What is a 1094/1095 Form?
It seems like another day, another ACA requirement. The most recent requirement generating a buzz is the filing of the 1094 and 1095 forms.
To give you a background, the Affordable Care Act (ACA) imposes reporting requirements for government to track compliance with the individual and employer mandates.
The ACA added section 6056 to the Internal Revenue Code, which requires applicable large employers (ALEs) to file information returns with the IRS and provide statements to full-time employees about the health insurance coverage the employer offered. Employers determine reporting requirements based on size and plan type (insured, self-insured or none at all)
An ALE is a company that employs 50 full-time employees or more. Under this regulation, the ALE can be a single entity or a group of related entities. The “pay or play” mandate ALE status is determined on a “controlled group basis” which means companies that have a common owner or are otherwise related are generally combined and treated as a single employer. If two or more related companies together constitute an applicable large employer, each employer member will need to report, using its own EIN.
The information provided on the forms determine whether an employee is eligible for the premium tax credit or if the employer owes a penalty.
“Pay or play” comes into effect with all individuals and employer groups over 50. Currently, all individuals have to be covered by health insurance or pay a fine. On the employer end, all employers with at least 50 employees must provide health care coverage for employees or pay a fine. Some employers who provide coverage still may have to pay a fine, depending on the benefits provided, their cost, and employees’ ability to pay.
The first mandatory reporting occurs during the first quarter of 2016.
- Feb 1: All employees should receive their individual coverage statements.
- Feb 29: IRS statements due if filing by paper
- Mar 31: IRS statements due if filing electronically (required for employers filing 250 or more forms)
So what are these forms and what do they mean? There are two sets of forms, the B series and the C series.
The 1094-B and 1095-B forms are meant to capture information on the individual. This information will be relayed to the government to verify if the individual has me the 2015 coverage criteria. If so, then the individual will not receive a tax penalty. In addition, these forms also help identify whether the individual should receive a tax credit.
The 1094-B form is called the transmittal form and it is a cover page that gives a high level summary of the findings from the 1095-B form. The 1095-B form is where the individual enters their specific information.
The 1094-C form is identical to the 1094-B form. On the 1095-C form however, this form tracks an employer’s employee’s coverage.