United States: Health Care Reform Reporting Is Coming: Is Your Company Prepared?

For months, large employers and health coverage issuers have been working to understand—and prepare for—their healthcare reporting duties under the Affordable Care Act (ACA). As we previously reported in Issue 92 ( link), in February the IRS released final instructions and Forms 1094-B, 1095-B, 1094-C, and 1095-C for optional ACA reporting on coverage offered in 2014, but even that guidance left many important questions unanswered, effectively stymying reporters' preparation efforts. Finally, just months before the reporting due dates, the IRS released final instructions and forms for mandatory ACA reporting on coverage offered in 2015.

This client alert presents a high-level, non-exhaustive checklist of action items for employers preparing to report, and briefly discusses notable changes in the final instructions for issuer reporting.

Form 1094-C and 1095-C Reporting

Applicable large employers (ALEs) must file annual ACA reports with the IRS providing information on offers of coverage made to full-time employees, using IRS Forms 1094-C and 1095-C.

Determine ALE Status

The ACA defines an ALE as having an average of at least 50 full-time or full-time equivalent employees. For employers with 50-99 full-time or full-time equivalent employees, there is transition relief available from the Employer Mandate for 2015, but such employers must still complete Forms 1094-C and 1095-C.1

Related employers within a controlled group need to be aggregated for determining the number of "full-time" or "full-time equivalent employees" employed by an ALE for the purpose of determining ALE status (for example, if a parent company has 80% or more ownership interest in a subsidiary). The final instructions refer to these corporate families as an Aggregated ALE Group and each ALE within the Aggregated ALE Group is an ALE Member.

Each employer with a separate employer identification number (EIN) that is an ALE or an ALE Member is responsible for reporting. In some cases, related employers with separate EINs participate in the same self-funded group health plan. Despite having a single self-funded group health plan providing the coverage, Form 1094-C and 1095-C will need to be completed for each employer EIN for the full-time employees of that employer. Each ALE will also need to report the names and EINs of other entities in the ALE's controlled group (referred to as the Aggregated ALE Group) on Form 1094-C.

The final 2015 instructions clarify that, when an employer is determining whether it is subject to the employer shared responsibility rules (the "Employer Mandate") , it should disregard an employee for any month in which the employee is covered under TRICARE or Veterans Administration coverage, consistent with The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015.

Decide Whether to Outsource ACA Reporting

Employers need to collect a significant amount of data and information from payroll, employee benefits departments, benefit enrollment systems, and third party vendors. All this information will need to be compiled onto the Form 1094-C and Form 1095-C. Accordingly, Employers will need to decide if they have the resources internally to complete this undertaking or whether they need to engage a third party to prepare the ACA reports.

For those employers that intend to outsource the ACA reporting, third party vendors will need to be selected immediately and contracts finalized to allow enough time to load workforce data and test the program software for preparing Forms 1094-C and 1095-C, if needed.

Consult Advisors Regarding Reporting Questions

The rules for ACA reporting are quite detailed, and different reporters might be subject to different special rules (many of which are beyond the scope of this alert). ALEs would be wise to ramp up their reporting preparation efforts, if they have not already done so, and to review the following guidance with their advisors, staff, and vendors:

Develop a Plan for Filing IRS Reports and Furnishing Statements to Individuals

The Forms 1094-C and 1095-C for the 2015 calendar year need to be filed with the IRS by February 29, 2016, if filing on paper, or March 31, 2016, if filing electronically. Employers will need to furnish the Form 1095-C to each full-time employee by February 1, 2016.

Both sets of final 2015 instructions provide details on the procedures for obtaining extensions of the IRS filing deadline2 or the deadline to furnish statements to individuals, obtaining waivers of the electronic filing requirement, filing substitute returns with the IRS or providing substitute statements to individuals, and filing corrected forms. Note that certain procedures (e.g., submitting the request for a waiver of the electronic filing requirement) would need to be completed, if at all, before the deadlines for furnishing statements to individuals or filing forms with the IRS.

Electronic filing is required if the employer files at least 250 returns. If an ALE must file electronically, we suggest that its software programmers and reporting staff consult and review IRS Publication 5165 (Guide for Electronically Filing Affordable Care Act Information Returns for Software Developers and Transmitters) (Early Look for Processing Year 2016); IRS Publication 5164 (Test Package for Electronic Filers of Affordable Care Act Information Returns); and various guidance on electronic filing and important software requirements, available online at https://www.irs.gov/for-Tax-Pros/Software-Developers/Information-Returns/Affordable-Care-Act-Information-Return-AIR-Program.  It is important for reporters to review the instructions for registering for the AIR electronic filing system and applying for a "Transmitter Control Code," which must be received in the mail before the reporter can file Forms 1094-C or 1095-C electronically; the same applies to health coverage issues required to file Forms 1094-B and 1095-B electronically.

Lastly, if the ALE is thinking about using substitute forms and statements, it should review IRS Publication 5223 with its vendors and advisors.

Decide Who was a Full-time Employee for at Least One Month of the Year

Each ALE member must file a Form 1095-C for (i) each employee who was a full-time employee for any month of the calendar year (see Issue 77 (link)), and (ii) for any employee who enrolls in self-funded coverage, whether or not full-time for any month.

Generally, ALEs should work to identify full-time employees, using the ALE's chosen method for determining full-time status under the ACA, in advance of the ACA reporting deadline. Doing so will confirm who must receive Form 1095-C and will enable the ALE to complete Form 1094-C. ALEs must report their total employee and total full-time employee counts for each month on Form 1094-C based on a consistent "snapshot" methodology (e.g., on the first day of the month, last day of the month, etc.). The methodology has been revised in the final 2015 instructions to allow employers to base their employee count on the number of employees as of the 12th day of each month.

This step does not apply if the employer is eligible for the 98 percent offer rule described in the instructions for Forms 1094-C and 1095-C.

Determine the Types of Coverage Offered and How Each Type Should be Reported

ALE with Employees Covered under a Self-Insured Plan. An ALE that offers medical coverage through a self-insured health plan sponsored by the employer must complete Form 1095-C, Parts I, II, and III, for any employee who enrolls in the health coverage, whether or not the employee is a full-time employee for any month of the calendar year. In addition, the Form 1095-C will need to be completed for each full-time employee.

ALE with Employee Covered under an Insured Medical Plan. An ALE that offers medical coverage through an insured group health plan sponsored by the employer will need to complete Form 1095-C, Parts I and II. The employer should not complete Part III.

ALE with Employees Covered under a Multiemployer Plan. Employers relying on the multiemployer plan interim rule relief for a given month complete Form 1095-C, Parts I and II and, in Part II, will enter 1H on line 14, skip line 15, and report  2E on line 16, without regard to whether the employee was eligible to enroll or enrolled in coverage under the multiemployer plan. The instructions for line 16 create an exception to the 2C enrollment code for the 2E multiemployer interim rule relief code. While the IRS may change the requirements for reporting multiemployer plan coverage for 2016 and future years, the instructions for 2015 resolve much of the ambiguity that has been plaguing multiemployer plans about the need to exchange data with employers.

Nevertheless, it is important to note that the streamlined reporting scheme described above requires that the employer must be eligible for the multiemployer plan transition relief rule. Employers might still need to obtain offer and enrollment information from the multiemployer plan if there are full-time employees who receive offers of coverage but (a) the employer has no obligation to contribute on their behalf, (b) they are offered coverage that is not affordable, (c) they are offered coverage that does not provide minimum value, or (d) they are offered coverage that does not cover eligible individuals' dependent children. The IRS and HHS still have not provided any guidance on HIPAA issues that could arise if such a data exchange between multiemployer plans and contributing employers were required.

Individuals Eligible for COBRA

The final 2015 instructions state that, when a former employee terminates employment, an offer of COBRA coverage upon termination of employment should not be reported as an offer of coverage--regardless of enrollment. This is a change from prior IRS guidance that suggested that an offer of COBRA coverage upon termination should be reported as an offer of coverage if the employee actually enrolled in COBRA. However, the final instructions do not change prior IRS guidance regarding COBRA coverage offers due to a reduction in hours (such offers are reported in the same manner as an offer of that type of coverage to any other active employee).


The instructions also reflect applicable tax reporting penalties effective for 2015 filings which, if assessed, apply in addition to the Employer Mandate penalties that would be assessed under the ACA. Note that ACA reporting penalties may be reduced or waived for failures that are due to reasonable cause or that are timely corrected.

Additionally, penalties will not be assessed for 2015 ACA reports as long as the entities responsible for reporting show they made good faith efforts to comply with the new ACA reporting requirement. Importantly, this short-term penalty relief is available only for incorrect or incomplete information provided on 2015 reports and statements, and not for a failure to timely file an information report or furnish a statement.

Form 1094-B and 1095-B Reporting

Issuers of minimum essential coverage (MEC), such as health insurance issuers, sponsors of self-insured health plans, governments, and other persons that provide MEC to individuals, must prepare annual ACA reports reflecting enrolled individuals' months of coverage.

Most issuers will fulfill their reporting obligations by using Forms 1094-B and 1095-B (though applicable large employers sponsoring self-insured coverage can use Forms 1094-C and 1095-C). The 2015 Forms 1094-B (https://www.irs.gov/pub/irs-pdf/f1094b.pdf)  and 1095-B (https://www.irs.gov/pub/irs-pdf/f1095b.pdf)  are largely unchanged from their 2014 counterparts. The 2015 instructions (https://www.irs.gov/instructions/i109495b/index.html ) for those forms, however, address a few issues that were not clear in the 2014 instructions.

Coverage Under Multiple Types of MEC

Notably, the instructions to Forms 1094-B and 1095-B clarify certain special reporting rules that apply where an individual is covered by multiple types of MEC. There are two situations where only one type of MEC would need to be reported:

  • the individual is covered by more than one type of MEC provided by the same provider (an example would be a selfinsured employer-sponsored health reimbursement arrangement, or "HRA," and a self-insured group health plan sponsored by the same employer); or
  • the individual is eligible for one type of MEC only if he or she is covered by other MEC for which reporting is required (as an example, an employer offers an HRA for which an individual is eligible only if he enrolled in the insured major medical plan; the employer does not need to report the HRA coverage for an individual covered by both arrangements).

Reporting Taxpayer Identification Numbers and Social Security Numbers

The final instructions to Forms 1094-B and 1095-B clarify that Form 1095-B furnished to recipients may truncate social security numbers (SSNs), taxpayer identification numbers (TINs), or the employer's employer identification number (EIN), but not the filer's EIN. Until final guidance is issued, a reporter will not be subject to penalties for failure to report a TIN if the reporter complies with the regulatory procedures for soliciting TINs, with certain modifications described in detail in IRS Notice 2015-68.

"Responsible Individual" Defined

The instructions, oddly, removed the relatively straightforward definition of a "responsible individual" that existed in the 2014 final instructions ("A responsible individual may be a primary insured employee, former employee, parent, uniformed services sponsor, or other person enrolling individuals in coverage") and replaced it with a circular one:

The "responsible individual" is the person who, based on a relationship to the covered individuals, the primary name on the coverage, or some other circumstances, should receive the statement. Generally, the statement recipient should be the taxpayer (tax filer) who would be liable for the individual shared responsibility payment for the covered individuals, if that person is known. . . .

Operationally, we do not believe this revised instruction significantly expands or contracts the universe of responsible individuals for whom the Plan must report, given that the preamble to the regulations under Section 6055 makes clear that "[a] responsible individual is a primary insured, employee, former employee, uniformed services sponsor, parent, or other related person named on an application who enrolls one or more individuals, including him or herself, in minimum essential coverage." 79 Fed. Reg. 13220 (March 10, 2014).

Summing It All Up

Though the final 2015 instructions for Forms 1094-B, 1095-B, 1094-C, and 1095-C have provided some welcome clarity, the reporting rules are still relatively new. As the deadlines to furnish statements and file reports are rapidly approaching, now is the time for employers and issuers alike to organize their data and plan for compliance.


1 Employers that are not ALEs but sponsor self-insured health plans would still have reporting obligations as health coverage issuers under Section 6055, as explained below.

2 Proposed regulations issued on August 13, 2015 potentially make the procedures for obtaining extensions of the deadlines to file Forms 1094-C, 1095-C, and 1095-B stricter than the procedures currently described in the draft 2015 instructions. The Treasury is soliciting comments on those proposed regulations until November 2015; once finalized, they would become effective no earlier than January 1, 2018.

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.

Similar Articles
Relevancy Powered by MondaqAI
Foley & Lardner
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Foley & Lardner
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions