We are entering the last quarter of the 2016 calendar year which means the penalties related to section 4980H for 2015 will soon be assessed against employers. At the latest, the 2015 section 4980H penalties will be assessed in the first quarter of 2017. Whenever the penalties are assessed, the government will be presented, perhaps for the first time in history, with an interesting conundrum....
And from BB&T's Compliance Team: Final Forms for ACA Reporting Released. On Sept. 30, 2016, the Internal Revenue Service (IRS) released the final 2016 Forms 1094-C and 1095-C used by applicable large employers (ALEs) to report under Internal Revenue Code (Code) Sections 6055 and 6056. The newly released forms finalized changes that were reflected in the 2016 draft forms, released on July 6, 2016.
As a reminder, ALEs will not have the extension to file they had in 2016 for 2015 forms. 2016 forms are due to employees/covered individuals by Jan. 31, 2017, and must be filed with the IRS by Feb. 28, 2017 (or March 31, 2017, if filing electronically).
Final instructions for the forms were also released and provide employers with a few clarifications, including the following:
- Transition Relief: Certain transition relief was available to ALEs for 2015 under Section 4980H and Section 6056, but only limited transition relief remains for 2016. Any references to transition relief that applied to calendar year 2015 only have been removed and descriptions of the remaining forms of transition relief have been amended to clarify for which months in 2016 the transition relief applies.
- Aggregated ALE Groups: The final instructions provide employers with clarifying information on how filings by ALEs that are part of an Aggregated ALE Group, including clarification that each member of the group must file regarding its own full-time employees. The instructions also include an example on how to file for employees who work for more than one member of an Aggregated ALE Group.
- COBRA (and other post-employment coverage): Clarifying language was added on how to report offers of COBRA and other post-employment (non-COBRA) coverage. Offers of COBRA or other post-employment coverage to former employees and their family members should not be entered as offers of coverage on Line 14. However, an offer of COBRA coverage to a current employee who remains employed should be entered as an offer of coverage.
- Qualifying Offer Method: The instructions clarify ALEs using the Qualifying Offer Method may, but are not required to, enter a safe harbor code on Line 16 when using Code 1A on Line 14.
- Code 1G: The instructions clarify Code 1G applies for the entire year or not at all. If Code 1G applies, an ALE should enter Code 1G on Line 14 of the 1095-C in the "All 12 Months" column or in each separate monthly box for all 12 months.
- Affordability Safe Harbor Codes: The instructions clarify the affordability safe harbor codes should not be used on Line 16 of Form 1095-C for any month the ALE did not offer minimum essential coverage (MEC) to at least 95% of its full-time employees and their dependents.
