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ACA Reporting Final Forms and Instructions Released by the IRS

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) to their employees.

On February 8, 2015, the Internal Revenue Service (IRS) released final versions of forms and related instructions that employers may use to report under Sections 6055 and 6056 for 2014. Reporting entities may voluntarily file these forms in 2015 for 2014 coverage, but are not required to do so.

On February 9, 2015, the IRS also issued Publication 5196, Understanding Employer Reporting Requirements of the Health Care Law, to help employers prepare for reporting in 2016.

Few Changes to Final Forms
The final versions of the forms do not differ significantly from the draft versions. In general, the final instructions were edited to clarify existing requirements. However, the final instructions for Forms 1094-C and 1095-C did include a new option for Applicable Large Employers (ALEs) reporting information for nonemployees (such as nonemployee directors, retired employees or nonemployee COBRA beneficiaries) covered under employer-sponsored self-insured health coverage.

Section 6055 Reporting
Under Section 6055, every person that provides Minimum Essential Coverage (MEC) to an individual during a calendar year must file Forms 1094-B (a transmittal) and 1095-B (an information return).

Self-insured plan sponsors that are also ALEs subject to the employer shared responsibility rules will report information about coverage in Part III of Form 1095-C, instead of on Form 1095-B. In general, an employer with 50 or more full-time employees (including full-time equivalents) during the prior calendar year is considered an ALE.

Section 6056 Reporting
All ALEs (as defined under the employer shared responsibility rules) must file Form 1094-C (a transmittal) and Form 1095-C (an information return) for each full-time employee. These forms help the IRS determine whether an ALE owes penalties under the employer shared responsibility rules, as well as whether an employee is eligible for premium tax credits.

Combined Reporting
Form 1095-C will generally be used by ALEs to satisfy both the Section 6055 and 6056 reporting requirements, as applicable.

New Option for ALEs Reporting Enrollment Information for Nonemployees
The final instructions for Forms 1094-C and 1095-C include a new option for ALEs reporting information for nonemployees (such as nonemployee directors, retirees or nonemployee COBRA beneficiaries). This new option allows employers to report employer-sponsored self-insured health coverage for nonemployees (and their family members) using either Forms 1094-B and 1095-B or Form 1095-C, Part III.

This option applies only for ALEs offering self-insured health coverage for any individual who enrolled in the coverage for one or more calendar months of the year, but was not an employee for any calendar month of the year.

Changes to Alternative Methods of Reporting Under Section 6056
The final instructions for Forms 1094-C and 1095-C also made several changes to the alternative methods of reporting under Section 6056. Two alternative methods of reporting are available under Section 6056—the Qualifying Offer Method (and the Qualifying Offer Method Transition Relief for 2015) and the 98 Percent Offer Method.

Learn more by reading our full Health Care Reform Legislative Brief.