The IRS has published various Affordable Care Act Information Returns (AIRs) documents for the 2020 tax year with which employers will need to familiarize themselves before filing for this year.
On September 10, the agency made available documents pertaining to Known Issues, Form to Schema Crosswalks, XML Schemas, and Business Rules for the 2020 Tax Year. Of the Form to Schema Crosswalks made available, Forms 1094-B, 1095-B, 1094-C, and 1095-C are included. Regarding the Known Issues 2020 document, the IRS stated that the document would be made available at a later time but will contain information on the known issues, solutions, and workarounds regarding AIRs software.
This information applies to Applicable Large Employers (ALEs), employers with 50 or more full-time employees and full-time-equivalent employees, that are required to offer Minimum Essential Coverage (MEC) to at least 95% of their full-time workforce (and their dependents), whereby such coverage meets Minimum Value (MV) and is affordable for the employee, or be subject to IRC Section 4980H penalties as required by the ACA’s Employer Mandate.
How will these ACA issues affect your business?
You can request copies of the new documents, including the Schema Crosswalks for the Forms 1094-B, 1094-C, 1095-B, and 1095-B from our office: Simply email us and we will send them to you directly.
While technical in nature, this information is incredibly important for employers that electronically file their ACA information with the IRS, because it includes details on how employers should map their software for transmitting ACA information to the IRS, including information on the new 1095-C Codes, namely, Codes 1L through 1S. These new codes relate to individual coverage health reimbursement arrangements (HRAs). They address a new rule issued that allows employers to use individual coverage HRAs to reimburse employees for the cost of health insurance purchased in the health insurance marketplace. You can learn more about these new codes on the instructions page of Form 1095-C, here.
In July, the IRS issued draft versions of Forms 1094-C and 1095-C for the 2020 tax year.
As a reminder, Forms 1094-C and 1095-C are used in combination with the IRS automated Affordable Care Act Compliance Validation (ACV) system to determine whether an ALE owes a payment under the Employer Shared Responsibility Provisions (ESRP) under IRC Section 4980H. Stay tuned for the release of the final Forms 1084-C and 1095-C as they should be released soon.
Employers should take note of recent IRS activity and let it be a reminder that it’s time to start thinking about filing your ACA information for the 2020 tax year.
Forms 1095-C are likely to look very different for employers this year due to the economic changes that have arisen as a result of the COVID-19 pandemic.
For an overview of the existing codes, how to use them, and how to avoid penalties, reach out.
For assistance in understanding the new schemas, codes, and forms, contact us to learn how Innovative Health Insurance Advisors can reduce the administrative burden in complying with the ACA’s Employer Mandate.