HR Compliance

How ACA Form Extension Affects Employees, Individual Mandate

By

Robert Barclay

| Jan 20, 2016

For 2016, certain employers are required to provide employees with the IRS Form 1095-C, “Employer-Provided Health Insurance Offer and Coverage,” in time for employees to file for their own tax purposes. Forms were required to be furnished to employees by Jan. 31 of the year following coverage; however, due to the recent form extension for employers, Forms 1095-C for 2015 will be delayed to some employees and, in most cases, subsequently not needed for individual tax returns.

What does this mean for employees?

For this transition year, most employees do not need to wait for the Form 1095-C in order to file income tax returns. If an individual and their family were covered for all of 2015, they would mark the full-year coverage box on their return. For those not covered for the full year, they may claim an exemption or make an individual shared responsibility payment.

Notice 2016-4 (pages 6-8) grants transitional relief to certain individuals who receive Forms 1095-B and -C after they have filed. Under this relief, employees may choose to use other forms of verification of coverage to avoid ACA penalties. In addition, the IRS will not require these individuals to amend their tax returns to reflect the information provided on the forms. However, individuals in need of premium tax credits or those applying for a coverage exemption may need to file amended returns.

What other documents qualify as proof?

The Form 1095-C lists individuals and dependents who enrolled in coverage and the length of time they were covered. Because Form 1095-C will not be available to some employees in time, other verifiable information can be used, including:

  • proof of insurance,
  • a summary of benefits,
  • a statement from the insurance issuer,
  • a W-2 or payroll statements showing health coverage deductions and
  • records of advance payments of the premium tax credit.

Despite the relief for employers, the IRS encourages early furnishing of reports to employees if possible. Issuing reports earlier than expected minimizes the disruption for employees filing their 2015 tax returns.

As for employees, don’t wait – file your tax returns using other documentation if possible.

The content of this blog is intended to keep interested parties informed of legal and industry developments for educational purposes only.  It is not intended as legal opinion or tax advice and should not be regarded as a substitute for legal or tax advice.

About the Author

Robert Barclay

Robert Barclay has been the Tax Research Team Lead at Paycom since 2012, and has been instrumental in such company projects as the development of its Affordable Care Act compliance product, implementation of geolocation services and redesign of Form W-2. He joined Paycom in 2011, bringing more than 20 years of experience with the capital markets consulting practices of Ernst & Young in Memphis, Tenn., and Birmingham, Ala.; and Causey Demgen & Moore in Denver, Colo. A native Oklahoman, Barclay is a graduate of Rhodes College in Memphis, where he played football as linebacker.

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