Final 2020 1094-C, 1095-C ACA Reporting Forms Issued by IRS

The IRS recently released final versions of the 2020 Affordable Care Act (ACA) forms, which include 1094-C and 1095-C. What should employers know about this important component of healthcare compliance reporting?

New 2020 ACA Forms Issued by IRS

The IRS issued final versions for four 2020 ACA forms, including Forms 1094-B, 1095-B, 1094-C, and 1095-C. The forms can be accessed using the following links:

1. Form 1094-B
2. Form 1095-B
3. Form 1094-C
4. Form 1095-C

The IRS also released full instructions for Forms 1094-C and 1095-C for employers and HR teams, as well as instructions for Forms 1094-B and 1095-B. 

Form 1095-C Updates for Filing in 2021

A few key updates were made to Form 1095-C. Now, several new codes (1L through 1S) are included to describe the affordability of coverage that an employer offers to employees, their spouses, and their dependents. This specifically applies to costs associated with individual coverage HRAs—otherwise known as ICHRAs.

Other changes to ACA forms include: 

1. Plan Start Month: All Applicable Large Employers (ALEs) must enter a two-digit code on 2020 Form 1095-C.
2. Age and ZIP Code Inclusion: If an employee was offered an ICHRA, employers must enter the employee’s age as of Jan. 1, 2020. Similarly, the employer must submit the ZIP Code of either the employee’s permanent residence (codes 1L, 1M, or 1N) or the primary site of employment if the ALE Member uses the work location safe harbor (codes 1O, 1P, or 1Q). The ZIP Code is included on Line 17 of the form if the employer used it to determine the affordability of an ICHRA.
3. Relief for Failure to Furnish: The IRS won't impose a penalty on employers that fail to furnish Form 1095-C to any employee enrolled in an ALE's self-insured health plan. This applies to employees who weren’t full-time workers for any month in 2020 (assuming certain conditions are met).
4. Extension of Good Faith Relief for Reporting and Furnishing: The IRS won't impose penalties for reporting incorrect or incomplete information on Form 1095-C if a good-faith effort is made to comply with reporting requirements. In this instance, “good faith” means that employers didn’t purposely misinterpret or misreport information.

Meanwhile, the following changes apply to Forms 1094-B and 1095-B:

1. ICHRA: Employers may offer HRAs integrated with individual health insurance coverage or Medicare for plan years beginning on Jan. 1, 2020. 
2. New Coverage Code Type: Code G must be entered on Form 1095-B, line 8 to identify an ICHRA.
3. Relief for Failure to Furnish: The IRS won't impose a penalty on employers that fail to furnish Form 1095-B to individuals if certain conditions are met. 
4. Extension of Good Faith Relief for Reporting and Furnishing: The IRS won't impose penalties for reporting incorrect or incomplete information on Form 1095-B if a good-faith effort is made to comply with reporting requirements.

When Should the New 1095-C Codes Be Used?

Codes 1L through 1S are available to indicate the affordability of ICHRAs offered by employers. They should be used under the following circumstances:

• 1L: If an ICHRA is offered to employees only and affordability is determined by a ZIP Code, which identifies an employee’s primary residence 
• 1M: If an ICHRA is offered to employees and dependent(s) (not spouse) and affordability is determined by a ZIP Code, which identifies an employee’s primary residence 
• 1N: If an ICHRA is offered to employees, spouses, and dependent(s) and affordability is determined by a ZIP Code, which identifies an employee’s primary residence 
• 1O: If an ICHRA is offered to employees and affordability safe harbor is determined by the ZIP Code of the employment site
• 1P: If an ICHRA is offered to employees and dependent(s) (not spouse) and affordability safe harbor is determined by the ZIP Code of the employment site
• 1Q: If an ICHRA is offered to employees, spouses, and dependent(s) (not spouse) and affordability safe harbor is determined by the ZIP Code of the employment site
• 1R: If an ICHRA is not affordable and is offered to employees; employees and spouses or dependent(s); or employees, spouses, and dependent(s)
• 1S: If an ICHRA was offered to a worker who isn’t a full-time employee

What Else Should Employers and HR Know About Form 1095-C in 2021?

Earlier in October 2020, the IRS also announced an extension of the furnishing deadline for Forms 1095-B and 1095-C. The distribution deadline is now March 2, 2021. 

The typical 30-day extension to furnish information statements will not be granted in addition to the new deadline. With this in mind, the adjusted date does not extend the filing deadline for 2020 Forms 1094-B, 1095-B, 1094-C, or 1095-C, all of which must be submitted by Feb. 28, 2021, or e-filed by March 31, 2021.

There are additional year-end compliance concerns that play key roles in all HR responsibilities. Stay on top of important dates and filing requirements using BerniePortal’s comprehensive HR calendar, which is updated regularly as extensions are granted and new deadlines are added.