IRS Releases 2020 ACA Form 1094-C and 1095-C Final Instructions

Key Changes:
Compared with 2019, the 2020 ACA forms have more significant changes such as new fields and codes for meeting the mandated ICHRA reporting.

2020 ACA Form Final Instructions
- An Overview

- Updated November 27, 2020 - 8.00 AM - Admin, ACAwise

In the month of November, the IRS released final instructions of Form 1094-C and 1095-C. These Forms which are integral to the ACA reporting process have undergone changes and updates, primarily the Form 1095-C.

It is important to note that these are final revisions of Form 1094-C and 1095-C which clearly defined the mandate of ICHRA Reporting. However, these final instructions are a helpful guide for mandatory ACA reporters and service providers who will need to accommodate these changes in 2021 ACA reporting.

Key Changes in 2021 ACA Form 1095-C

“Plan Start Month” box

The “Plan Start Month” box in Form 1095-C is required to be completed for 2021 ACA reporting. This box was not mandated in prior years. Employers are required to enter the two-digit number (01 through 12) representing the calendar month during which the plan year begins.

Employee’s Age on January 1

In Part II of Form 1095-C, employers that offer ICHRAs should enter the employee’s age as of the beginning of the calendar year.

New codes related to offers of ICHRAs

The IRS requires employers to report the ICHRA coverage information on Form 1095-C.

With an ICHRA (Individual coverage health reimbursement arrangements), an employer provides a class of employees with a monthly allowance that can be used to purchase individual health coverage from the marketplace.

This is a list of ACA codes that are related to ICHRAs and should be used on line 14 to indicate the nature of your employees health insurance coverage.

  • 1L - Individual coverage health reimbursement arrangement (HRA) offered to you only with affordability determined by using the employee's primary residence location ZIP Code.
  • 1M - Individual coverage HRA offered to you and dependent(s) (not spouse) with affordability determined by using the employee's primary residence location ZIP Code.
  • 1N - Individual coverage HRA offered to you, spouse and dependent(s) with affordability determined by using the employee's primary residence location ZIP Code.
  • 1O - Individual coverage HRA offered to you only using the employee’s primary employment site ZIP Code affordability safe harbor.
  • 1P - Individual coverage HRA offered to you and dependent(s) (not spouse) using the employee’s primary employment site ZIP Code affordability safe harbor.
  • 1Q - Individual coverage HRA offered to you, spouse and dependent(s) using the employee’s primary employment site ZIP Code affordability safe harbor.
  • 1R - Individual coverage HRA that is NOT affordable offered to you; employee and spouse or dependent(s); or employee, spouse, and dependents.
  • 1S - Individual coverage HRA offered to an individual who was not a full-time employee.

New Line 17 for ZIP Code

The line 17 reports the applicable ZIP code your employer used for determining affordability if you were offered an individual coverage HRA.

Changes in 2020 ACA Form Deadline & Penalties

Deadlines:

The IRS has extended the deadline to furnish the ACA Forms 1095-B / 1095-C recipient copies from
January 31st, 2021 to March 02nd, 2021.

Penalties:

As for Form 1095-C, the IRS will not impose a penalty for failure to furnish it in regards to any employee that is enrolled in an ALE member’s self-insured health plan who is not a full-time employee for any month of 2020. Employers must meet this condition by completing Part 1 of the Form 1095-C and indicating Code 1G for this employee in the IRS reporting. See Notice 2020-76 for more information on reporting penalties.

Remember, The 2020 section 6055 furnishing relief in no way affects the assessment of penalties associated with the filing requirement or the deadline to file with the IRS the 2020 Forms 1094-C or 1095-C, as applicable.

For more information on the final changes to Form 1095-C, please refer to the IRS final version at https://www.irs.gov/pub/irs-pdf/f1095c.pdf

Choose ACAwise for your ACA Reporting

ACAwise has experience in generating 2021 ACA Form 1095-C codes with 100% accuracy. Our comprehensive ACA reporting solution is designed to handle your ACA reporting requirements, producing the best results.

This is a list of codes that are related to HRAs and should be used on line 14 to indicate the nature of your employees health insurance coverage.

All our clients are happy with our process and often refer our services to other employers for their
ACA Reporting.

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A Quick Guide for Employers

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