The IRS’s 1095 Forms for ACA Explained
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A number of changes were introduced to the health insurance marketplace with the passage of the Affordable Care Act in 2010. From different reporting forms and instructions to health insurance plan requirements to the penalties imposed on employers for failing to comply with ACA regulations, the ACA created unique responsibilities for employers, health insurance carriers, and individuals.
One of the responsibilities set forth by the ACA are the issuance and filings of the different 1095 schedules.
Every year, Americans will receive a 1095-A, 1095-B, 1095-C, or a combination of these forms in the mail documenting the health coverage details for the previous year. Some of you who have been working on ACA compliance may already be familiar with these forms. For those of you who are not, the following is a description of what the different types of 1095 forms are and the roles they play in complying with the ACA. Below is a breakdown of each form.
The 1095-A
Individuals who obtain health coverage through a state or federal health exchange will receive Form 1095-A. The form indicates details pertaining to the individual as well as any others in the household that may also be receiving coverage.
The 1095-B
The 1095-B is distributed by health insurance carriers and employers operating a self-funded insurance plan to their employees. The form will contain information about the individuals covered and for which months out of the year they received coverage. In addition, individual details such as name, date of birth, and employer information are reported on this form.
The 1095-C
Form 1095-C is issued by Applicable Large Employers (ALEs) to individuals that were considered full-time employees by the ACA throughout the previous reporting year. (ALEs are organizations with 50 or more full-time employees and full-time equivalent employees). The 1095-C includes information on the lowest cost plan available to the employee, the contribution amount from the employee, and whether the health insurance plan that was offered met certain ACA plan requirements, such as Minimum Essential Coverage (MEC), Minimum Value (MV) and affordability. The 1095-C also provides enrollment details for the employee. Failing to furnish the 1095-C schedules to your full-time workforce can result in penalties under IRC 6722.
The deadline to submit these 1095 forms to your full-time workforce for the 2018 tax year is March 4, 2019. This is an extension from the original deadline of January 31, 2019.
The deadline for employers to submit 1095-C forms electronically to the IRS is April 1, 2019.
The 1095-C forms submitted to the IRS should be accompanied by a Form 1094-C. The IRS requires that Form 1094-C must be used to report to the IRS summary information for each ALE Member and to transmit Forms 1095-C to the IRS. Form 1095-C is used to report information about each employee to the IRS and to the employee.
Forms 1094-C and 1095-C are used in combination with the agency’s 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 had not filed or furnished information, resulting in penalties under IRC Sections 6721/6722.
Employers who have not received IRS penalty notices should consider undertaking an ACA Penalty Risk Assessment to learn if they will be deemed by the IRS to be considered to be ALEs and are at risk of receiving ACA penalties from the IRS. Some outside experts may offer to undertake this assessment at no cost to employers. Such a review can reap dividends by helping organizations to avoid significant IRS ACA penalties.
To learn more about ACA compliance for the 2019 tax year, click here.
For ACA reporting deadlines in 2020 for the 2019 tax year, organizations should review this link for important dates and requirements.
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