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Wednesday, December 14, 2016

IRS Releases Final ACA Reporting (Forms 1095-C And 1094-C) and Instructions for 2016

The Internal Revenue Service has released its final instructions on Forms 1095-C and 1094-C. The 1094 and 1095 C Forms are filed by applicable large employers (ALEs). The 1094 and 1095 B Forms are filed by providers of health coverage (mostly insurers but also some self-insuring employers and others). The new 1094 and 1095 C Form instructions generally follow the final 2015 instructions, but have added some clarifications and additions.

Under the Affordable Care Act (ACA), the "Employer Mandate" requires ALEs to offer compliant coverage to all of their fulltime employees (defined as those who regularly work at least 30 hours per week) or pay additional taxes for failure to do so. The "Individual Mandate" requires individuals to acquire health insurance coverage or pay additional taxes for failure to do so. Under the ACA certain individuals are eligible for subsidized coverage through the Health Insurance Marketplace.

In order to determine if additional taxes are due or if individuals are entitled to subsidies, the IRS instituted the reporting scheme found in Forms 1095-C, 1094-C, 1095-B, and 1094-B. ALEs are responsible for reporting coverage provided their fulltime employees on Forms 1095-C and 1094-C. When these ALEs fail to report accurate information, this can incorrectly generate penalties under the Employer Mandate and the Individual Mandate. This can also affect individuals' eligibility for subsidized coverage.

The updated final instructions for Forms 1095-C and 1094-C are largely identical to last year's instructions. This should allow employers and service providers to build upon last years’ experience.

Clarifications have been provided, including an explanation on how to report in a control group situation and how to report COBRA coverage. Also included are cross references to guidance on reporting on HRA coverage and safe harbor procedures for solicitation of social security numbers of covered individuals. Further clarifications include updates to certain definitions that make it clear that reporting must be done for the entire year for each relevant individual.  There are also additional explanations regarding code combinations

 This year, it is even more important that filings be timely and correct. The deadlines to report have not been extended and there is no "good faith compliance" standard applicable to this year's reporting. All Forms 1095-C are due to employees by January 31, 2017 and due to the IRS by February 28, 2017, if filing by paper, and March 31, 2017, if filing electronically. The transmittal Form 1094-C is also due to the IRS when the associated 1095-Cs are submitted to the IRS. The IRS does not indicate that they will extend the filing deadlines this time. Employers seeking extensions will have to petition the IRS by more traditional means prior to the applicable due date.

Also, when these reports are submitted they will need to be correct. The IRS has made no indication that "good faith efforts" will be sufficient to avoid penalties for incorrect filings this time. The penalty is $260 for each incorrect statement or return.  


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With offices in Toledo and Lima, OH Allotta Farley Co., L.P.A. serves clients throughout northwest OH with various legal matters. Areas of service include Allen County, Ashland County, Auglaize County, Crawford County, Defiance County, Erie County, Fulton County, Hancock County, Hardin County, Henry County, Huron County, Lucas County, Marion County, Mercer County, Morrow County, Ottawa County, Paulding County, Putnam County, Richland County, Sandusky County, Seneca County, Van Wert County, Williams County, Wood County, Wyandot County.

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