IRS has released the final forms and instructions for satisfying the reporting requirements of the Affordable Care Act (“ACA”). In particular, the final instructions offer guidance on how applicable large employers (“ALEs”) should complete Form 1095-C for full-time employees for whom they make multiemployer plan contributions.
Background. ALEs must complete IRS Form 1095-C in order to demonstrate compliance with the ACA’s employer shared responsibility rules. The 2014 version of the Instructions for Forms 1094-C and 1095-C (“Instructions”) required ALEs that contribute to a multiemployer plan on behalf of full-time employees (“contributing employers”) to obtain information from the multiemployer plan about covered employees. In addition to creating a myriad of logistical problems for contributing employers, this created compliance concerns regarding the HIPAA privacy rules.
IRS’s 2015 Draft Instructions. As a solution, the IRS’s 2015 draft Instructions directed contributing employers to use Code 1H (“no offer of coverage”) on Form 1095-C, Line 14 for any month in which the employer claimed the multiemployer plan transition relief made available in the preamble to the final Code § 4980H regulations.
(Note: The multiemployer plan transition relief provides that a contributing employer is treated as offering coverage, and generally protected from a penalty, if the following three criteria are met: (i) the employer is required to contribute to a multiemployer plan on behalf of an employee pursuant to a collective bargaining agreement; (ii) coverage is offered under the multiemployer plan to employees who meet the plan’s eligibility rules; and (iii) the coverage offered by the plan is affordable and provides minimum value.)
The 2015 draft Instructions further advised contributing employers to enter Code 2E (“multiemployer interim rule relief”) on Form 1095-C, Line 16. Some contributing employers, however, were confused by this direction based on the instruction to use Code 2C as the default entry for Line 16 when more than one code might apply.
Completing Form 1095-C. The final 2015 Instructions resolve employers’ confusion over when Code 2E is the appropriate entry for Line 16. Specifically, the final 2015 Instructions confirm that participating employers should enter Code 1H (“no offer of coverage”) on Form 1095-C, Line 14 for any month in which they enter Code 2E on Line 16. (Code 2E on Line 16 indicates that the employer was required to contribute to a multiemployer plan on behalf of the employee for that month and is, therefore, eligible for the multiemployer interim rule relief.)
The final 2015 Instructions are available at: http://www.irs.gov/pub/irs-pdf/i109495c.pdf