On Nov. 18, 2016 the IRS issued Notice 2016-70, giving employers subject to the Affordable Care Act’s (ACA’s) 2016 information-reporting requirements up to an additional 30 days to deliver these forms to employees.
The revised deadline to distribute these forms to employees in 2017 has shifted from Jan. 31st to March 2nd. The IRS did not change the deadline for filing respective Forms with the agency. Those deadlines remain Feb. 28th (paper) or March 31st (electronic).
1095-B and 1095-C (to employees): March 2nd, 2017
1094-B, 1095-B, 1094-C, and 1095-C (to IRS):
Electronic: March 31, 2017
Form 1095-B is used to report certain information to the IRS and taxpayers about an individual (and any dependents) who are covered by minimum essential coverage and not liable for the individual shared responsibility payment (individual mandate penalty). In the event that any individual was not covered by a health plan during the preceding plan year, or a portion thereof (three months or more), you may be subject to a tax penalty.
** These forms are most often delivered by the health insurance company **
The following entities provide minimum essential coverage:
Employer Plans, to include health care benefits for retirees and COBRA beneficiaries
Government Health Plans, to include Medicare Part A, Medicare Advantage, Medicaid, CHIP, Tricare, Veteran Medical Benefits, and plans for the Peace Corps Volunteers
Marketplace, Federal and State markets
Individual Health Plan, off the marketplace
The following information is found on the 1095-B:
Identification of the subscriber on the health plan
Employer information, if applicable
Household members enrolled on the plan
Form 1095-C must be used to report employee specific information that includes personal information for the employee, spouse and dependents (if any are covered by a self-insured plan) regardless of the employee being offered coverage or not. Forms 1095-C will be mailed or electronically filed with the IRS, along with the Form 1094-C Transmittal. Form 1095-C also includes coverage offer types, if minimum essential coverage was offered, for which months and if it was affordable and met minimum value.
** These forms are most often produced through a payroll provider **
Form 1095-C is provided to employees and contains information about health insurance that is available from the employer. This information helps individuals and the IRS determine if they are eligible for any premium tax credit for coverage through the Health Insurance Marketplace. This form must be given to any employee who is a full-time employee for one or more calendar months.
Employees must receive Form 1095-C or a substitute form provided it has the required information. This should include the following:
Employee’s name, address and Social Security number
Dependent name and date of birth and/or Social Security number (if covered on self-insured plan)
Employer name, address and Employer identification number (EIN)
Employee offer of coverage information by month
Dependent offer and coverage information by month
Cost of insurance as a percentage of employee’s salary month
The purpose of the (calendar) month data is that the individual mandate penalty, the employer mandate assessable payment and the premium tax credit are calculated on a calendar month basis.
Form 1094-B simply provides the IRS with the name of the employer, employer identification number, address, contact person, phone number, and volume of 1095-B forms that were distributed.
Form 1094-C must be used to report employer summary information that includes company and contact information and if the employer is a member of an aggregated ALE group. Used to transmit Forms 1095-C to the IRS, it also includes coverage offer types, if minimum essential coverage was offered and a monthly employee count.
The transmittal Form 1094-C reports minimum essential coverage (MEC) in addition to a full-time employee count and total employee count by month for the entire year. All ALE members of an aggregated ALE group must be listed. This form is employer specific and will help the IRS determine which employers are subject to the employer mandate and any assessable payments. The IRS will use the data on these forms to review individual’s eligibility for premium tax credits.
The data required on these forms include:
Aggregated ALE group. Generally, an Aggregated ALE Group refers to a group of ALEs that are treated as a single employer whether through an affiliated service group, multi-employer plan, common control et al.
Affordable coverage. If the lowest cost self-only health plan is 9.66% (adjusted to 9.69% for 2017 [IRS Revenue Procedure 2016-24]) or less of a full-time employee’s household income, then the coverage is considered affordable. Due to the difficulty of knowing an employee’s household income, employers can determine whether they offered affordable coverage under various “safe harbors” based on information available to the employer. These safe harbors include using the employee’s W-2 wages, rate of pay and the Federal Poverty Level (FPL).
Applicable Large Employer (ALE). An ALE is, for a particular calendar year, any single employer, or group of employers treated as an Aggregated ALE Group, that employed an average of at least 50 full-time employees (including full-time equivalent employees) on business days during the preceding calendar year, or, if a new employer at any time during the current year expects to do so.
Eligible Employer-Sponsored Plan. An eligible employer-sponsored plan refers to group health insurance coverage for employees under 1. A governmental plan, such as the Federal Employees Health Benefits Program (FEHB), 2. An insured plan or coverage offered in the small or large group market within a state, 3. A grandfathered health plan offered in a group market, or 4. A self-insured group health plan for employees.
Employee. An employee is an individual who is an employee under the common-law standard for determining employer-employee relationships.
Employer. An employer is the person that is the employer of an employee under the common-law standard for determining employer-employee relationships and that is subject to the employer shared responsibility provisions of section 4980H.
Employer Shared Responsibility (ESR) provision. Often called the employer mandate or play or pay, this requires large employers to offer health coverage to their full-time employees or face a potential penalty.
Full-time employee. A full-time employee is employed an average of at least 30 hours of service per week for a calendar month with the employer. For this purpose, 130 service hours in a calendar month is treated as the monthly equivalent of at least 30 hours per week.
Full-time equivalent employee. Total hours of service for all non-full-time employees divided by 120.
Health coverage. As used with the forms, health coverage refers to minimum essential coverage. Minimum essential coverage is generally all health coverage that is not a HIPAA excepted benefit.
Hours of service. An hour of service is each hour for which an employee is paid, or entitled to payment, for the performance of duties for the employer or a period of time during which no duties are performed due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty, or leave of absence.
Minimum essential coverage (MEC). For purposes of these forms, minimum essential coverage refers to health coverage under an eligible employer-sponsored plan. See Publication 974, Premium Tax Credit. MEC includes government-sponsored programs, eligible employer-sponsored plans, individual market plans and miscellaneous coverage designated by the Department of Health and Human Services
Minimum value. A plan provides minimum value if the plan pays at least 60 percent of the costs of benefits for a standard population and provides substantial coverage of inpatient hospitalization services and physician services.
Premium tax credit. A tax credit for eligible individuals and families with low or moderate incomes. The credit offers premium assistance to help them afford health insurance purchased through the Health Insurance Marketplace.