K added – Code 1J can be used if: (1) minimum essential coverage providing minimum value was offered to the employee; (2) minimum essential coverage was conditionally offered to the employee’s spouse; and (3) minimum essential coverage was not offered to the employee’s dependent(s). Code 1K can be used if: (1) minimum essential coverage providing minimum value was offered to the employee; (2) minimum essential coverage was conditionally offered to the employee’s spouse; and (3) minimum essential coverage was offered to the employee’s dependent(s).
  • COBRA and other Post-employment Coverage – Clarifying language has been added on how to report offers of COBRA and other post-employment (non-COBRA) coverage. Offers of COBRA or other post-employment coverage to former employees (and their family members) should not be entered as offers of coverage on Line 14. However, an offer of COBRA coverage to an employee who remains employed should be entered as an offer of coverage.
  • Aggregated ALE Groups – The instructions contain additional information on filing by ALEs that are part of an Aggregated ALE Group, including clarification that each member of the group must file regarding its own full-time employees. The instructions also include information and an example on filing related to employees who work for more than one member of an Aggregated ALE Group.