H&W: Final Forms 1094 and 1095

Depending on your area of the country, the leaves will soon be changing colors as they herald the arrival of fall and the start of cooler weather.  This also marks the fact that we are nearing the final quarter of the year which means only a few more months to prepare for the first official Section 6055/6056 reporting cycle!  With that in mind, the IRS recently released finalized Forms 1094-B, 1095-B, 1094-C and 1095-C as well as the final instructions for 2015 reporting.  Information of particular notice in the finalized instructions is highlighted below.

Form 1095-B Instructions

• A new section on page 3 entitled “Coverage in More Than One Type of Minimum Essential Coverage” is included which provides information on HRA reporting.

Coverage in More Than One Type of Minimum Essential Coverage

If an individual is covered by more than one type of minimum essential coverage, reporting is required of only one of the types, if one of the following rules applies.

• If an individual is covered by more than one type of minimum essential coverage provided by the same provider, the provider is required to report only one of the types of coverage.
• A provider of minimum essential coverage generally is not required to report coverage for which an individual is eligible only if the individual is covered by other minimum essential coverage for which reporting is required. (For employer-sponsored coverage, this exception applies only if both types of coverage are under group health plans of the same employer).

Under the first exception, if an individual is covered by a self-insured major medical plan and a health reimbursement arrangement (HRA) provided by the same employer, the employer is the provider of both types of coverage and therefore is required to report the coverage of the individual under only one of the arrangements.

The second exception applies in the following situations.

• An insurance company offering a Medicare or TRICARE supplement for which only individuals enrolled in Medicare or TRICARE are eligible is not required to report coverage under the Medicare or TRICARE supplement.
• A state Medicaid agency is not required to report Medicaid coverage for which only individuals enrolled in other minimum essential coverage, such as employer-sponsored coverage or a qualified health plan, are eligible.
• An employer with an insured major medical plan and HRA coverage for which an individual is eligible because the individual enrolls in the insured major medical plan is not required to report the coverage under the HRA for an individual covered by both arrangements.

If an individual is covered by an HRA sponsored by one employer and a non-HRA group health plan sponsored by another employer (such as spousal coverage), each employer must report the coverage the employer provides.

Form 1095-C Instructions

• On page 10, in the section entitled “Indicator Codes for Employee Offer and Coverage”, there is new guidance on reporting COBRA offers for terminated employees. Specifically, offer code 1H (no offer of coverage) will be used on line 14 and an applicable Section 4980H safe harbor code will be used on line 16.  This is a change from Q&A guidance earlier in the year. Examples of various COBRA situations and the proper coding are included in the FAQs.
• Similar to the information added to the 1095-B instructions, they have included new HRA reporting information on page 11, in the section entitled “Part III – Covered Individuals”.

An ALE Member with a self-insured major medical plan and a health reimbursement arrangement (HRA) is required to report the coverage of an individual enrolled in both types of minimum essential coverage in Part III under only one of the arrangements. An ALE Member with an insured major medical plan and an HRA is not required to report in Part III HRA coverage of an individual if the individual is eligible for the HRA because the individual enrolled in the insured major medical plan. An ALE Member with an HRA must report coverage under the HRA in Part III for any individual who is not enrolled in a major medical plan of the ALE Member (for example if the individual is enrolled in a group health plan of another employer (such as spousal coverage)).

Overview of Forms

FORMS 1094/1095 “B”

Form 1095-B is used to report certain information to the IRS and to taxpayers about individuals who are covered by minimum essential coverage and therefore are not liable for the individual shared responsibility payment. Minimum essential coverage includes government-sponsored programs, eligible employer-sponsored plans, individual market plans, and miscellaneous coverage designated by Health & Human Services [HHS].

Every person that provides minimum essential coverage to an individual during a calendar year must file an information return and a transmittal. Most filers will use 1094-B (transmittal) and 1095-B (return). However, large employers (including government employers) subject to the employer shared responsibility provisions will report information about the coverage on 1095-C, Employer-Provided Health Insurance Offer and Coverage, instead of on Form 1095-B.

FORMS 1094/1095 “C”

Employers with 50 or more full-time employees (including full-time equivalent employees) use Forms 1094-C and 1095-C to report the information required under sections 6055 “AND” 6056 about offers of health coverage and enrollment in health coverage for their employees.

Form 1094-C (transmittal) must be used to report to the IRS summary information for each employer and to transmit Forms 1095-C (return) to the IRS. Form 1095-C is used to report information about each full-time employee and enrolled individuals.

In addition, Forms 1094-C and 1095-C are used in determining whether an employer owes a payment under the employer shared responsibility provisions under section 4980H. Form 1095-C is also used in determining the eligibility of employees for the premium tax credit. Employers that offer employer-sponsored self-insured coverage also use Form 1095-C to report information to the IRS and to employees about individuals who have minimum essential coverage under the employer plan and therefore are not liable for the individual shared responsibility payment for the months that they are covered under the plan.