Last month, the Internal Revenue Service released the long anticipated 1095 forms required to comply with ACA Reporting requirements under Sections 6055 and 6056.
This is significant in that there will be many more companies required to file these forms in 2017 (for filing year 2016) versus the amount that filed in 2016.
First off, let’s identify who is required to file. A company is required to provide a 1095-C to all full time employees, as well as a copy of these along with an accompanying 1094-C to the Internal Revenue Service, if you were considered an Applicable Large Employer (ALE) in the calendar year 2015. The definition of ALE is a company with 50 or more full time or full time equivalent employees on average for that year. The equivalent part can be tricky. If you had 50 or more full time employees in each calendar month of the year, your part is done and you are definitely considered an ALE. If you had fewer than 50 full time employees but you also employ some part time employees, you are not necessarily out of the woods. Take your total part time hours for each month and divide by 120. Add that number to your full time figure. If that final number equates to 50 or more then you are in fact considered an ALE. And if that number fluctuates monthly then simple math helps to answer the question. Take the total number FTE over the year and divide by 12. If the result is 50 or more…read on.
There is a factoid that needs to be thrown out at this time, which is that you can also be considered an ALE if you are part of an aggregated group. If the person or entity that owns your company owns 80% or more of another or multiple businesses, all of the employees of these companies get aggregated to determine status. The calculations are the same. However, it can become cumbersome to collect this information for each business so getting an early start and having a similar and effective tracking tool for each business is essential to your success.
So if you will be filing a 1095-C and 1094-C for the first time in 2017 (or you filed last year but are wanting a refresher), here are a few tips. First off, be aware that the deadline to provide employees with their copy of 1095-C is January 31, 2016. The IRS will give you until March 31, 2017 to provide your 1094-C and copies of the 1095-C forms to them. Secondly, only parts 1-3 need to be completed on the 1095-C if your plan is fully insured. Third, get some advice on the offer codes to use in part 2 of the 1095-C as the terms can be confusing. Fourth, the safe harbors in part 2 of the 1094-C are rarely applicable and should for the most part be ignored. Lastly, the forms for 2016 are largely unchanged from 2015. This is good news for those of you who had this down last year as there is little new information to digest this time around.
Keep in mind that the 2017 forms are still in draft status at this time, but this is no reason to delay a review of these documents as soon as possible; especially if this is your first year to file. You will be very surprised how quickly the deadline will approach and knocking this task out as soon as possible is highly recommended.
©Copyright 2016 by Ernie Sweat and Fringe Benefit Analysts, LLC. Reproduction permitted with attribution to the author.
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