IRS Releases Final Instructions for Forms 1094-C, 1095-C, 1094-B and 1095-B

On Oct. 3, 2017, the IRS released final instructions related to IRC Sections 6055 and 6056 reporting. The 2017 instructions appear to have no substantial changes from the 2016 instructions, and the final forms were reported on in the Oct. 3, 2017, edition of Compliance Corner. For example, the multiemployer interim relief rule remains in place for applicable large employers that contribute to a multiemployer plan.

The most notable change is that no Section 4980H transition relief is available beginning with the 2017 reporting year. Thus, all references to such relief have been removed. Specifically, boxes B and C on Line 22 of the Form 1094-C (which were previously used to claim transition relief) have now been marked as “reserved.” Similarly, column (e) of Part III of the Form 1094-C has also been marked “reserved.”

Here are some other minor changes from last year:

  • Updates have been made to references for items that have been adjusted for inflation, such as the affordability percentage (9.69 percent for 2017).
  • There is new language in the instructions for Forms 1094-C and 1095-C in the section regarding corrected returns that may cause confusion for employers (please see our Sept. 6, 2017, Compliance Corner for additional information). It states that an incorrect entry of the employee’s cost of coverage on Line 15 would not necessitate a corrected filing if the entry differs from the correct amount by $100 or less. This safe harbor is based on guidance provided in IRS Notice 2017-9 for certain de minimis errors.
  • The IRS provides clarification for Form 1095-C that there is no specific code to enter on Line 16 to indicate that a full-time employee who was offered coverage either did not enroll in the coverage or waived the coverage. This is consistent with the previous interpretation, which generally instructed that the line either be left blank or be completed with an affordability safe harbor code, as applicable.
  • In Part II of the Form 1095-C, it was anticipated that the “Plan Start Month” box would be mandatory for 2017. In the final version of the instructions, the box remains optional for 2017.

Importantly, the final instructions provide no mention of relief from penalties for a good faith compliance effort. This is similar to the 2016 version of the instructions. However, the IRS later provided such relief through communication on their website in regards to the 2016 reporting year. While the IRS could potentially provide a similar communication closer to the 2017 filing deadlines, employers should assume for now that no such good faith relief will be available.

As a reminder, Forms 1094-B and 1095-B (the forms used for Section 6055 reporting) are required of insurers and small self-insured employers that provide MEC. These reports will help the IRS administer and enforce PPACA’s individual mandate. Form 1095-B, the form distributed to the covered employee, will identify the employee, any covered family members, the group health plan and the months in 2017 for which the employee and family members had MEC under the employer's plan. If the plan is fully insured, Form 1094-B identifies the insurer (for a fully insured plan) or the employer (for a self-insured plan) and is used by the insurer to transmit corresponding Forms 1095-B to the IRS.

Additionally, PPACA requires all employers with 50 or more full-time-equivalent employees to file Forms 1094-C and 1095-C with the IRS and to provide statements to employees to comply with IRC Section 6056 (meant to help the IRS enforce the PPACA’s employer mandate). Specifically, large fully insured employers will need to complete and submit Forms 1094-C and 1095-C (Parts I and II). Large self-insured employers, which are subject to both Sections 6055 and 6056, may combine reporting obligations by using Form 1094-C and completing all sections of Form 1095-C (Parts I, II and III). Small self-insured employers would need to file Forms 1094-B and 1095-B. Employers with grandfathered plans must comply with the reporting requirements as well.

Finally, the due dates for 2017 employer reporting are:

  • Jan. 31, 2018, to provide 2017 information returns to employees or responsible individuals.
  • Feb. 28, 2018, for paper filings with the IRS of all 2017 Forms 1095-C or 1095-B, along with transmittal Form 1094-C or 1094-B. Employers filing fewer than 250 forms may file by paper or electronically.
  • April 2, 2018, for electronic filings with the IRS of all 2017 Forms 1095-C or 1095-B, along with transmittal Form 1094-C or 1094-B. Employers filing 250 or more forms must file electronically with the IRS.

Instructions for Forms 1094-B and 1095-B »
Instructions for Forms 1094-C and 1095-C »