2018 Form 1094/1095 Reporting

Understanding Your Reporting Obligations

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Compliance Consultant
+1 314 594 5902
November 29, 2018

The IRS recently released the final Forms 1094/1095 and instructions for the 2018 reporting year.  Conveniently, the forms and reporting obligations are basically unchanged from 2017. The IRS has yet to announce penalty relief for good faith mistakes made while completing the forms. This good faith relief is typically announced in middle to late December, although employers shouldn’t automatically assume the IRS will grant the relief for 2018.

This article is intended to provide a brief overview of 2018 Form 1094/1095 reporting for employers.

The Deadlines

There are two deadlines for employers to be aware of:  

  1. Reporting to employees/enrollees – Employers need to provide the applicable Form 1095 to employees/enrollees by January 31, 2019. The IRS has repeatedly extended this due date, and it may do so again. A hardship extension may also be available under certain circumstances.

  2. Reporting to the IRS 
    • Less than 250 returns – Employers filing less than 250 returns may file paper returns with the IRS by February 28, 2019.
    • Electronic returns – Employers filing electronically must file with the IRS by April 1, 2019 (March 31, 2019 is a Sunday). An employer who files 250 or more returns must file electronically.

Employers may request an automatic 30-day extension. An additional 30-day hardship extension may be available under certain circumstances.

Which Forms Apply to Me?

This depends upon whether you are considered an applicable large employer (ALE) under the Affordable Care Act (ACA), generally defined as an employer with 50 or more full-time employees (including full-time employee equivalents).

The C Forms
The C Forms are used by ALEs to report their compliance or non-compliance with the ACA’s employer shared responsibility requirements (the “employer mandate”). Employer mandate reporting is intended to address whether an employer offered coverage to 95% of its full-time employees, whether any were eligible for subsidized coverage in the public insurance exchange, and if the employer is liable for any penalties as a result.   

If the ALE offers self-insured coverage, Form 1095-C will also reflect the months any employee and/or dependents were enrolled to address the ACA’s “individual mandate” to maintain health insurance coverage. The individual mandate officially ends after 2018, but this reporting also ties into whether an individual (not just the employee) is eligible for a subsidy in the public insurance exchange. 

The B Forms
If an ALE offers fully-insured coverage, the insurance carrier will handle the individual mandate reporting by reporting the months an employee and/or any dependents were enrolled on the B Forms. Small employers who offer self-insured coverage (including level-funded coverage) must also use the B Forms to report the months an employee and/or any dependents were enrolled.

Small employers who do not offer coverage or offer only fully-insured coverage have no Form 1094/1095 reporting requirement.

Plan Type

Form 1095-C
Parts I and II

Form 1095-C
Part III

Form 1095-B
Employer

Form 1095-B
Insurance Carrier

ALE
Fully-Insured

Yes

No

No

Yes

Small Employer Fully-Insured

No

No

No

Yes

ALE
Self-Insured

Yes

Yes

No

No

Small Employer
Self-Insured

No

No

Yes

No

Form 1095-C, Some Reporting Tips…

Part II, Line #14, Offer of Coverage
An ALE may only report an offer of coverage was made for the month if coverage was offered for every day of the month. If coverage began or ended mid-month, the ALE should report Code 1H for that month. Code 1H means no offer of coverage was made, but the ALE will reflect the partial coverage and avoid potential penalties in Line #16.

Part II, Line #15, Employee Required Contribution
Line #15 is only required if certain codes are used on Line 14. The triggering codes are 1B, 1C, 1D, 1E, 1J and 1K. If required, the employer must enter the employee’s monthly cost for the lowest-cost, self-only coverage meeting the ACA’s minimum value requirement that was offered to the employee. The dollar amount entered is just for self-only coverage. It does not matter if the employee enrolled in a more expensive plan option, enrolled one or more dependents, or waived coverage. If the employee cost is zero, don’t leave the line blank. Instead, enter “0.00.”

Part II, Line #16, Section 4980H Safe Harbor and Other Relief
An ALE may only report an employee was enrolled in coverage for the month using Code 2C if the employee was enrolled for every day of the month. If coverage began mid-month, Code 2D should be used instead. Similarly, if coverage ended mid-month, Code 2B should be used. In both instances, Codes 2D and 2B take the employer out of potential penalty for that month.

An employer may use both the Code 2G (federal poverty limit) and Code 2H (rate of pay) affordability safe harbors for the same employee during the reporting year. This may be relevant for employers with non-calendar year plans. By contrast, if the Code 2F (Form W-2) affordability safe harbor is used for any month, it is the only affordability safe harbor that may be used for that employee during the reporting year.  

Continuing Problems with Code 1A in Line #14
The use of Code 1A in Line #14 automatically demonstrates that an affordable offer of coverage was made to the employee. Employers using Code 1A must leave Line #15 blank. Since 2016, the instructions have also indicated that employers may [but is not required to] leave Line #16 blank and doesn’t have to enter a code to avoid potential penalty. That said, the IRS has had difficulty processing “unaccompanied Code 1As” and tends to mark these as sources of potential penalty for employers. We recommend employers reflect a corresponding enrollment or affordability code (such as Code 2G) to avoid this.    

Part III, Column(e) 
In stark contrast with how Part II works, an individual should be reflected as having coverage for a month if the individual was covered for any day of the month. Coverage for the entire month is not required. For small employers required to file Form 1095-B, this is found on Part IV of that form.

Ready, Set, File!

Completing the 1095 forms takes longer than most employers realize. We realize most employers utilize vendors to assist with this process. If you have not begun your 2018 reporting process, we recommend you do so as soon as possible. 

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