A few weeks ago, we provided the most Frequently Asked Questions regarding the employer reporting requirements under The Patient Protection and Affordable Care Act (the “ACA”), which are generally effective beginning January 1, 2015, with the applicable reports filed in early 2016. That post – Part 1 of 2 – focused on the FAQs regarding Form 1095-C (Employer-Provided Health Insurance Offer and Coverage), which generally must be filed on behalf of all full-time employees. This post – Part 2 of 2 – focuses on the FAQs regarding Form 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage), which is the transmittal accompanying the Form 1095-Cs an Applicable Large Employer is required to file with the IRS. In addition, on December 28, the IRS issued Notice 2016-4, which extends the filing deadline for both Form 1094-C and Form 1095-C. This extension is discussed further below. The FAQs related to Form 1094-C are listed below:
Q1: Which employers are required to file Form 1094-C and when is the filing due?
A1: Generally, all “Applicable Large Employers (“ALE”) are required to file with the Internal Revenue Service a Form 1094-C, which accompanies copies of each Form 1095-C prepared and filed on behalf of its full-time employees. An ALE is one with 50 or more full-time and full-time equivalent employees. A small employer (i.e. under 50 FTEs) that self-insures its health benefits must file a different transmittal form – Form 1094-B.
Filing Deadline Delay: Notice 2016-4 delays the Reporting Requirements under the Affordable Care Act. The dates below apply for 2015 only. Notice 2016-4 extends the due dates:
for furnishing to individuals the 2015 Form 1095-B, Health Coverage, and the 2015 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, from February 1, 2016, to March 31, 2016, and
for filing with the IRS the 2015 Form 1094-B, Transmittal of Health Coverage Information Returns, the 2015 Form 1095-B, Health Coverage, the 2015 Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and the 2015 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, from February 29, 2016, to May 31, 2016, if not filing electronically, and from March 31, 2016, to June 30, 2016 if filing electronically. This notice also provides guidance to individuals who might not receive a Form 1095-B or Form 1095-C by the time they file their 2015 tax returns.
Q2: If we are a member of a controlled group of companies, do we have our own filing obligation?
A2: Yes. Each member of a controlled group must complete its own Form 1094-C (Transmittal) and Form 1095-Cs for its full-time employees. Employers filing more than one Form 1094-C will identify one Form 1094-C as the “Authoritative Transmittal”.
Q3: How does an employer count its full-time and total number of employees for Part III of Form 1094-C?
A3: Columns B and C of Part III of Form 1094-C ask for counts of full-time employees and total employees. Any one of the following methods may be used to count employees each month:
Employee count on the first day of the month;
Employee count on the last day of the month;
Employee count on the 12th day of each month;
Employee count as of the first day of the first payroll period that starts during each month; or
Employee count as of the last day of the first payroll period that starts during each month.
Regardless of the method selected, a consistent approach must be used for each month of the year.
Q4: What are the Line 22 Certifications of Eligibility, and can an ALE check more than one option on Form 1094-C, line 22?
A4: The Line 22 Certifications of Eligibility include:
Qualifying Offer Method – the ALE made a Qualifying Offer to one or more of its full-time employees for all months during the year in which the employee was a full-time employee. A “Qualifying Offer” is an offer of minimum essential coverage to the employee, spouse, and dependents that is affordable based upon the Federal Poverty Level safe harbor.
Transition Relief Qualifying Offer Method (95% Offer Method) – the ALE made a Qualifying Offer for one or more months of calendar year 2015 to at least 95% of its full-time employees.
Section 4980H Transition Relief – the ALE is eligible for section 4980H Transition Relief because: (1) the ALE had fewer than 100 full-time employees, including full-time equivalent employees (50-99 Transition Relief), or (2) the ALE had 100 or more full-time employees (and full-time equivalents) and qualifies for a reduced penalty in 2015.
98% Offer – the ALE offered affordable health coverage (using any of the safe harbor standards) providing minimum value to at least 98% of its employees (and dependents) for whom it is filing a Form 1095-C employee statement. If the 95% Offer applies, the “Full-Time Employee Count” in Part III, column (b) of Form 1094-C is not required to be completed.
An ALE should check all options that apply as it is possible that an employer may be able to apply different options to different segments of its employee population.
Q5: When is an ALE member eligible to use the alternative method of reporting for Qualifying Offers?
A5: If an ALE has made a Qualifying Offer for all 12 months of the year to one or more full-time employees (and the employee did not enroll in self-insured coverage), the ALE may use an alternative reporting method for those employees who received a Qualifying Offer for all 12 months of the year.
Alternative Reporting: As an alternative to furnishing the employee with a copy of Form 1095-C filed with the IRS, the employer may furnish a statement containing certain information and stating that because the employee received a Qualifying Offer for all 12 months of the year, the employee is not eligible for the premium tax credit. This alternative may not be used by an employer that sponsors a self-insured plan with respect to any employee who has enrolled in the coverage under the plan because the employer is required to report that coverage on Form 1095-C.