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Every year Applicable Large Employers (“ALEs”) must file Forms 1094-C and 1095-C with the IRS and furnish Forms 1095-C to employees considered full-time under the Affordable Care Act (“ACA”). In this article we will go over the final versions of the ACA reporting Forms 1094-C and 1095-C, in addition to the specific reporting instructions for the 2020 tax year, to be filed and furnished this year (2021).
Forms 1094-C and 1095-C are used in combination with the IRS automated Affordable Care Act Compliance Validation (ACV) System, to determine whether an ALE owes a payment under the Employer Shared Responsibility Provisions under IRC Section 4980H. The IRS can also identify which ALEs have not filed or furnished their information returns, resulting in penalties under IRC Sections 6721/6722.
When populating Form 1095-C, employers are communicating a lot of information through a series of codes. It is incredibly important for an employer to have documentation supporting the codes they are using when populating the Forms. Employers should remember that there are a number of new 1095-C codes specific to the 2020 tax year. These new codes are to be entered on Line 14 of the 1095-C Form and can be found below:
1L. Individual coverage health reimbursement arrangement (HRA) offered to an employee with the affordability determined using the employee’s primary residence location ZIP Code.
1M. Individual coverage HRA offered to an employee and their dependent(s) (not spouse) with the affordability set using the employee’s primary residence location ZIP Code.
1N. Individual coverage HRA offered to an employee, their spouse and any dependent(s) with affordability determined by the employee’s primary residence location ZIP Code.
1O. Individual coverage HRA offered to an employee only using the employee’s primary employment site ZIP Code affordability safe harbor.
1P. Individual coverage HRA offered to an employee and their dependent(s) (not spouse) using the employee’s primary employment site ZIP Code affordability safe harbor.
1Q. Individual coverage HRA offered to an employee, their spouse and dependent(s) using the employee’s primary employment site ZIP Code affordability safe harbor.
1R. Individual coverage HRA that is NOT affordable offered to an employee; employee and spouse; or dependent(s); or employee, spouse, and dependents.
1S. Individual coverage HRA offered to an individual who was not a full-time employee.
You can find the final 2020 filing instructions by clicking here. The final versions of Form 1094-C and 1095-C for the 2020 tax year are also available for download at the following links:
Employers, if you are unsure of the coding on your ACA information returns and need assistance in carrying out these responsibilities, as required by the ACA’s Employer Mandate, contact us to learn about how ACA Complete can help.
For information on ACA penalty amounts, affordability percentages, important filing deadlines, steps for responding to penalty notices, and best practices for minimizing IRS penalty risk, download the ACA 101 Toolkit.
