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  • Andy Adams

Form 1094-C and 1095-C IRS Recordkeeping Rules Driving Employers CRAZY!

In spite of the delay of the deadline to file the Form 1094 and 1095, employers subject to the recordkeeping requirements (those with 50+ employees or self-funded plans of any size) are at their wits end making sense of the instructions for filing these forms. We have conducted two live seminars and two webinars in January, and employers are upset and irritated by these recordkeeping rules. Rightly so.

The rules are complicated, requiring the filing of a transmittal form for each company that employs or covers any individual for one month. Employers with more than 50 employees, must file a 1094-C with the IRS and provide a 1095-C to every full-time employee who worked for that employer for one month during 2015. It does not matter if the employer offered insurance coverage or not. The filing rules apply to ALL employers with 50+ employees!

Indeed, these has to be one of the most onerous and least reported on features of the so-called "Affordable Care Act."

For example, the 1095-C form must contain an "offer code" for every month of 2015. There are nine different codes (1A, 1B, 1C, 1D, 1E, 1F, 1G, 1H, and 1I) that an employer may use, each signifying a different status that each employee would have during the year. Some employees with have the same code for all 12 months, but many will have different codes throughout the months of the year. There are also nine different "safe harbor" codes (2A, 2B, 2C, 2D, 2E, 2F, 2G, 2H, and 2I) that may or may not be applicable to each employee for each month depending on the type of insurance that was offered to the employee and whether or not it was accepted. Moreover, employers offering self-funded insurance will have to complete a monthly schedule for each covered individual (including dependents) on the plan.

Some payroll companies are offering software solutions to help employers deal with these requirements, but the quality and ease of use of the software varies greatly. In most cases, it also costs a substantial amount.

The original deadlines required the 1095-Cs to be delivered before the end of February for paper filers and the 1094-Cs (and copies of all 1095-Cs) to the IRS by the end of March. The deadlines have been extended, but this will not stop employees from asking their employers for their 1095-Cs. While they are not required to be sent with the employee's tax forms, you can bet they will be demanded as proof of health insurance.

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