Answers to important ACA questions

Iris Tilley, The Daily Record Newswire

On Sept. 17, about two months after most employers would have liked to have seen final guidance, the Internal Revenue Service released final Affordable Care Act reporting forms and instructions for 2015. Applicable large employers and insurers will use these forms and instructions to complete mandatory reporting in early 2016 for offers of coverage and coverage in the 2015 calendar year. As a reminder, these forms will be used to enforce the individual mandate and employer penalties as well as crack down on individuals who may have received subsidies for which they were not eligible.

While many of the reporting details are better left to a personal conversation, here is a summary of key details that employers will find most relevant.

Who distributes and files what?

As background, employers with an average of 50 or more full-time equivalent employees in 2014 will distribute Forms 1095-C to all employees who worked on a full-time basis for at least one month in 2015. (Employees were not eligible for coverage due to a waiting period or measurement period fall under a special rule.) These forms are due to employees on or before Feb. 1, 2016. Insurers and small employers with self-insured health plans distribute Forms 1095-B to covered individuals on the same schedule. Employers file both Forms 1095-C and a transmittal form, Form 1094-C, with the IRS. Insurers and smaller employers with self-insured plans do the same with Forms 1094-B and 1095-B.

I was prepared for reporting; now what?

Employers who were prepared are in large part still prepared. The final forms are substantively identical to the draft forms, and the instructions are in large part unchanged.

What do the final instructions do with HRA reporting?

Prior to the final instructions, the IRS' guidance indicated that employers offering health reimbursement arrangements (HRAs) that are integrated into a medical plan would be required to file two sets of forms one for the main medical plan and one for the HRA. These employers can breathe a collective sigh of relief because the final forms correct this ambiguity in employers' favors.

The final instructions provide that employers offering more than one type of minimum essential coverage (MEC) to a particular employee are only required to report one type of coverage. That is, employers with both a major medical plan and an HRA are only required to report one of the two coverage types.

Do the instructions do anything to clarify simplified reporting?

As anyone who has spent time sorting through the reporting requirements is aware, the instructions provide for several types of "simplified reporting." However, this reporting is governed by so many rules and nuances that it often seems as if qualifying for the simplified reporting is more complicated than just reporting without any so-called simplification. The final instructions attempt to get at this complexity by providing some clarifications to the qualifying offer method of simplified reporting.

Through an example, the instructions explain that an employer can use the qualifying offer method of reporting (with the corresponding reporting code of 1A) if an employee and the employee's dependents received an offer of affordable coverage for all months of the calendar year in which the employee was a full-time employee of the employer.

The example illustrates that an ALE member can use the qualifying offer code (1A) on Form 1095-C so long as the employee received a qualifying offer for all months in which the employee was full-time (and not in a limited non-assessment period), but the ALE member cannot furnish the alternative statement unless the employee received a qualifying offer for all 12 months in the calendar year. Months in which an employee was excluded from coverage for a permissible reason, like a waiting period that does not exceed the ACA maximums, will not preclude an employer from using the qualifying offer reporting method. However, the instructions make clear that this method is not available for self-insured employers if the employee actually enrolled in the employer's self-insured coverage.

Do I really need to report COBRA offers of coverage?

No, COBRA offers of coverage are no longer reported as an offer of coverage if an employee terminated employment. However, in instances where an employee loses coverage due to a reduction in hours but remains an employee, an offer of COBRA coverage would be reported.

Am I really going to need to report in 2016?

The IRS' affirmative step in releasing final forms and instructions signals that employers will not see an additional delay in reporting requirements. The IRS has stated that it will not impose penalties where an employer makes a good faith effort to comply, but penalties are likely where an employer simply ignores the reporting rules.

For employers that have been ignoring the rules in hopes that they would disappear, this new guidance signals the perfect moment to get things in order.


Iris Tilley is a partner at Barran Liebman LLP. She advises employers about all aspects of employee benefits, including ACA compliance. Contact her at 503-276-2155 or

Published: Wed, Oct 07, 2015