What's New on the 2016 1095-C and 1094-C?
Good news! The IRS received and applied some of the feedback they received on simplifying the 1095-C.
Bad news—you still have to file.
But hey, let’s celebrate the small victories. As of late September, the 2016 Instructions for Forms 1095-C and 1095-C are available at irs.gov. If you are filing in-house, I definitely recommend printing and reading the instructions.
But, for a quick reference, here are some of the highlighted changes you will find on the forms.
2016 Changes to Form 1095-C
- Code 1I for line 14 and 2I for line 16 are “no longer applicable” as they dealt with 2015 Transition Relief. They are marked in the instructions as “reserved”
- New Codes 1J and 1K have been added for line 14. Of note, these are similar to codes 1D and 1E, with the difference being that at least a “conditional offer of coverage” has been extended to a spouse.
- So what’s a “conditional offer of spousal coverage” you ask? Per the new instructions, “A conditional offer is an offer of coverage that is subject to one or more reasonably objective conditions.” For example, if the employer extends the coverage offer to a spouse under the condition that she is not Medicare eligible or offered coverage through a group health plan elsewhere, then the employer would use conditional codes 1J or 1K.
- So do the new line 14 codes affect line 15? Yes they do. Where in 2015, you would only enter a value into line 15 when using code 1B, 1C, 1D, or 1E in line 14, in 2016 you will also enter a value into line 15 when using new codes 1J and 1K.
- There is also a small wording change in Part III. Last year, many self-insured emplyoers were confused whether or not to list the employee reported on amongst the covered individuals in Part III. For example, many though, “If Bob Smith is the employee reported on, and I have Bob’s information in Part I of the 1095-C, do I still need to list Bob on Part III as a covered individual with his dependents, or is that implied? The answer is “Yes”, and there is now wording to clarify that on the form.
2016 Changes to Form 1094-C
- Because “only limited Transition Relief” applies for 2016, line 22, Box B does not apply and is marked “reserved”.
- In Part III, line b, the language “Section 4980H” has been added to the form. In doing so, the IRS is saying, “We don’t care about how you internally classify your employees as full-time, we want you to report the number of full-time employees for each month based on our IRS definition outlined in Section 4980H.”
- Further clarification has been given for Part IV of the 1094-C, stating that the reporting ALE should not include it’s name amongst the list of employers in the Aggregate Group. For example, if employers A, B, and C were part of an Aggregate Group, and employer A is filing the report, only employers B and C will be listed in Part VI of the 1094-C.
So hey, that wasn’t so bad. Keep in mind, employers delivering 1095-Cs to their employees for the 2016 Reporting Year must do so by January 31, 2017. That does not leave a lot of time, so take steps now to ensure that all data (addresses, dependents, SSNs) are up-to-date no later than December 1. Otherwise you’ll be chasing data while you build the forms.
Finally, on the social security numbers—the IRS will be cross-referencing the SSNs on the forms with the corresponding SSN in the Social Security Administration’s records. Employers should ensure that the SSNs that they use on the forms match those on employees’ Social Security Cards. Also, employers must have documented evidence that they made three separate attempts no more than 75 days apart to solicit Social Security Numbers from their employees. Build the audit trail as you go along, and you won’t have to worry when you’re called to verify your attempts.