As employers prepare for 2020 tax year Affordable Care Act and State Mandate reporting, there are a few considerations to pay close attention to this year for filing forms 1094-C and 1095-C.
Extensions and Relief
First and foremost as a reminder, the IRS extended the due date for furnishing Form 1095-C from January 31, 2021, to March 2, 2021. This extension only applies to furnishing forms to employees and does not change the due date for filing with the IRS (March 31, 2021, if filing electronically). This notice also includes relief in which the IRS will not impose a penalty for failure to furnish Form 1095-C/1095-B to any employee enrolled in an ALE member’s self-insured health plan that was not a full-time employee for any month in 2020 if certain conditions are met:
The Employer must post a notice prominently on its website informing employees that they may receive a copy of their 2020 form upon request while also having an email address, physical address and telephone number to which the request can be made and contacted for any questions.
The employer must provide the requested form to that employee within 30 days of the request date.
2020 Form 1095-C Changes
Plan Start Month
While Plan Start Month has been on Form 1095-C, it has not been a required field until now. All form 1095-Cs must now be completed with this information in Part II.
Individual Coverage Health Reimbursement Arrangement Reporting
For some employers, the most substantial change for Form 1095-C revolves around Individual Coverage Health Reimbursement Arrangements (ICHRA). On June 13, the U.S. Department of Health and Human Services, Labor, and the Treasury issued the final rules on ICHRAs and the impacts for employers.
For plan years beginning on or after January 1, 2020, employers may offer HRAs that are integrated with individual health plans or Medicare. This means that employers that offer contributions to a qualified individual HRA (to reimburse employees for the cost of health insurance) can now mitigate their risk of 4980H(a) fines as these contributions are now considered to be a qualifying offer for the Employer Mandate rules.
To determine the affordability (and potential risk for 4980H(b) fines) of the ICHRA, new safe harbor rules and codes have been added for the 2020 reporting year. The affordability is based upon the employee’s location for a given month, more specifically their ZIP code, as well as age to help determine what the marketplace costs would be for them. Employers have the option to use the employee’s primary residence location or the employee’s primary site of employment. There are corresponding codes that are outlined further below that relate to each option.
The ICHRA offer would be considered affordable if the monthly premium the employee would pay (after the employer reimbursement) for the self-only lowest cost Silver plan available to them through the marketplace in their area (and age band) is less than the affordability threshold (9.78%) for the month based on the employee’s household income.
The new Line 14 indicator codes that will be used for employers offering ICHRAs are below: Indicator Codes for primary residence location
1M. Individual coverage HRA offered to employee and dependent(s) (not spouse) with affordability determined by using the employee's primary residence location ZIP code.
1N. Individual coverage HRA offered to employee, spouse, and dependent(s) with affordability determined by using the employee’s primary residence location ZIP code.
Indicator Codes for primary employment location
1O. Individual coverage HRA offered to employee only using the employee’s primary employment site ZIP code affordability safe harbor.
1P. Individual coverage HRA offered to employee and dependent(s) (not spouse) using the employee’s primary employment site ZIP code affordability safe harbor.
1Q. Individual coverage HRA offered to employee, spouse, and dependent(s) using the employee's primary employment site ZIP code affordability safe harbor.
Not Affordable and Non full-time indicators
1R. Individual coverage HRA that is NOT affordable offered to employee; employee and spouse, or dependent(s); or employee, spouse and dependents.
1S. Individual coverage HRA offered to an individual who was not a full-time employee.
It is important to remember that employers that offer ICHRAs will also need to complete Line 17 (Zip Code) with the appropriate information based on primary residence or employment location, as well as the employee’s age as of January 1 of the reporting year, on Part II of the 1095-C form.
More in-depth information regarding Instructions and form specifics can always be found in the 2020 Instructions for Forms 1094-C and 1095-C.
State Mandated Health Insurance Reporting
In addition to the various federal requirements that employers must comply with, there are also State Health Insurance Reporting mandates. Each state with these mandates has its own regulations surrounding which employees must be reported, when forms are due to employees, and when filing is due to the various state reporting entities. States that have currently enacted this legislation, as well as their due dates for 2020, are as follows:
Equifax continues to monitor additional states that have indicated they are considering imposing their own state reporting mandates as well. The ever-changing rules and regulations for the Affordable Care Act continue to be challenging for employers. If your organization needs help managing ACA reporting for prior, current or future years, contact our specialized ACA team at Equifax.
Equifax is not providing, and cannot provide, tax or legal advice on any legal issues relating to ACA requirements. Your company should work with its legal counsel, tax and other experts to make all determinations regarding specific ACA obligations.