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What it Takes to Complete the 1095-C for Mandatory ACA Reporting

Published on 2/26/2016 12:00:00 AM
What it Takes to Complete the 1095-C for Mandatory ACA Reporting

To satisfy the reporting requirements effective this 2016 tax-filing season, fully insured and self-insured applicable large employers must complete Form 1095-C (and the 1094-C transmittal form).

Similar to W-2s and 109​9s, this involves distributing employee statements by one date, followed by filing with the IRS (either by paper or electronically) by a second date. (See filing deadlines here.) Here’s some insight on how to manage the process.

Gathering data for 1095-C completion

Before you can sit down with the actual forms and start the filing process, you must gather certain employee data. And because nothing is simple, you’ll need to tap a few different departments or sources to do this, including HR, benefits, payroll and your time-tracking system.

The information you’ll need to complete the forms includes:

Total employee count based on hours of service (including full-time and full-time equivalents)– Most likely pulled from payroll or time-tracking system
Employee name, Social Security number and address - Most likely pulled from HR records
Health coverage offered
Employee share of the lowest-cost monthly premium for self-only coverage
Months the employee was enrolled in coverage
Affordability safe harbor provisions or other relief
If self-insured, information about the covered individuals, including Social Security numbers and months of coverage – Most likely pulled from HR records and benefits

This information correlates with the parts of the 1095-C as follows:

Part 1 is where you enter identifying information for the employee, such as name, address and Social Security number – and identifying information for you, the employer, such as name, address and Employer Identification Number.

Part 2 is all about the offer of coverage. In the three lines here, you’ll enter information about the health coverage offered by month (if any), the cost of the cheapest monthly premium the employee could have paid for self-only coverage and the months you met an affordability safe harbor.

If you’re self-insured, Part 3 is about the health insurance that was supplied to all covered individuals – including spouses, dependents, retirees and COBRA enrollees. You’ll need Social Security numbers or, if these numbers aren’t available, date of birth. This information isn’t completed by insured employers because it’s captured separately, by the health insurance providers themselves, through the 1095-B.

Pointers for Line 14 on the 1095-C

The bulk of the work in completing the 1095-C will be with Lines 14-16 in Part 2. Although the subject is too complex to cover fully in this article, keep in mind:

The “Offer of Coverage” on Line 14 -- which involves nine codes -- describes whether or not minimum essential coverage was offered to an employee. This is all about the offer and not necessarily the actual coverage.

Quick tip: If one code applies for the entire 12 months, you only need to enter it once in the “All 12 Months” column.

Pointers for Line 15 on the 1095-C

On Line 15, you’re reporting the employee share of the lowest-cost monthly premium for self-only coverage. This helps the IRS determine if affordable coverage was made available to the employee. You’ll only fill out this section if you entered code 1B, 1C, 1D or 1E on Line 14. Include cents with this figure and don’t round numbers.

Also, if you entered 1A on Line 14, nothing needs to be entered here – or on Line 16. Code 1A indicates you made a qualified offer and, in turn, don’t need a safe harbor or other relief.

Pointers for Line 16 on the 1095-C

Line 16 -- which involves nine codes again – are safe harbor codes that indicate whether an individual was employed during the month, whether the employee was eligible and/or enrolled in coverage, and if any affordability safe harbors or other relief apply.

In a nutshell, you’re giving the IRS a reason why you shouldn’t be penalized under the Employer Shared Responsibility provision. Again, you only fill this out if a code applies to the employee for any particular month.

Get clear direction before the deadlines hit

For the actual reporting process, the IRS estimates that it will take 12 minutes per form. This is a new process for everyone involved, though, so you should anticipate a bigger investment of time and resources – at least this first year.

Need help making sense of it all? Check out our upcoming webinar, Simplifying ACA Compliance, for more information on the new ACA reporting requirements – and guidance on how to gather the necessary employee data and complete the 1095s.

Jaime Lizotte
Presented by: Jaime Lizotte,
HR Solutions Manager
Hiring, recordkeeping, time and attendance tracking, employee discipline, filing 1099 and W2s ... all of these tasks create overhead expenses and detract from revenue-generating activities.