Basics of Employer Reporting

1. What forms must an ALE member file with the IRS to report the required information under sections 6055 and 6056?

The section 6056 regulations provide, under the general method of reporting, that an ALE member must file a separate Form 1095-C (or a substitute form) for each of its full-time employees, and a transmittal on Form 1094-C (or a substitute form) for all of the returns filed for a given calendar year. These forms must be filed regardless of whether the ALE member offers coverage, or the employee enrolls in any coverage offered. A more complete discussion of the information that must be reported to the IRS (including simplified methods of reporting) can be found in the final section 6056 regulations, in the final section 6055 regulations, and in the instructions to Form 1094-C and Form 1095-C.

The section 6056 return (and, if the employer maintains a self-insured plan, the section 6055 return) also may be made by filing a substitute form, but the substitute form must include all of the information required on Form 1094-C and Form 1095-C and satisfy all form and content requirements as specified by the IRS.

 

2. For which employees must an ALE member file Form 1095-C?

Generally, an ALE member must file Form 1095-C (or a substitute form) for each employee who was a full-time employee of the ALE member for any month of the calendar year.

In addition, an ALE member that sponsors a self-insured plan must file Form 1095-C for each employee who enrolls in the self-insured health coverage or enrolls a family member in the coverage, regardless of whether the employee is a full-time employee for any month of the calendar year.

 

3. What information must an ALE member furnish to its full-time employees?

An ALE member must furnish to each full-time employee a completed Form 1095-C (or a substitute form). This form must be furnished regardless of whether the ALE member offers coverage, or the employee enrolls in any coverage offered. An ALE member is not required to furnish to its full-time employees a copy of Form 1094-C as filed with the IRS.

A substitute form must include the information on Form 1095-C and must comply with generally applicable requirements for substitute forms.

 

4. For which employees is an ALE member not required to file a Form 1095-C?

Form 1095-C is not required for the following employees (unless the employee or the employee’s family member was enrolled in a self-insured plan sponsored by an ALE member):

an employee who was not a full-time employee in any month of the year; or an employee who was in a limited non-assessment period for all 12 months of the year (for example, a new variable hour employee still in an initial measurement period). See the definition of Limited Non-Assessment Period in the instructions to Form 1095-C for more details.

 

5. Which ALE members should complete Part III of Form 1095-C?

An ALE member that sponsors a self-insured health plan should complete Part III of Form 1095-C for employees and family members who enroll in the self-insured coverage.

If an ALE member sponsors a health plan that includes self-insured options and insured options, the ALE member should complete Part III of Form 1095-C only for employees and family members who enroll a self-insured option.

An ALE member that offers coverage through an employer-sponsored insured health plan (and does not sponsor a self-insured health plan) should NOT complete Part III. Instead, information about coverage will be furnished to employees on Form 1095-B, which is filed by the insurance provider.

 

Reporting Offers of Coverage and other Enrollment Information

6. How should an ALE member report whether an offer of coverage was made to an employee for a calendar month?

The ALE member uses line 14, Offer of Coverage, in Part II of Form 1095-C to report whether an offer of coverage was made to an employee for each month of the year. An offer of coverage is considered to have been made for a month only if the coverage offered would provide coverage for every day of that month. The ALE member should enter the appropriate indicator code to indicate what type of coverage, if any, was offered to the employee for that month (for example, employee-only coverage, employee and dependents coverage, employee, spouse and dependents coverage, etc.). However, see questions 7 and 8 below for more information about reporting offers of coverage for the months in which an employee is hired or terminated

 

7. How should information about the offer of coverage for the month in which an employee is hired be reported on Form 1095-C?

For the first month of employment, the ALE member should report that the employee was not offered coverage for that first month by entering code 1H, No offer of coverage, on line 14 (unless the offer of coverage extended to every day of that month). For example, if a newly-hired employee starts employment on the 10th of a calendar month, with the offer of coverage (if accepted) providing coverage also starting on the 10th of a calendar month, the ALE member should indicate that the employee was not offered coverage for that first month.

Note, however, that the ALE member may be entitled to relief from section 4980H liability for that month. For instance, the first three months after an employee first becomes a full-time employee may be treated as a limited non-assessment period if all applicable conditions are satisfied, which would be reported as code 2D, Employee in a section 4980H(b) Limited Non-Assessment Period, on line 16. If applicable, the employer should insert the appropriate indicator code on line 16 for that month to reflect the applicable relief from section 4980H.

On Part III of Form 1095-C, an ALE member should report an individual as having coverage under the plan for the calendar month if the individual was covered for any day of the calendar month. Accordingly, if the ALE member offers a self-insured health plan, and the employee enrolls in the plan and obtains coverage for any day during the first month of hire, the employee (and any other individuals such as spouses and dependents who obtained coverage through the employee’s enrollment) should be reported as having coverage for that month under Part III of Form 1095-C.

 

8. How should information about the offer of coverage for the month in which an employee terminates employment be reported on Form 1095-C?

As discussed in the question above, an ALE member reports that an employee was offered coverage for a month under Part II of Form 1095-C only if the offer of coverage would provide coverage for all days of the calendar month. Accordingly, if an employee terminates employment [with an ALE member] on any day other than the last day of a month and the coverage or offer of coverage expires upon termination of employment, the ALE member should report that the employee was not offered coverage for that final month of employment by entering code 1H, No offer of coverage, on line 14.

If the coverage or offer of coverage would have continued if the employee had not terminated employment during the month, the ALE member will be eligible for relief under section 4980H for that employee’s last month of employment. In that case, the ALE member should enter code 2B, on line 16 for that month. See the instructions for Forms 1094-C and 1095-C for more information on reporting for a terminated employee and the use of indicator codes.

 

9. Is an ALE member required to enter a code in line 16, Applicable Section 4980H Safe Harbor, of Form 1095-C?

No. An ALE member is not required to make an entry on line 16 of Form 1095-C. However, an ALE member can use line 16 to indicate whether the ALE member qualifies for an exception from the assessable payment under section 4980H(b) for a given month. An ALE member should enter the appropriate code on line 16 if any.

 

10. How should an employer report enrollment information for self-insured coverage provided to an individual who was not an employee on any day of the calendar year, such as a non-employee COBRA beneficiary (for example, the former spouse of an employee), member of the board of directors, or retired employee?

An employer that sponsors a self-insured health plan may report enrollment information for individuals who were not employees on any day of the calendar year by entering code 1G, Offer of coverage to employee who was not a full-time employee for any month of the calendar year, on line 14 of Part II of Form 1095-C for all twelve months and completing Part III of Form 1095-C. (Note, however, that Form 1095-C requires the recipient’s Social Security number (SSN) on line 2 in all instances, so Form 1095-C cannot be used for covered individuals who have not provided a SSN to the employer regardless of whether the employer has requested the information.) Such individuals might include a non-employee director, a terminated employee receiving COBRA coverage who terminated employment in a previous calendar year, a retired employee who terminated employment in a previous calendar year, or a family member (including a surviving spouse or dependent) of such an individual if the family member is receiving coverage independent of the individual, such as by electing individual COBRA continuation coverage. All family members of the individual who are covered individuals due to that individual’s enrollment (for instance, a spouse of a retiree who is enrolled in the plan because the retiree elected self plus spousal coverage) should be included on the same Form 1095-C as the individual who enrolls in the coverage.