United States: ACA Reporting Update: New Forms, Higher Penalties & Other Guidance

With the impending deadline early next year, most applicable large employers are (or should be) in the process of gearing up for what is perhaps the biggest Affordable Care Act ("ACA") compliance challenge this year — the information reporting requirements found in Sections 6055 and 6056 of the Internal Revenue Code (the "Code") (details of which can be found here).  Many employers are finding that properly programming their systems to track the data necessary to complete the forms is a lengthy, time consuming and complicated process.  As they work with their vendors and internal resources to prepare to meet their obligations, employers should be aware that over the last few months, the stakes have been raised by new legislation and there has been some additional guidance as to completion of the forms.

A brief description of recent developments related to ACA reporting is provided below.

  1. IRS Releases New Draft Forms.  Despite releasing "final" forms and instructions in February 2015, the IRS released new draft forms in June 2015.  The changes were, for the most part, minimal.  For example, the new draft Form 1095-B now has an additional page so that more covered individuals can be listed.  The new draft Form 1094-C has been renumbered so that Item 19 is now in Part I of the form.  Form 1095-C has been revised to include a box for the employer to indicate the first month of the plan year.  Completing this new box, which is optional for 2015 reporting, will assist employers sponsoring plans with non-calendar plan years.Finally, the IRS indicated that for 2016 reporting, new indicator codes will be established to require employers to report conditional offers to spouses.  A conditional offer is one that is subject to a reasonable, objective condition, such as offering coverage upon certification that the spouse does not have group health coverage available from another employer.  Currently, the instructions to Form 1095-C provide that a conditional offer such as this should be treated as an offer for reporting purposes only.  However, the new indicator codes are needed so that the IRS can determine whether the spouse should be eligible for a premium tax credit.
  2. Trade Legislation Increases Reporting Penalties.  In July 2015, Congress passed, and the President signed, the Trade Preferences Extension Act of 2015.  Among other things, the new law increased the statutory penalties for failing to file information reporting forms with the IRS or failing to provide copies of these forms to employees.  The ACA reporting forms are subject to these penalties.  The chart below reflects the increased penalties.

    Reason for Penalty Standard Penalty Maximum Penalty
    Forms filed or provided late, but within 30 days $50 per report(previously $30 per report) $500,000(previously $250,000)
    Forms filed or provided late, but by August 1 $100 per report(previously $60 per report) $1,500,000(previously $500,000)
    Forms filed or provided late, but after August 1, or not filed at all $250 per report(previously $100 per report) $3,000,000(previously $1,500,000)

    If necessary, employers can request a 30-day extension to file the forms.  Otherwise, penalty relief for late reports is subject to a reasonable cause standard.  Also, for 2015, the IRS will not assess a penalty for an incorrect report as long as the report is timely filed and the employer attempted in good faith to complete the report correctly.  In future years, incorrect filings will be subject to a reasonable cause standard.
  3. IRS Q&As Provide Special Rules for COBRA Offers.  In May 2015, the IRS released Questions & Answers ("Q&As") providing additional guidance on Form 1095-C, the form on which employers will use indicator codes to report offers of, and enrollment in, coverage.  Among other things, the Q&As provided special rules relating to the coding for offers of COBRA coverage.  When an offer of COBRA coverage is made to a former employee as the result of a termination from employment, the employer should indicate on Form 1095-C that an offer of coverage was made only if the former employee actually elects to enroll in the coverage.  The reason for this is that the IRS does not want to disqualify a terminated employee from a premium subsidy based on an offer of COBRA coverage that was not accepted. However, when an offer of COBRA coverage is made to an employee due to a reduction in hours, the employer should indicate on Form 1095-C that an offer of coverage was made whether or not the employee elects to enroll in the coverage.  In this situation, the cost used to determine affordability should be the employee's self-only COBRA premium or contribution.  Employers should be aware that a loss of coverage due to a reduction in hours could trigger a penalty under Code Section 4980H(b).  This would happen if the affected employee was determined to be full-time based on the look-back measurement method and the reduction in hours occurred during the applicable stability period.  In most circumstances, employees are required to pay a COBRA premium or contribution equal to 102% of the cost of coverage, which would usually exceed the affordability threshold for purposes of Code Section 4980H.  Although the offer of COBRA coverage would prevent a penalty under Code Section 4980H(a), the employee could reject the COBRA coverage and obtain a premium subsidy when Marketplace coverage is purchased.  This would trigger the penalty under Code Section 4980H(b).

Over the next few months, it is anticipated that the IRS will issue additional guidance related to these reporting requirements.  As this additional guidance is released, employers should consider whether any adjustments are needed to their programming.  Of course, given the complexities involved with these requirements, employers should seek the assistance of counsel to make sure the forms are properly completed.

ACA Reporting Update: New Forms, Higher Penalties & Other Guidance

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.