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Sorting the Pieces of the Puzzle:1094/1095 Filing Details
Darcy L. Hitesman
Hitesman & Wold, P.A.
New Forms Issued
• Draft 2015 Forms pre-released June 2015
– Form 1094-C: http://www.irs.gov/pub/irs-dft/f1094c--dft.pdf
– Form 1095-C: http://www.irs.gov/pub/irs-dft/f1095c--dft.pdf
• Very little difference from 2014 Forms
• Addition of “Plan Start Month” on Form 1095-C
– No new instructions yet
– This presentation assumes no major changes to instructions either
– 2014 Instructions: http://www.irs.gov/pub/irs-dft/i109495c--dft.pdf
Overview & Comments
• Focus on the two forms
– Comprehensive but no exhaustive
• Not addressing:
– Deadlines and methods for filing
– Notification options and deadlines
– Penalties for failure to file
– Etc.
Overview & Comments
• You will not complete all lines!
• First challenge is determining what lines need completion
– Also tells you what information you will need
– Are you currently gathering?
• Recommend circle lines required to be completed
• Double check lines not circled
• Cross through lines not required to be completed
DO THIS NOW.
IRS Form 1094-C (2015)http://www.irs.gov/pub/irs-dft/f1094c--dft.pdf
Form 1094-CPart I: ALE Information
• Form 1094-C is a “transmittal” form
• ALE Member
– Refers to single employer
– Refers to member of an Aggregated ALE Group
• Aggregated refers to controlled group for purposes of the Code
• Lines 7 and 8 identify the person “responsible for answering any questions”
Form 1094-CPart I: ALE Information
• Lines 9 – 15 are for governmental entities only
– DGE defined on p. 9 of 2014 instructions
– Example of DGE on p.2 of 2014 instructions
• Line 18, total number of 1095-C forms transmitted under this 1094-C
– Can be more than one transmittal
Form 1094-CPart II: ALE Member Information
• Line 19, Authoritative transmittal
– One must be designated authoritative and report aggregate employer-level data
– Lines 20 – 22 completed only if authoritative transmittal
• Line 20, total 1095-Cs for ALE member
– Compare to Line 18
• Line 21, whether part of Aggregated ALE Group (i.e., controlled group)
– If not, do not have to complete Part IV
• Line 22, Certifications of Eligibility [later slide]
• Signature block
– “Examined return and accompanying documents”
Certifications of EligibilityThe Four Boxes
• Form 1094-C, Part II, Line 22
– Remember only completing if authoritative transmittal
• The Four Boxes
– Qualifying Offer Method
– Qualifying Offer Method Transition Relief
– Section 4980H Transition Relief
– 98% Offer method
• Employer determines whether apply and whether want to take advantage
• Check all that apply
• Boxes checked significantly impact what needs to be completed
Qualifying Offer Method
• 1094-C Part II, Line 22, Box A checked “yes”
• If eligible to use and using qualifying offer method (QOM) for one or more full-time employees
• Employer certification that made a qualifying offer (QO) to one or more full-time employees for all months during the calendar year in which employee was a full-time employee
– Not a month by month determination
– Code 1A in the “all 12 months” box
Qualifying Offer Method
• QO – offer of MEC providing minimum value to full-time employee to which penalty could apply (excludes those in LNP) for all months of the year, at a cost not greater than 9.5% of FPL divided by 12, and offer includes employee, dependents, and spouse.
• Must not complete 1095-C, Part II, Line 15 for any month in which QO made
– Where 1095-C, Part II, Line 14 indicates QO by using code 1A
• Not required
– Do not check 1094-C, Part II, Line 22, Box A
– Instead complete 1095-C, Part II, Lines 14 and 15
Qualifying Offer Method Transition Relief
• 1094-C Part II, Line 22, Box B checked “yes”
• If eligible for and using qualifying offer method transitional relief (QOM-TR) for one or more full-time employees
• Employer certification that made a QO for one or more months of the calendar year 2015 to at least 95% of full-time employees
– For 2015, may be able to use 70% instead of 95% [later slide]
• QO – offer of MEC providing minimum value to full-time employee to which penalty could apply (i.e., exclude LNP) for one or more months of the year, at a cost not greater than 9.5% of FPL divided by 12, and offer includes employee, dependents, and spouse.
Qualifying Offer Method Transition Relief
• 1095-C. Part II. Line 14, Code 1A for months employee received a QO
• 1095-C. Part II. Line 14, Code 1I for months employee did not receive a QO
• Must not complete 1095-C, Part II, Line 15 for any month in which QO made or QOM-TR applies
– Where 1095-C, Part II, Line 14 indicates 1A or 1I
• Not required
– Do not check 1094-C, Part II, Line 22, Box B
– Instead complete 1095-C, Part II, Lines 14 and 15
Section 4980H Transition Relief
• 1094-C Part II, Line 22, Box C checked “yes”
• Special penalty related rules
• ALEs with 50-99 employees
– If qualify, penalty assessable beginning 2016
• ALE with 100 or more employees
– For 2015, “minus 80 freebies” instead of “minus 30 freebies”
• Must complete 1094-C, Part III, column (e)
*This slide has been revised
98% Offer Method
• 1094-C Part II, Line 22, Box D checked “yes”
• If eligible for and using 98% offer method transitional relief (98%) for one or more full-time employees
• Employer certification that offered for all months of calendar year affordable health coverage (under one of the safe harbors) providing minimum value to at least 98% of its employees for whom filing a 1095-C, and offered MEC to employees’ dependents.
• Do not have to complete 1094-C, Part III, column (b)
• Not required
– Do not check 1094-C, Part II, Line 22, Box D
– Instead complete 1095-C, Part II, Lines 14 and 15 and Part III, column (b)
Form 1094-CPart III: ALE Member Info Monthly
• Column (a) Minimum Essential Coverage (MEC) Offer Indicator
• Check “yes” or “no”
• Where 1094-C Part II, Line 22, Box C checked “yes”
– ALE with 100 or more employees
– For 2015, “minus 80 freebies” instead of “minus 30 freebies”
– Check “yes”
Form 1094-CPart III: ALE Member Info Monthly
• Non-calendar plan year
– If qualify for transitional relief (see description on pp. 12, 13 of 2014 Instructions)
– Months prior to start of plan year can check “yes” if offer health coverage no later than first day of 2015 plan year
• Line 23 if all information the same for all 12 months
• Or lines 24 – 35
– Complete month by month
Form 1094-CPart III: ALE Member Info Monthly
• Column (b) Full-time Employee Count
• If checked 1094-C, Line 22, Box D (98% Offer Method), do not complete
• Number of full-time employees for each calendar month minus full-time employees in a Limited Non-Assessment Period (LNP)
– NOT related to full-time employees that took coverage
• LNP – Recognized period during which not penalty assessable
– How to code when a full-time employee is not offered coverage
– Examples include waiting period, first month of employment
Form 1094-CPart III: ALE Member Info Monthly
• Use same day each month
– First day of calendar month
– Last day of calendar month
– First day of first payroll period in month
– Last day of first payroll period in month
• If the same number for each calendar month, may use “all 12 months” instead of month by month
Form 1094-CPart III: ALE Member Info Monthly
• Column (c) Total Employee Count
• Total number of employees for each calendar month
– Full-time, part-time, seasonal, temporary, etc.
– NOT related to those that took coverage
• Use same day each month
– Same as column (b)
• If the same number for each calendar month, may use “all 12 months” instead of month by month
Form 1094-CPart III: ALE Member Info Monthly
• Column (d) Aggregated Group Indicator
– If checked “yes” on 1094-C, Part II, Line 21
• Line 23 if all information the same for all 12 months
• Or lines 24 – 35
– Complete month by month
• If check any box “yes”, must complete 1094-C, Part IV
Form 1094-CPart III: ALE Member Info Monthly
• Column (e) Section 4980H Transitional Relief Indicator
– If checked “yes” on 1094-C, Part II, Line 22, Box D
• Availability of relief is employer responsibility to determine
– Code A if qualify for and are requesting 50-99 relief (not penalty assessable in 2015)
– Code B if qualify for and are requesting 100 or more relief (penalty assessable but lower thresholds for 2015)
– Cannot be eligible for both
Form 1094-CPart IV: Other ALE Members of Aggregated ALE
Group
• COMPLETE ONLY IF PART OF AGGREGATED ALE GROUP
– If checked “yes” on 1094-C, Part II, Line 21
• Complete if part of aggregated ALE group at any time during calendar year
• List top 30 ALE members in descending order based on highest average full-time employees
• Must also complete 1094-C, Part III, column (d)
– LINKS to 2015 Instructions:
– Form 1094-c: http://www.irs.gov/pub/irs-dft/f1094c--dft.pdf
– Form 1095-c: http://www.irs.gov/pub/irs-dft/f1095c--dft.pdf
IRS Form 1095-C (2015)http://www.irs.gov/pub/irs-dft/f1095c--dft.pdf
Form 1095-CPart I: Employee and ALE Members
• One for each “full-time” employee
– Full-time under Health Care Reform
– Regardless of whether actually covered
– Full-time employee for any month of the calendar year
• If self-insured, also for each other employee (i.e., other than full-time) actually covered
• Lines 7 – 13 need to match Form 1094-C entries
Form 1095-CPart II: Employee Offer and Coverage
• Offer
– Provides employee an effective opportunity to enroll in MEC health coverage (or decline that coverage) at least once each plan year
– Offer to employee and dependents; offer to spouse not required
• “Plan start month”
– New
– Optional for 2015
– Will be a two digit code in 2015 Instructions when issued
Form 1095-CPart II: Employee Offer and Coverage
• Line 14: Offer of Coverage
– Look at the codes in instructions
– 1A if qualifying offer (MV and affordable under FPL safe harbor)
• Check the box on 1094-C, Line 22
– First column if all 12 months
– Otherwise, each calendar month
– NOT related to who actually takes coverage
Form 1095-CPart II: Employee Offer and Coverage
• Line 14 Example: FT employee hired on June 15, 2015; coverage available first of month following 30 days employment; employee actually enrolled
– June – July 1H for months prior to first coverage month
– August – December 1E months offered
• Compare to employee covered for entire year – all boxes would be 1E so use all 12 months
Form 1095-CPart II: Employee Offer and Coverage
• Line 15: Employee Share of Lowest Cost Monthly Premium, for Self-only Minimum Value Coverage
– Affordability
– NOT related to what employee actually takes
• Only complete if line 14 is 1B, 1C, 1D, or 1E
• Left blank if line 14 is 1A qualified offer
– Check the box on 1094-C, Line 22, Box A
Form 1095-CPart II: Employee Offer and Coverage
• Line 16: Applicable Section 4980H Safe Harbor
– Note: “if applicable”
• Code 2 series –
– Safe harbor codes “and other relief”
– Addresses which to use when more than one applies
– If none apply, leave blank
• First column if all 12 months
• Otherwise month by month
Form 1095-CPart II: Employee Offer and Coverage
• Common examples include
– 2C if enrolled in coverage each day of the month
• Overrides any other applicable code
– 2D if in LNP
– 2A if not an employee for the month
– 2I if qualify for non-calendar transitional relief
Form 1095-CPart II: Employee Offer and Coverage
• Line 16 Example: FT employee hired on June 15, 2015; coverage available first of month following 30 days employment; employee actually enrolls
– Jan – May 2A
– June and July 2D
– August – Dec 2C
• Compare to FT enrolled all year – 2C
Form 1095-CPart III: Covered Individuals
• ONLY IF SELF INSURED
– Check the box!
• Report covered individuals
• Not employees
– Persons covered through employee
• Dependents
• Spouse
• Domestic partner
Form 1095-CPart III: Covered Individuals
– Persons not covered through employee
• Retiree (beginning year after)
• Former employee on COBRA beginning year after
• Other non-employee (e.g., independent contractor)
– For persons not covered through employee, may use 1095-B or 1095-C
– If use 1095-C, Part II, Line 14 coded 1G for “all 12 months”
Form 1095-CPart III: Covered Individuals
• Social Security Number
– 2 attempts to collect after first unsuccessful attempt (e.g., open enrollment)
– Birth date alternative if attempts to collect fail
• If all months the same, “all 12 months”
• Otherwise, month by month
Summary & Closing Comments
• Do a preliminary run through the documents now
– Penalties assessed monthly so may be time to fix going forward
– Make sure you qualify for simplified reporting (4 boxes) and other relief
– Identify “To Do” items regarding tracking, documentation, etc.
• Person listed as contact
• Person that signs
• Keep all information used to complete forms
– Information actually reported
– Information that supports how reported
– Information in case a mistake was made
