The Affordable Care Act (ACA) created new reporting requirements under Internal Revenue Code (Code) Sections 6055 and 6056. Under these new reporting rules, certain employers must provide information to the IRS about the health plan coverage they offer (or do not offer) or provide to employees. Reporting is first required in 2016, related to coverage offered or provided in 2015.

On Aug. 7, 2015, the Internal Revenue Service (IRS) released 2015 draft instructions for Form 1094-B and 1095-B (used by entities reporting under Section 6055, including sponsors of self-insured group health plans), and 2015 draft instructions for Form 1094-C and 1095-C (used by Applicable Large Employers (ALEs) that are reporting under Section 6056, as well as for combined reporting by ALEs who also sponsor self-insured plans).

2015 draft Forms 1094-B, 1095-B, 1094-C and 1095-C were previously released on June 16, 2015.

These 2015 forms and instructions are draft versions only and should not be filed with the IRS or relied upon for filing. The IRS may make changes prior to releasing final 2015 versions.

Changes

Changes made in the 2015 draft instructions include the following:

• Filing Extensions – Reporting entities can get an automatic 30-day extension of time to file by completing and filing Form 8809 by the due date of the returns. The form may be submitted on paper or electronically through the FIRE System. No signature or explanation is required for the extension. Under certain hardship conditions, reporting entities may apply for an additional 30-day extension.
• Furnishing Extensions – Reporting entities may also request an extension of time to furnish the statements to recipients by sending a letter to: IRS, Information Returns Branch, Attn: Extension of Time Coordinator, 240 Murall Drive, Mail Stop 4360, Kearneysville, WV 25430. The letter must include the filer’s name, taxpayer identification number (TIN) and address, the type of return, a statement that the extension request is for providing statements to recipients, a reason for the delay and the signature of the filer or authorized agent. The request must be postmarked by the date on which the statements are due to the recipients. If a request for an extension is approved, a maximum of 30 extra days will generally be granted to furnish the recipient statements.
• Electronic Reporting Waiver – Reporting entities can file up to 250 returns on paper. For those entities filing more than 250 returns, returns are to be filed electronically. To receive a waiver from the electronic filing requirement, reporting entities must submit Form 8508 at least 45 days before the due date of the returns. Without an approved waiver, a reporting entity that is required to file electronically but fails to do so may be subject to a penalty of up to $250 per return.

Clarifications

Clarifications made in the 2015 draft instructions include the following:

• Corrected Returns – The 2015 draft instructions include detailed information for correcting returns. The procedure for correcting a return will vary, depending on the form and whether it is filed with the IRS or provided to individuals. The instructions provide examples of errors and step-by-step instructions for filing corrected returns.
• Penalties – The 2015 draft instructions include an additional section outlining the penalties for reporting entities that fail to comply with the reporting requirements. For 2015, the IRS will not impose penalties for reporting incorrect or incomplete information if the filer can show that it made good faith efforts to comply with the information reporting requirements. No relief is provided for reporting entities that fail to file on time. For more information on penalty relief, see the Section 6055 FAQ’s and Section 6056 FAQs.
• COBRA Coverage – For purposes of the Form 1095-C, the 2015 draft instructions included additional information for reporting offers of COBRA coverage. In general, an offer of COBRA coverage to a former employee upon termination is reported as an offer of coverage on Line 14 only if the former employee enrolls in the coverage. An offer of COBRA coverage to an active employee (for example, due to a reduction in the employee’s hours) is reported in the same manner and uses the same code as an offer of that type of coverage to any other active employee.
• Method for Determining Monthly Cost – For purposes of the Form 1095-C, the 2015 draft instructions allow an employer to divide the total employee share of the premium for the plan year by the number of months in the plan year to determine the monthly employee contribution for the plan year. This monthly employee contribution would then be reported for any months of that plan year that fall in the 2015 calendar year.
• Minimum Value – The definition of “minimum value” was revised to clarify that the plan must provide substantial coverage of inpatient hospitalization services and physician services. An offer of coverage under a plan that fails to provide substantial coverage of inpatient hospitalization and physician services should be reported on Form 1095-C as not providing minimum value, even if an employer qualifies for the transition rule under Notice 2014-69.

Please contact New England Employee Benefits Co., Inc. for more information on reporting under Code Sections 6055 and 6056.