The IRS released draft instructions for the 2016 1094-C and 1095-C Forms. The Forms were issued earlier in the summer.
There are minimal changes to the forms for the 2016 filing year, but the IRS did provide some clarifications in the draft instructions. Some of the changes will require additional information from employers.
A few noteworthy points include:
- Aggregated ALE Groups. There is new discussion and examples for controlled group filers. In particular, an example is included for a full-time employee who works for more than one member of an ALE group in a month. The example provides that the employee should be reported for the month only by the ALE member for whom the employee worked the most hours.
- Conditional Offers of Spousal Coverage. There are two new codes for Form 1095-C, Part II, line 14 (codes 1J and 1K). These Codes are for “conditional” offers of coverage to an employee’s spouse. A conditional offer of coverage is an offer that has one or more limitations for coverage to be offered. For example, a conditional offer of coverage would apply if the spouse can be covered only if the spouse is not eligible for coverage under his/her own employer’s plan. Conditional offers of coverage were not contemplated in the 2015 filings.
- COBRA and Other Continuation Coverage. The draft instructions contain instructions on COBRA and post-employment non-COBRA coverage. Non-COBRA continuation coverage for the former employee, spouse and/or dependents should not be reported as an offer of coverage on Line 14. It should be entered as 1H (with Code 2A) for any month in which the offer of coverage applies. The instructions also provide that an employer is treated as making an offer to the employee’s dependents for an entire plan year if the employee could enroll the dependents at least once for the plan year, even if the employee did not enroll the dependents and therefore they were not offered COBRA coverage.
- Definition of Employee Required Contribution. There is a new definition for “Employee Required Contribution.” This allows the employer to take the annual contribution and divide by 12. The definition also provides that some contributions may count against the employee contribution (such as opt-out payments- see our article here).
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