IRS ACA data collection: An overview of Forms 1094-1095

For companies that have grown to 50 or more full-time employees in calendar year 2016, the 2016 tax year brings a brand-new challenge: the preparation and filing of Internal Revenue Service Forms 1094-1095. Forms 1094-1095 are used by the IRS to prove compliance with the Affordable Care Act, which requires firms with 50 or more FTEs to offer them health insurance -- or face federal penalities.

While IRS ACA compliance can be challenging, here's the good news for companies: firms who make a "good faith" effort at filing and furnishing Forms 1094-1095 by the deadline will not be penalized in Tax Year 2016.

Also, taxpayers are offered some other general protections from the IRS, which has adopted a Taxpayer Bill of Rights as recommended by the National Taxpayer Advocate.

In most cases, firms of 50-plus full-time workers (applicable large employers, or "ALEs," in IRS parlance) will be filling out Forms 1094-C and 1095-C. Here's a brief overview of the forms:

Form 1094-C

This is the transmittal sheet for employers, who furnish group-wide information for health coverage offerings for their employees. Per IRS guidance, this should take about four hours for a company to complete.

Form 1095-C

On this form, the company must document whether each full-time employee had received an offer of health coverage. Form 1095-C is also furnished to individual employees. Form 1095-C allows the IRS to determine whether an employee took health coverage via the employer, took coverage elsewhere or didn't have coverage at all. Individuals without health insurance are subject to an IRS penalty at tax time. According to the IRS, Form 1095-C takes 12 minutes to complete per individual.

Deadlines

Form 1095-C is due to employees by Thursday, March 2, 2017. Form 1094-C must be filed with the IRS by Tuesday, February 28, 2017 (if filing on paper) or Friday, March 31, 2017 (if electronically filing).

Contact us

Need a hand with IRS ACA compliance? We can help. The Plexus Groupe provides a full suite of filing and preparation services for IRS Forms 1094-1095. For more information, contact a Plexus Groupe client service team representative at 847.307.6100 (Deer Park, Ill. / Chicagoland), 312-606-4800 (Chicago/Loop), 972-770-5010 (Dallas) or 405-840-3033 (Oklahoma City), or contact us via the Web.