The IRS recently published the draft instructions for the 2020 Forms 1094-C and 1095-C. As a reminder, applicable large employers (ALEs) are responsible for completing this reporting by the following deadlines:
- Furnishing deadline for 2020 Forms 1095-C is March 2, 2021 (extended from January 31, 2021 per IRS Notice 2020-76).
- Filing deadline for 2020 Forms 1094-C and 1095-C is February 28, 2021, for paper filings, and March 31, 2021, for electronic filings.
These draft instructions contain important new reporting requirements. First, the plan start month of an ALE’s group health must now be reported on Form 1095-C, whereas in prior reporting years this information was optional. In general, ALEs will report the two-digit number (01 – 12) that corresponds to the calendar month in which the plan year of the health plan offered to the employee begins. The instructions also explain how this reporting is impacted when no plan is offered and when multiple plan years could apply.
Second, ALEs who offered individual coverage health reimbursement arrangements (ICHRAs) during the 2020 calendar year will have additional reporting requirements on Form 1095-C. As background, ICHRAs became available to employers of any size as a means to reimburse employees for costs associated with individual policies or Medicare for plan years beginning on or after January 1, 2020. ALEs offering ICHRAs during the 2020 calendar year must reporting the following additional information on Form 1095-C:
| Form 1095-C Location | Reporting Description |
|---|---|
| Part II Heading | The employee’s age as of January 1, 2020 |
| Part II, Line 14 | The applicable offer code that corresponds to the type of ICHRA offered to the employee (1L – 1S) |
| Part II, Line 15 | The employee required contribution amount for the ICHRA, as defined in the instructions, when offer codes 1L – 1Q are reported |
| Part II, Line 17 | The zip code used for identifying the lowest cost silver plan and calculating the employee required contribution reported in line 15 when offer codes 1L – 1Q are reported, which will either be the zip code of the employee’s residence or the employee’s primary site of employment |
The IRS has been actively enforcing the Form 1094-C and 1095-C reporting requirements against ALEs by assessing reporting penalties, which are generally $280 per reporting failure for forms required to be filed in 2021 for the 2020 calendar year. Thus, it is imperative that ALEs ensure they have a solution in place to accurately and timely complete these reporting requirements.
ETC will continue to monitor the release of any final forms and instructions as they become available. If you would like more information about these ALE reporting requirements, ETC Companies has resources to help.