Correcting Mistakes on ACA Reporting Forms
To enforce the Affordable Care Act's ("ACA's") employer and individual mandates, the IRS requires information about the group health coverage provided by applicable large employers ("ALEs"). IRS receives this information from the Forms 1094-C and 1095-C filed by ALEs.
ALEs must correct any errors on the Forms as soon as possible because there are significant penalties for furnishing Forms with incorrect information. This Alert provides guidance on correcting common errors made by ALEs when preparing the Forms.
Background. ALEs must file Form 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns) and Form 1095-C (Employer-Provided Health Insurance Information and Coverage) with the IRS. ALEs must also furnish Form 1095-C to covered individuals and all full-time employees. See the Alert of 2/20/15 for further information.
Correcting Errors. The instructions for the Forms identify the types of errors that ALEs must correct. For Forms 1094-C, ALEs must be sure to correct errors that involve: (i) the name and/or EIN of the ALE; (ii) the total number of Forms 1095-C filed by or for the ALE; (iii) whether the ALE is a member of an aggregated ALE group; (iv) certifications of eligibility; (v) the Minimum Essential Coverage Indicator; (vi) full-time employee count for an ALE member; (vii) the Aggregated Group Indicator; and (viii) the Section 4098H Transition Relief Indicator. For Forms 1095-C, ALEs must be sure to correct errors regarding: (i) the employees' or enrollees' names and Social Security Numbers; (ii) the ALE's name and/or EIN; (iii) specifications regarding the offer of coverage; and (iv) the premium amount of the least expensive option for self-only coverage.
For electronically filed Forms, ALEs should take the following actions to correct errors:
- To correct an error on Form 1094-C: (i) prepare a new, corrected Form 1094-C, (ii) enter "X" in the "CORRECTED" box at the top of the Form, and (iii) refile the form with the IRS (without any Forms 1095-C).
- To correct an error on Form 1095-C: (i) prepare a new, corrected Form 1095-C, (ii) enter "X" in the "CORRECTED" box at the top of the Form, (iii) submit the corrected Forms 1095-C with the original Form 1094-C to the IRS, and (iv) furnish corrected Forms 1095-C to affected individuals. (NOTE: Do not check the "CORRECTED" box on the original Form 1094-C sent to the IRS and complete only Part I.)
NOTE: Correcting both Forms requires two separate submissions, which can be included with the same transmittal to the IRS.
Penalties for Reporting Failures. The IRS has provided short-term penalty relief from reporting failures concerning the 2015 Forms. In particular, the IRS will not impose a penalty where an ALE has made a good faith effort to comply with the reporting requirements and has filed returns and provided statements on time. In fact, ALEs that are late in filing the Forms may be eligible for penalty relief if the IRS determines that there was reasonable cause for the late submission.
In general, the penalty for failing to file an information return with the IRS is $250 for each return, and the penalty for furnishing an incorrect statement to employees/enrollees is $250 for each incorrect statement. Employers must be cognizant that filing failures may potentially result in "double" penalties because there are separate penalties for returns filed with the IRS and for forms provided to individuals. Generally, the total penalty for all reporting failures is capped at $3 million per year. For violations due to "intentional disregard," however, each $250 penalty can be doubled to $500 per failure, and there is no cap on the total penalty amount.
For reporting failures that are corrected within 30 days of the due date, the penalty is reduced to $50 per return. It is $100 per return if corrected before August 1. (NOTE: For the 2015 Forms, the IRS has extended the August 1 deadline to October 1 for Forms sent to individuals, and November 1 for Forms filed with the IRS.)
Instructions for the 2015 IRS Forms 1094-C and 1095-C are available at: https://www.irs.gov/instructions/i109495c