Updated: IRS releases draft instructions and deadlines for 2019 Form 1095-C: Here's what you need to know
As long as the Affordable Care Act (ACA) is in place, it carries stiff compliance requirements and the potential for financial penalties. Applicable employers are required to file 1095-Cs with the IRS, and each year usually brings changes and clarifications for filing. The IRS has just recently released draft instructions for the 2019 tax year 1094/1095-B and 1094/1095-C forms.
Before we delve into the changes for this year's forms, let's review forms 1094/1095-C.
What is the 1095-C?
Beginning in 2016, employers with more than 50 full-time employees are required to produce and send a second government form to employees — Form 1095-C. While the W-2s main purpose is to communicate pay information to the IRS, the 1095-Cs function is to communicate health insurance information. Similar to the W-2, employees will also need the 1095-C to keep with their tax records.
What is the 1094-C?
The 1094-C can be thought of as a cover sheet for all of an organization’s 1095-Cs (you must file 1 1094-C per tax ID) and is solely filed with the IRS and not distributed to employees. The form requires information such as the number of people employed and how many 1095-C forms are being filed.
What is the purpose of the 1095-C?
The Affordable Care Act requires all Applicable Large Employers (employers with 50 full-time employees or equivalent) to offer full-time employees qualifying healthcare coverage or pay a penalty. This form helps the IRS determine whether the employer owes a penalty for not offering qualifying coverage.
In addition, the form helps the IRS determine which employees were eligible for subsidies for individual health insurance during the year. Employees who were offered qualified coverage by their employers are not eligible for these subsidies in the months they were offered qualified coverage. If an employee claimed a subsidy anyway, the IRS can end up recouping the subsidy from the employee. On the other hand, if an employee claims a subsidy and has an employer that did not offer qualified coverage, the employer can expect the penalty.
When is the deadline to file?
As of November 2019, employers have until Jan. 31, 2020, to distribute 1095-Cs and 1095-Bs to employees for the 2019 tax year.
Employers must also file 1094-B, 1095-B, 1094-C and 1095-C forms with the IRS by February 28, 2020 for companies with fewer than 250 forms and filing by paper, or by March 31, 2020 if filing electronically.
In 2018, the IRS extended the due date for providing the forms to employees from January 31 to March 4, however, the IRS has not declared that it is extending the due date this year, so plan on distributing the forms to your employees by January 31, 2020.
Who needs to comply with the reporting requirements?
The most frequently asked question from employers regarding the 1095-C is “does this apply to me?” Simply put, the 1095-C affects all employers who are considered applicable large employers (ALEs). ALEs had at least 50 full-time workers or full-time equivalents in the previous year.
If you're unsure if you are required to file, check out our ACA flowchart below:
2019 1095-C Form Changes
On December 2, 2019 the IRS has delayed the deadline for providing 1095-B and 1095-C forms to employees by 30 days. The revised deadline is now March 2, 2020. Learn more about the extension here.
According to the draft instructions released by the IRS, no substantial changes have been made to the 2019 tax year form. The majority of the form's changes were updates to made to revise dates from 2018 to 2019 and update website links.
In addition to updating the forms, the IRS has decided to again extend the "good faith compliance efforts" relief for 2019. The "good faith compliance efforts" relief has been provided in past years to grant relief to employers who made an effort to comply with the reporting requirements, but filed incorrectly or incompletely.
Additional items to note for the 2019 tax year form are that the IRS has kept the "plan start month" box as optional for reporting and that employers must provide all printed forms in landscape format.
Want to learn everything you need to know to successfully prepare and file your 1094/1095-Cs?
Register now for our free BernieU Course, Intro to 1094/1095-Cs, where we cover everything from the history of the forms to tactical tips and tricks to help you streamline filing and reduce errors—all in 5 convenient, comprehensive and compelling courses.
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