The Affordable Care Act is still in effect along with strict compliance requirements and failure to comply can bring stiff financial penalties.

One of these requirements is for applicable employers to file 1095-Cs with the IRS, and each year usually brings changes and revised instructions for filing.

IRS Announces Form 1094/1095 Changes

In mid-November, the IRS has released draft instructions for the 2019 tax year 1094/1095-B and 1094/1095-C forms.

According to a post at the ACA Times,

“While these forms are not the final versions to be filed and furnished for the 2019 tax year, they do serve as an accurate depiction of what employers should expect when preparing for 2019 ACA employer mandate reporting.

Employers should prepare for the end of the year and stay tuned for the final versions of the forms and instructions to be issued in the near future. As it stands currently, the IRS has not issued any extension for filing and furnishing Forms 1094-C and 1095-C. Employers will need to move quickly if they want to meet the IRS-mandated deadlines and avoid ACA penalty assessments.”

The draft forms and instructions are available on the IRS website:

• Health Coverage Form 1095-B
• Transmittal Form 1094-B to accompany Form 1095-B.
• Instructions for Forms 1094-B and 1095-B.
• Employer-Provided Health Insurance Offer and Coverage Form 1095-C
• Transmittal Form 1094-C to accompany Form 1095-C.
• Instructions for Forms 1094-C and 1095-C.

In addition, once the final versions of the forms are available, they will be posted on the IRS website.

You may also want to download IRS Publication 5223, General Rules and Specifications for Affordable Care Act Substitute Forms 1095-A, 1094-B, 1095-B, 1094-C, and 1095-C, which explains how employers can prepare substitute forms to furnish ACA reporting information to individuals and the IRS.

IRS 1095/1094 Forms Essentials

Since 2016, most all employers with more than 50 full-time employees have been required to provide an additional IRS form to their employees known as Form 1095-C. Along with the Form W-2, whose main purpose is to communicate pay information to the IRS, the 1095-C provides health insurance information.

Just as with the W-2, employees will also keep the 1095-C with their tax records.

The IRS Form 1094-C is essentially a cover sheet for all the Forms 1095-C that an employer files for its employees and is only filed with the IRS and not distributed to employees. The form requires information such as the number of people employed and how many 1095-C forms are being filed. Employers must file one 1094-C for each tax ID.

The ACA requires all Applicable Large Employers, or ALEs,  to offer full-time employees qualifying healthcare coverage or pay a penalty. ALEs are those employers with 50 full-time employees or an equivalent in the previous year.

In addition to determining any possible penalties, the form is used by the IRS to determine which employees were eligible for subsidies for individual health insurance during the year. Employees who were offered qualified coverage by their employers are not eligible for these subsidies in the months they were offered qualified coverage.

This is where potential penalties can be levied. If an employee claimed a subsidy even if offered qualified coverage, the IRS can recoup the subsidy from the employee. Or, if an employee claims a subsidy and the employer that did not offer qualified coverage, the employer can be penalized.

Form 1095-B is the tax form that reports the type of health insurance coverage an employee has, any dependents covered by their insurance policy, and the period of coverage for the prior year. The form verifies with the IRS that an employee and any dependents have at least minimum qualifying health insurance coverage and therefore are not liable for the individual shared responsibility payment.

The 1094-B is the transmittal form that must be filed with the Form 1095-B.

Deadlines for Filing 1094/1095 Forms

As of November 2019, employers have until Jan. 31, 2020, to distribute 1095-Cs and 1095-Bs to employees for the 2019 tax year.

Employers must also file 1094-B, 1095-B, 1094-C and 1095-C forms with the IRS by February 28, 2020 for companies with fewer than 250 forms and filing by paper, or by March 31, 2020 if filing electronically.

In 2018, the IRS extended the due date for providing the forms to employees from January 31 to March 4, however, the IRS has not declared that it is extending the due date this year, so plan on distributing the forms to your employees by January 31, 2020.

On December 2, 2019 the IRS has delayed the deadline for providing 1095-B and 1095-C forms to employees by 30 days. The revised deadline is now March 2, 2020. You can read more about the extension at this link. 

The 2020 filing deadlines for 2019 coverage:

• 1095 forms delivered to employees - January 31 (extended to March 2)*
• Paper filing with IRS - February 28
• Electronic filing with IRS - March 31

*The IRS has again extended the January 31 deadline by 30 days, per Notice 2019-63

Overall Changes Are Minor

According to the draft instructions released by the IRS, most of the 2019 tax year form changes were updates to revise dates from 2018 to 2019 and to update IRS website links.

The IRS also reported that they will once again extend the “good faith compliance efforts” relief for tax year 2019. This relief has been provided in previous years to grant relief to employers who attempted to comply with the IRS reporting requirements but filed either incorrectly or incompletely.

Other points the IRS noted is that they have kept the ‘plan start month’ box as optional for reporting for the 2019 tax year and that employers must provide all printed forms in landscape format.

Staying in Compliance With the IRS

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