Earlier this month the IRS issued draft ACA Forms 1094-C and 1095-C for the 2022 tax year.
For the first time in years, there do not seem to be any changes to the federal documents, that is, for now anyway. The forms in their current state are drafts and subject to change pending any new passing legislation or unexpected issues.
The instructions on both Forms 1094-C and 1095-C appear to be the same and have no adjustments to newer information, such as Line 14 codes 1T and 1U, which were both added to Form 1095-C last year. If you need a refresher on these relatively new codes, see below:
What is the 1T code on Form 1095-C?
The 1T code applies to individuals who receive a Health Reimbursement Arrangement (HRA) offer of coverage from their employers. The 1T code also specifies that an HRA offer is affordable based on the recipient’s primary residence zip code. Remember, this code only applies to the individual and does not includes their dependents.
What is the 1U code on Form 1095-C?
The 1U code also applies to an individual who receives an HRA offer of coverage from their employer but uses a different affordability calculation. This code communicates that the offer is affordable based on the employee’s primary employment zip code, instead of their primary residence. Like the 1T code, the 1U code also only applies to the individual and not their dependents.
While a seemingly minor detail, these differences are significant, so be sure you use the codes correctly come filing season. For a complete understanding of all of the codes, view our 1095-C codes blog post.
One foreboding observation about the new forms is that they do include future Line 14 codes, 1V, 1W, 1X, 1Y, and 1Z. Currently, these codes are all “reserved for future use,” signaling that one or more of these be deployed between now and reporting time next year.
In the interim, these draft documents should help employers prepare for the upcoming 2022 ACA reporting season.
Under the ACA’s Employer Mandate, Applicable Large Employers, or employers with 50 or more full-time employees and full-time equivalent employees to:
- Offer Minimum Essential Coverage to at least 95% of their full-time employees (and their dependents) whereby such coverage meets Minimum Value and
- Ensure that the coverage for the full-time employee is affordable based on one of the IRS-approved methods for calculating affordability
Employers that fail to meet these ACA Employer Mandate requirements, including not filing ACA forms 1094-C and 1095-C on time or accurately, could be subject to Letter 226J penalty notices.
The IRS is currently issuing Letter 226J penalty notices for the 2019 tax year, but most recently began issuing the penalty letter’s precursor notice, Letter 5699 for the 2020 tax year, indicating that the agency will be moving onto the 2020 Letter 226Js shortly.
If you need assistance coding your ACA forms correctly, download the Employers Guide to Coding Form 1095-C below.
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.