IRS Releases Final 2016 ACA Forms and Instructions

On August 1, the Internal Revenue Service released the much-anticipated draft 2016 instructions for Affordable Care Act Forms 1094-C and 1095-C, which are used by Applicable Large Employers (ALEs) to report on employer-provided health insurance offers and coverage. On September 30, 2016, the IRS posted new versions of the instructions and forms. Although the information is still subject to change, the documents no longer include a “DRAFT” watermark, indicating the IRS intends for them to be the final 2016 ACA forms. The updated documents for 2016 reporting can be accessed at the following links:

• Instructions for Forms 1094-C and 1095-C
• Form 1094-C
• Form 1095-C

While changes to ACA forms and filing requirements can be difficult to follow, we at Equifax are here to help. Our team of ACA experts has reviewed these documents to deliver a brief overview of what’s new and notable. Not much has changed from the drafts to the latest versions, but here’s what we think you should know:

TIN Solicitation

One of the biggest mysteries for tax year 2015 reporting—and perhaps the most common pain point amongst Applicable Large Employers—was the process of Tax Identification Number (TIN) matching. After filing 1094-Cs and 1095-Cs with the IRS, many employers received feedback containing large numbers of “TIN Mismatch” errors. The ACA Information Return (AIR) e-filing system’s validations check to make sure the TINs and names provided on match what is in the IRS database.

• For employers: The relevant TIN is the employer’s Federal Employer Identification Number (FEIN); the employer name provided on Forms 1094-C and 1095-C should match the legal name provided on Form SS-4, Application for Employer Identification Number.
• For employees (i.e. those listed on line 1 of the 1095-C): The relevant TIN is the individual’s Social Security Number (SSN).
• For other covered individuals (i.e. those not listed on line 1 of the 1095-C): The TIN is typically an SSN, but another type of TIN is acceptable if the individual does not have an SSN.

The updated 2016 instructions include the following language to help employers better understand what efforts to obtain the appropriate tax numbers for covered individuals are expected of them:

For additional guidance and proposed regulatory changes relating to section 6055, including clarifications regarding the reporting requirements for providers of minimum essential coverage and the requirement to solicit the TIN of each covered individual for purposes of the reporting of health coverage information, see Proposed Regulations section 1.6055-1(h) and Regulations section 301.6724-1.

Employers should follow the above-referenced guidance to insulate themselves from potential section 6055 reporting compliance risk.

No “VOID” for 2016 Forms

For 2015 reporting, very little guidance was given on how to address a scenario in which an employer furnishes a 1095-C to an individual, files that return with the IRS, and later discovers that the individual should not have received a 1095-C.

Example: Imagine that after filing 1094-C and 1095-C returns with the IRS, a third-party data partner provides updated payroll or benefits data, which surfaces that the individual was neither a full-time employee nor enrolled in the employer’s self-insured coverage for any month during the year. The employer therefore had no obligation to provide a 1095 C and wishes to retract it.

Other IRS forms, such as the 1095-A and W-2, utilize the “VOID” checkbox to address this scenario. By marking VOID, you indicate that the form was issued in error and should be disregarded. The updated instructions add a “VOID Box” section that simply states, “Do not use this box on Form 1095-C.” Although this provides no further guidance on what an employer should do in this situation, it makes it clear that the IRS will not be using this checkbox for 2016 1095-Cs.

Portrait Orientation Allowed for Substitute Statements to Recipients

Unlike other IRS forms, the standard versions of Forms 1094-C and 1095-C are in landscape format. New language in the updated instructions permits the use of portrait format for employers sending substitute statements (i.e. statements not using the official IRS form) to full-time employees and covered individuals. The instructions clarify that any returns filed with the IRS, however, must be in landscape format.

Indicator Code 1G: All or Nothing

Form 1095-C, line 14 indicator code 1G indicates that an individual who was determined not to be a full-time employee for any month in the reporting year was offered and enrolled in the employer’s self-insured coverage. In response to confusion in the first mandatory reporting year, the IRS added the following clarifying language under the description of the code:

“Note. Code 1G applies for the entire year or not at all. Therefore, if code 1G applies, an ALE Member must enter code 1G on line 14 in the “All 12 Months” column or in each separate monthly box (for all 12 months).”

If 1G applies at all, then it applies for all 12 months. Please note that this code should not be used for non-full-time employees who enroll in an employer’s fully insured coverage.

Changes From 2015

For more information on what has changed since the 2015 forms and instructions, please see our previous post, New and Notable: 2016 Draft Instructions for ACA Forms.

–B Versions

Please note that the above information focuses on Forms 1094-C and 1095-C, which are used by Applicable Large Employers (ALEs) to report on employer-provided health insurance offers and coverage. Non-ALEs who provide minimum essential coverage to one or more individuals should instead use Forms 1094-B and 1095-B to report information for those individuals. The –B versions of the 2016 instructions and forms have also been updated for 2016 reporting, and they can be accessed at the following links:

• Instructions for Forms 1094-B and 1095-B
• Form 1094-B
• Form 1095-B

Need additional support in managing ACA reporting and staying compliant? Contact us at acacompliance@equifax.com, or learn more about our award-winning solutions here.