Get an early start: 5 ACA reporting changes for next year
The first official ACA reporting season just came to a close, and figuring out how to comply wasn’t easy. Now you’ve got to start thinking about how you’re going to incorporate the IRS’ changes to the process for next year.
Talk about no rest for the weary.
Immediately after this year’s reporting season ended, the IRS went to work switching some things up on employers for next year.
Example: It issued new draft forms (1094-B, 1094-C, 1095-B and 1095-C).
Then, to go along with those new forms, the IRS issued an updated set of instructions for how to complete and submit Forms 1094-C and 1095-C.
What changed?
Granted, many parts of the forms, along with the instructions, mirror the 2015 requirements.
But there were some notable changes:
- End of “good faith” relief. This year, non-compliance penalties could be waived if an employer showed it made a “good faith” effort to comply with the regulations and deadlines. That “good faith” standard is going away. For 2016, employers will have to show “reasonable cause” for why it failed to comply in order to receive relief from penalties.
- Elimination of some “transition relief.” Next year, the non-calendar-year transition relief for plan years starting in 2014 that applied in 2015 will no longer apply. The instructions also made changes to “Section 4980H Transition Relief.” This relief exempted applicable large employers (ALEs) from 4980H penalties and reduced the mandatory coverage offering threshold from 95% to 70% of full-time workers. It also exempted ALEs from having to offer coverage to dependents if certain requirements were met. For 2016, this relief is still available for non-calendar year plans through the end of the plan year. But the relief is not available for calendar year plans in 2016. These plans must meet the 95% threshold and offer dependent coverage during each month of the plan year.
- New COBRA-related coding. To clear up confusion about how to report COBRA offers of coverage, the IRS updated the instructions in this area. Example: The IRS’s instructions clarified that when employees are terminated, COBRA offers should be coded with 1H (Line 14) and 2A (Line 16) whether or not the departing staffers elected to accept the coverage.
- New spousal coverage indicator codes. Likewise, the IRS created new codes for indicating when coverage offerings were made to employees’ spouses. The 2016 forms include codes 1J and 1K on Part II, Line 14 of Form 1095-C.
- Term “ALE Member” added. Last year, the ACA reporting forms were filed by the “employer,” but that term has been replaced by “ALE Member” in most cases. The feds changed this term to highlight the fact that each separate ALE Member must file its own forms.
