ACA Reporting FAQs

ACA Reporting FAQs

The 1095-C provides IRS three points of information to the IRS

1. Was an offer made to a full-time employee and his/her spouse and dependents; line 14.
2. Was the offer affordable; line 15.
3. Did the employee enroll in the coverage that was offered; line 16.
For more detailed information on the 1095-C form, IRS WEBSITE LINK.

One Method that is used to determine if an employee is eligible for health insurance is the Look Back Method. When using the look-back method, the employer needs to define the following periods:

  • A measurement period to look back at hours worked that is at least three months but no longer than 12 months to determine if an employee averaged at least 30 hours per week. Considerations include the following:
      1. The employer will need to define an initial measurement period for newly hired employees as well as a standard measurement period for all other employees.

        The initial measurement period can begin on any date between the employee’s start date and the first day of the calendar month following the start date.

        After a new variable-hour or seasonal employee has been employed by an employer for a standard measurement period, the employee is considered to be an ongoing employee and must have his or her hours measured on the same basis as other ongoing employees. For administrative ease, many employers coordinate the standard measurement period with their open enrollment and plan year.
  • An administrative period of up to 90 days in addition to the initial measurement period and standard measurement period. This administrative period gives employers time to determine which of its employees have satisfied the requirement of an average of 30 hours per week to be eligible for coverage and time to provide those employees who have met that requirement with information about medical plan coverage options and enrollment materials. A new hire’s initial measurement period and the administrative period combined may not extend beyond the last day of the first calendar month beginning on or after the one-year anniversary of the employee’s start date.
  • A stability period, which is a designated period of not less than six months (and not less than the corresponding measurement period) during which the employer must offer coverage to all individuals identified as full-time employees during the measurement period, regardless of hours worked during the stability period. For example, if an employer has a three-month initial measurement period, the stability period must be at least six months. If an employer has a 12-month initial measurement period, the stability period must be at least 12 months.

During the stability period, employees are locked into full-or part-time status based on the hours of service determined during the initial or standard measurement period, regardless of how many hours the individual's work during the stability period. Once it has been determined that they are full time, they must remain eligible for coverage for the entire stability period.

Step 2: Determine Full-Time Status Based on Hours of Service

Once the initial and standard measurement, administrative and stability periods are established, an employer can begin to assess full-time status of new variable-hour employees.

A full-time employee for any calendar month is an employee who has on average at least 30 hours of service per week during the calendar month, or at least 130 hours of service during the calendar month. Hours of service include actual hours of work as well as paid time off, such as vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence.

For an employee paid on an hourly basis, an employer should examine the employee’s pay records and include any actual hours worked in addition to any hours for which the employee used paid leave to determine just what hours to include in the hours of service calculation.

For employees not paid on an hourly basis, an employer has three options for calculating the hours of service:

  • Employers may use the same method as for those employees paid on an hourly basis.
  • An employer may use a days-worked equivalency method. Using this method, the employer credits the employee with eight hours of service for each day for which the employee had at least one hour of service. For example, Joe, who is paid on a salary basis and normally works 9 a.m. to 5 p.m., comes in Monday morning as scheduled but needs to leave at 12 p.m. to go to a doctor’s appointment and does not return that day. Even though the employee worked less than a full day, for the purpose of this calculation, he would be credited with an eight-hour day.
  • The third method uses a weeks-worked equivalency of 40 hours of service per week for each week for which the employee would be required to be credited with at least one hour of service. For example, Joe works Monday 9 a.m. to 5 p.m. and then has a family emergency and needs to be out the rest of the week. Using this method, because Joe worked at least one hour that week, the employer could use 40 hours of service for the week as the basis of the calculation.

More information from IRS on Look Back Method and its application.

https://www.irs.gov/pub/irs-drop/n-14-49.pdf

Yes. Each individual EIN needs to provide employees with a 1095-C form and electronically file 1095-C and 1094-C forms for each EIN with the IRS.

For the purpose of ACA reporting companies that have multiple divisions with a common owner are generally combined and treated as one company. For example, company A, has 30 full-time employees and they have another division, company B, with 40 employees. If the combined number of full-time employees and full-time equivalent employees for the group is large enough to meet the definition of an ALE, then each employer in the group (called an ALE member) is part of an ALE and is subject to the employer shared responsibility provisions, even if separately the employer would not be an ALE.

If an employer does not offer Full-time or FTE’s employees an offer of affordable health insurance that meets the ACA requirements of Minimum Essential Coverage (Minimum Essential Coverage - IRS.gov) and Minimum Value (Minimum Value and Affordability - IRS.gov) they are subject to the “Employer Shared Responsibility Payment” a.k.a. the Employer Mandate penalty.

  • For employers who don’t provide coverage, the fee is $2,000 per full-time employee (minus first 30 full-time employees).
  • For employers who do provide coverage but don’t provide coverage meeting minimum-value and affordability requirements, the fee is the lesser of $3,000 per full-time employee receiving subsidies, or $2,000 per full-time employee (minus the first 30).

Coverage must be offered to Employee and dependents up to age 26. Once a dependent turns 26 they no longer need to be offered coverage. Spouses do not count as dependents and do not need to be offered coverage.

Form 1095-C is entitled, “Employer-Provided Health Insurance Offer and Coverage.” This form is used to report what medical coverage was offered to you and your family during the calendar year. The form is comprised of four sections as follows:

Part I - Lines 1-6 report personal information about you. Lines 7-13 report information about your employer.

Part II – This section provides important information the health plan offer and coverage. The three important lines of Part II are summarized below:

Line 14 The codes listed below for line 14 describe the coverage that your employer offered to you and your spouse and other dependent(s), if any. This information relates to eligibility for coverage subsidized by the premium tax credit for you, your spouse, and your other dependent(s). For more information about the premium tax credit, see Pub. 974. You may find it online here: https://www.irs.gov/publications/p974/.

Line 15 This line reports your share of the lowest-cost monthly premium for individual minimum essential coverage providing minimum value that your employer offered you. The amount reported on line 15 may not be the amount you paid for coverage if, for example, you chose to enroll in more expensive coverage such as family coverage. Line 15 will show an amount only if code 1B, 1C, 1D, or 1E is entered on line 14. If you were offered coverage, but not required to contribute any amount towards the premium, this line will report a “0.00” for the amount.

Line 16 The codes listed below for line 16 report for one or more months of the calendar year that one of the following situations applied to you: you were not employed or were not a full-time employee; you enrolled in the minimum essential coverage offered; you were in a waiting period (after your hire date) or in a measurement period (which applies only to hourly employees whose hours vary month to month); your employer contributes to a multi-employer health plan; you waived coverage of affordable health insurance offered by your employer; or your employer’s health plan year begins on a date other than January 1st and if certain criteria are met, is eligible to comply with the ACA as of the plan year renewal date.

Part III- This section will only be completed if your employer's,’ health plan is “self-insured” If your employer offers coverage provided by a health insurance company, your employer is not required to complete this section. In this case, you will receive Form 1095-B from the insurance company showing what months during calendar year 2015 you and your family were covered.

For employers with self-insured health coverage , Part III reports each member of your family that is covered by your employer’s health plan during calendar year 2015 (including you). A date of birth will be entered in column (c) only if a Social Security Number is not entered in Column (b). Column (d) will be checked if the individual was covered for at least one day in every month of the year.

The 1094-C Form is the “Transmittal of Employer Provided Health Insurance Offer and Coverage Information Returns” form and acts as a cover sheet for the 1095-C Forms; the employer sends the completed form to the IRS.

The 1095-B Form is a tax form that is used to verify that you, and any covered dependents, have health insurance that qualifies as minimum essential coverage. This form shows the type of health coverage you have, any dependents covered by your insurance policy, and the dates of coverage for the tax year.

Form 1094-B is the “Transmittal of Health Coverage Information Returns” form that is completed by the insurance provider (or self-insured employer) and acts as a cover sheet to the 1095-B forms.

  • Forms 1095-C and 1095-B are due to individuals by January 31st.
  • Forms 1095-C, 1094-C, 1095-B, 1094-B are required to be filed with the IRS by March 31st if filing electronically.
  • February 28th if filing on paper. Once these are complete hopefully if there are more small edits to the content we can do it on the live site.

No. These forms are for employee records. This form is used to report what medical coverage was offered to you and your family for the previous year.

As a coverage provider, self insured companies need to file forms 1094-B and 1095-B or forms 1094-C and 1095-C, depending on whether the employer is an applicable large employer with the IRS. Self insured companies need to provide information for both the employees and the dependants that are listed on the employee’s plan; their SSN or DOB, and the months they had coverage for the reporting year.

An ALE may be eligible to use the 98% offer method if they offer affordable insurance providing minimum value to 98% of their employees and their dependents.

If the break in service was less than 13 weeks the employee should be treated as an ongoing employee when they return to work. They should be eligible to enroll in health plan the first of the month following their start date.

If the break in service was more than 13 weeks the employee should be treated as a new hire and you can wait until the end of the established waiting period before offering coverage.

For Educational organizations the break in service can be up to 26 weeks instead of 13 and employee would still be considered an ongoing employee.

An offer of COBRA continuation coverage that is made to a former employee due to termination of employment is not reported as an offer of coverage in Part II of Form 1095-C. If the ALE Member is otherwise required to complete a Form 1095-C for the former employee (because, for example, the individual was a full-time employee for one or more months of the year before terminating employment), the ALE Member should use code 1H, No offer of coverage, on line 14 for any month that the former employee was offered COBRA continuation coverage. For those same months, the ALE Member should use code 2A, Employee not employed during the month, on line 16 for each month in which the individual is not an employee (regardless of whether the former employee enrolled in the COBRA continuation coverage). Note, however, that an ALE Member that provides COBRA continuation coverage through a self-insured health plan generally must report that coverage for any former employee or family member who enrolls in that COBRA continuation coverage in Part III of the Form 1095-C. Also, the ALE Member may report the coverage on a Form 1095-B for any individual who was not an employee during the year and who separately elected the COBRA continuation coverage.

An offer of COBRA continuation coverage that is made to an active employee due to a reduction in hours is reported differently than an offer of COBRA continuation coverage to a former employee. See the next question for more details.

An ALE Member making an offer of COBRA continuation coverage to an active employee who loses eligibility for non-COBRA coverage due to a reduction in hours (for instance, a change from full-time to part-time status resulting in loss of eligibility under the plan) should report the offer of COBRA continuation coverage as an offer of coverage in Part II of Form 1095-C. In this instance, the code entered on line 14 for the months in which an offer of COBRA continuation coverage is made should reflect only the individuals who received an offer of COBRA continuation coverage (which generally will be only the individuals enrolled in the non-COBRA coverage at the time of the reduction in hours) or the individuals who received an offer of other coverage at the same time the COBRA continuation coverage is offered. This is because only the individuals who received an offer of COBRA continuation coverage (or of other coverage at the same time) are potentially ineligible for the premium tax credit for coverage through the Marketplace due to the offer of COBRA continuation coverage (or other coverage).

If you can afford to buy insurance and do not purchase a health insurance policy you could be fined. All individuals in the U.S. are required to have Minimum Essential Coverage.

ALE’s that fail to furnish, or miss the mailing deadline, to their employees with the 1095-C form and do not file these forms with the IRS are subject to a $250 penalty per form up to a maximum of 3 million dollars. On top of this penalty the IRS could enforce an additional $250 penalty per form for not filing, or filing late, with the IRS. This are similar penalties the IRS imposes for not providing W2/W3 forms.

The IRS recommends that you contact the terminated employee and inform them of the error on their form. Keep documentation of this request. You however would not be subject to a penalty if you do not receive a response from the former employee and the error could not be corrected.

1.) SPS/GZ has certified professionals (including CPA’s) managing the filings and providing support.
2.) We can help you determine if you are an ALE, Applicable Large Employer and therefore subject to the Employer Mandate.
3.) Determine if the health plans offered to employees meet the ACA standards for affordability, minimum essential coverage and minimum value to avoid the possibility of IRS penalties
4.) Track hours of variable hour employees and alert you when an offer of coverage should be made to an employee.
5.) Assign an account manager to answer questions and guide you through the steps of compiling the data necessary for completion of 1095-C, and 1094-C forms. For health insurance providers 1095-B and 1094-B forms.
6.) User friendly portal allows clients to review, correct and print forms as needed
7.) Archive of data for seven years

SPS/GZ’s commitment to accuracy and high level of support will help ease the burden of ACA reporting from employers. SPS/GZ offers a personal approach to our clients’ needs and we are always available to assist with questions to make the reporting process easier for our clients. SPS/GZ offers the ability for the client to make corrections on their own, and print corrected forms to be mailed to employees. The corrected forms will be resubmitted with the IRS on a regular basis and updates will be provided by account manager. Current clients rate SPS/GZ highly for quality service and knowledgeable support.

1. Employer fills out online questionnaire about company and provide information on company’s health plans offered to employees.

2. Annual template for full-time workers and monthly template if company has variable hour workers would be downloaded from portal and completed and then uploaded to our secure portal.
Employee information; SSN, Address, etc.

      Start date
      Date offer of coverage was made. This should be the date the employee is eligible to enroll in health plan.
      Enrollment Date
      Type of health coverage plan offered
      Status (Full-time, Part-time, Variable-Hour)
      Termination date

3. Assigned SPS/GZ support manager will review data to ensure completeness and reasonableness of data received
4. SPS/GZ’s proprietary software creates ACA codes for each employee and generates forms 1095-B, 1094-B, 1094-C and 1095-C
5. SPS/GZ will ensure forms are mailed to employees and filed with IRS by deadlines.

SPS/GZ needs you to provide either monthly or annual data uploads. This will be based on your company’s needs and the structure of your workforce. These are the two options for data collection and processing:

  • Monthly Employee Format (MEF) – for companies with a workforce that includes variable-hour employees
  • Annual Employee Format (AEF) – for companies who only employ full-time employees.
    It is important to include all employees on your company’s monthly or annual template (even part-time employees who are not offered benefits). This is because all employees are required to be included in the total employee count on Form 1094-C.

SPS/GZ will also need information on your company’s health plans. This information is usually provided by your HR department or benefits manager.

Health Plan

  • Start date
  • Termination date
  • Status (Full-time, Part-time, Variable-Hour)
  • Type of health coverage plan offered
  • The lowest cost of employee’s share of the monthly premium for self only coverage
  • Date offer of coverage was made. This should be the date the employee is eligible to enroll in health plan.

Yes, if you would like to export your payroll and benefits employee information SPS/GZ will format data into the required templates that are needed to complete the 1095-C and 1095-B forms as long as they have the data points required for reporting.

SPS/GZ has a highly secure and encrypted (SSL technology) client portal for data exchanges.