This set of FAQs provides guidance on employer compliance with PPACA reporting requirements under IRC Sections 6055 and 6056.
As background, to fulfill the IRC Section 6056 requirement, Forms 1094-C and 1095-C are to be used by applicable large employers (ALEs), which are those with 50 or more full-time employees (FTEs), including full-time-equivalent employees, in the preceding calendar year. Form 1094-C is used for transmitting Form 1095-C. Self-insured ALEs will combine Sections 6055 and 6056 reporting on Form 1095-C.
These FAQs are meant to provide more specific guidance to ALEs on how to properly complete Part II of Form 1095-C, specifically Lines 14, 15 and 16.
Below is a quick reference guide to help clarify the meaning of codes and acronyms used throughout the FAQs.
A QUICK REFERENCE GUIDE TO REPORTING CODES AND COMMONLY USED ACRONYMS
Line 14 requires an ALE to enter the applicable code from Series 1 that identifies the type of health coverage actually offered by the ALE or on behalf of the ALE to the employee, their spouse and any dependents. This information also relates to eligibility for coverage subsidized by the premium tax credit.
Indicator Codes for Employee Offer and Coverage:
1A: Qualifying offer, for all 12 months, employer offered minimum essential coverage (MEC) providing minimum value (MV) that was affordable according to the federal poverty line (FPL) safe harbor ($93.18 per month in 2015). At least MEC offered to spouse & dependent(s).
1B: MEC providing MV offered to employee only. No coverage offered to spouse and dependents.
1C: MEC providing MV offered to employee. MEC offered to dependent(s). No coverage offered to spouse.
1D: MEC providing MV offered to employee. MEC offered to spouse. No coverage offered to dependent(s).
1E: MEC providing MV offered to employee. MEC offered to spouse and dependent(s).
1F: MEC not providing MV offered to employee and spouse and/or dependent(s).
1G: Offer to employee who was not full time and enrolled in self-insured plan for one or more months.
1H: No offer of coverage.
1I: Qualifying Offer Transition Relief 2015, employee (and spouse or dependents) received no offer of coverage, received an offer that is not a qualifying offer or received a qualifying offer for less than 12 months.
On Line 15: If code 1B, 1C, 1D or 1E is entered on Line 14, an ALE is required to enter the amount (including cents) of the employee share of the lowest-cost monthly premium for self-only MEC, providing MV that is offered to the employee. This is true regardless of the coverage actually enrolled in by the employee, e.g., if the employee chose to enroll in more expensive coverage such as family coverage.
Line 16 provides the IRS with information to administer the employer mandate penalties. The purpose of Line 16 is to indicate that under a rule or safe harbor, the employer is not subject to Penalty B for that month (or that the health coverage offered will be treated as affordable for that month).
Section 4980H Safe Harbor Codes and Other Relief for Employers
2A: Employee not employed during the month. 2F: Form W-2 affordability safe harbor.
2B: Employee was employed, but not full time. 2G: FPL affordability safe harbor.
2C: Employee enrolled in coverage offered. 2H: Rate of Pay affordability safe harbor.
2D: Employee is in a limited non-assessment period 2I: Non-calendar-year transition relief applies to employee (measurement period, waiting period). for the month.
2E: Multiemployer interim rule relief. Use this code for any employee where a fee is paid by the employer pursuant to a collective bargaining agreement.
Glossary
ALE: Applicable Large Employer FTE: Full-Time Employee
EIN: Employer Identification Number MEC: Minimum Essential Coverage
FPL: Federal Poverty Line MV: Minimum Value
I. EMPLOYER REPORTING ON AN OFFER OF COVERAGE TO FTES
Q1. On Part II of Form 1095-C, how should ALEs report whether an offer of coverage was made to an FTE?
A. ALEs should use Line 14 to report whether an offer of coverage was made to an FTE for each month of the year by entering the Series 1 indicator code that reflects the type of coverage offered. Importantly, an offer of coverage is considered to have been made for a month only if it would provide coverage for every day of that month. If an FTE was offered the same coverage for the entire calendar year, then an ALE would enter the applicable indicator code in the “All 12 Months” column on Line 14 or in each of the 12 boxes for the calendar months.
Q2. How are mid-month new hires reported?
A.Line 14 – 1H
Line 15 – No Entry Line 16 – 2D
For the first month of employment, the ALE should report that the FTE was not offered coverage by entering code 1H on Line 14. Again, unless the offer of coverage extended to every day of that month for the FTE, the offer is not considered to have been made for that month. No entry is required on Line 15 for that first month. Although the ALE reports that no offer of coverage was made, the ALE is entitled to relief from employer mandate penalties for that month. For the first three months after an employee first becomes an FTE, they may be treated as being in a limited non-assessment period if all applicable conditions are satisfied. This is reported as code 2D on Line 16.
For example, if a newly hired FTE starts employment on Jan. 15, 2015, and the offer of coverage (if accepted) provides coverage starting on Jan. 15, 2015, then the ALE should indicate that the FTE was not offered coverage for the month of January.
If the ALE offers a self-insured health plan and the FTE enrolls in the plan and obtains coverage for any day during the first month of employment, the FTE (and any other individuals such as spouses and dependents who obtained coverage through the FTE’s enrollment) should be reported as having coverage for that month on Part III of Form 1095-C, but that does not change what the ALE reports on Lines 14-16.
Q3. How are mid-month terminations reported?
A. Line 14 – 1H (No offer of coverage) Line 15 – No Entry
Line 16 – 2B
If an FTE terminates employment on any day other than the last day of a month and the coverage or offer of coverage expires upon termination of employment, then the ALE should report that the FTE was not offered coverage for the final month of employment by entering code 1H on Line 14. No entry is required on Line 15 for that final month.
If coverage would have continued if the FTE had not terminated employment with the ALE prior to the last day of the month, then the ALE will be eligible for relief for the FTE’s final month of employment. In that case, the ALE would enter code 2B on Line 16 for that month.
Q4. Is an ALE always required to enter a code on Line 16 of Form 1095-C in order to avoid a penalty under the employer mandate?
A. No. ALEs are not required to make an entry on Line 16. So, if no code is applicable for a given month, Line 16 should be left blank. However, ALEs should enter the appropriate code from Series 2, if any apply, on Line 16, to indicate whether they qualified for an exception from the assessable employer mandate penalty for a given month.
Q5. If an ALE is required to recognize paid FMLA leave for an FTE, and the ALE makes an offer of affordable, MV coverage to the FTE, spouse and dependents, how does the ALE report when only the FTE enrolls in coverage for a calendar month during the leave of absence?
A. Line 14 – 1E (MEC providing MV offered to employee. MEC offered to spouse & dependents). Line 15 – Enter employee share of lowest-cost monthly premium.
Line 16 – 2C (Employee enrolled in coverage).
For the month during the paid FMLA leave of absence, the ALE should enter code 1E on Line 14 and code 2C on Line 16 to report that the FTE was enrolled in coverage under the plan. The ALE should report on Line 15 the employee contribution for the lowest-cost monthly premium for self-only MEC providing MV offered under the plan.
Since the FTE is being paid for hours worked and the compensation is treated similarly to other employees (subject to W-2 reporting, employment taxes, etc.), then the FTE would appear to be an employee and treated similarly. This means that if the FTE is expected to regularly work an average of 30 hours or more per week, then he/she would be treated as an FTE and offered coverage, which must be reported on Form 1095-C.
II. EMPLOYER REPORTING ON AN OFFER OF COVERAGE TO FTES AND DEPENDENTS
Q6. If an ALE offers affordable MV MEC to FTEs, their spouses and dependents, and only an FTE enrolls, how should the ALE report this?
A. Line 14 – 1E
Line 15 – Enter employee share of lowest-cost monthly premium Line 16 – 2C
The ALE should enter code 1E on Line 14 and code 2C on Line 16 to report that the FTE enrolled in coverage under the plan.
The ALE should report on Line 15 the employee contribution for the lowest-cost monthly premium for self-only MEC providing MV offered under the plan to the FTE as an active employee. ALEs will complete Line 15 only if code 1B, 1C, 1D or 1E is entered on
Line 14 in either the “All 12 Months” box or in any of the monthly boxes.
The ALE should enter code 2C on Line 16 for any month in which the FTE enrolled in health coverage offered by the ALE for each day of the month, regardless of whether any other code from Series 2 might also apply.
Q7. How should an ALE report an FTE who waives coverage?
A. Line 14 – 1E
Line 15 – No Entry
Line 16 – 2F, 2G or 2H (depending on affordability safe harbor used)
The ALE should still enter code 1E on Line 14 and should enter one of the affordability safe harbors represented by codes 2F, 2G and 2H on Line 16 to report that the FTE did not enroll in coverage under the plan. The ALE should still report on Line 15 the
employee contribution for the lowest-cost monthly premium for self-only MEC providing MV offered under the plan to the FTE to show that the FTE was an active employee who was offered coverage.
Q8. How should an ALE report enrollment for self-insured coverage provided to an FTE’s former spouse who was not an employee on any day of the prior calendar year?
A. Line 14 – 1G
Line 15 – No Entry Line 16 – No Entry
The ALE may report enrollment information for an FTE’s former spouse by entering code 1G on Line 14 for all 12 months and completing Part III of Form 1095-C. No entry is required on Lines 15 or 16 for this non-employee.
Form 1095-C requires the recipient’s SSN on Line 2 in all instances, so Form 1095-C cannot be used for the FTE’s former spouse if he/she has not previously provided an SSN to the ALE, regardless of whether the ALE has properly requested the SSN. In that
case, the ALE would use Form 1095-B rather than Form 1095-C to report on the FTE’s spouse. Form 1095-B allows for the use of the spouse’s date of birth instead of an SSN when proper request procedures are followed by the ALE.
III. EMPLOYER REPORTING ON COBRA PARTICIPANTS
A. COBRA Due to Termination of Employment
Q9. How should an ALE report on an FTE who terminates employment during a calendar year and receives an offer of COBRA continuation coverage?
A. While an employer will need to report that the employee was full-time during a part of the year, the reporting obligation ends upon termination, even if the employee is offered and elects COBRA continuation coverage. The only difference is for self-insured plans, which are required to report COBRA participants as ‘covered individuals’—see Q11 for more information.
Example 1:
The FTE receives an offer of coverage providing MV for an employee, spouse and dependents (family coverage) under an ALE’s self-insured health plan. The FTE enrolled in family coverage under the ALE plan effective Jan. 1, 2015, through the earlier of Dec. 31, 2015, or the FTE’s termination of employment. On May 15, 2015, the FTE terminated employment with the ALE and received an offer of COBRA continuation coverage but chose not to enroll in the coverage.
For the months January through April, the ALE should enter code 1E on Line 14 and code 2C on Line 16 to report that the FTE enrolled in coverage under the plan. The ALE should report on Line 15 the employee contribution for the lowest-cost monthly premium for self-only MEC providing MV offered under the plan to the FTE as an active employee.
Line 14 – 1E
Line 15 – Enter employee share of lowest-cost monthly premium Line 16 – 2C
For May, the ALE should enter code 1H on Line 14 and code 2B on Line 16. No entry is required on Line 15 for that final month. Line 14 – 1H
Line 15 – No Entry Line 16 – 2B
For June through December, the ALE should enter code 1H on Line 14 and code 2A on Line 16 since the individual is no longer an employee. No entry is required on Line 15 for those remaining months.
Line 14 – 1H
Line 15 – No Entry Line 16 – 2A
Example 2:
The same facts, except that the FTE chooses to enroll in family COBRA coverage for him or herself, spouse and dependents under the plan.
For the months January through December, the ALE should enter the same information as in Example 1. Employers are not required to report COBRA coverage for a terminated employee.
B. COBRA Due to Reduction in Hours
Q10. How should an ALE report on an FTE who enrolls in COBRA continuation coverage due to a reduction in hours, e.g., a change from full-time to part-time status resulting in loss of eligibility under the plan?
A. The answer depends on whether the FTE elects COBRA coverage. The ALE should report the offer of COBRA continuation coverage as an offer of coverage.
Example 1:
An FTE of an ALE elects to receive coverage providing MV, including an offer of MEC to his/her spouse and dependents. The FTE enrolls in self-only coverage offered from Jan. 1, 2015, through Sept. 31, 2015. The required employee contribution for the lowest-cost self-only coverage option under the plan is $100 per month. On Oct. 1, 2015, the FTE transfers to a part-time position and is no longer eligible for coverage under the plan’s terms. The FTE receives an offer of COBRA continuation coverage due to the transfer to the reduced-hours position, with a COBRA premium of $200 per month for the lowest-cost self-only COBRA coverage. The FTE elects to enroll in the COBRA continuation coverage for October through December.
For January through September, the ALE should enter code 1E on Line 14, should report $100 as the employee contribution on Line 15 and should enter code 2C on Line 16 to report that the FTE enrolled in the coverage offered.
Line 14 – 1E
Line 15 – Enter employee share of lowest-cost monthly premium Line 16 – 2C
For October through December, the ALE should enter code 1E on Line 14, should report $200 on Line 15 and should enter code 2C on Line 16.
Line 14 – 1E
Line 15 – Enter COBRA premium amount Line 16 – 2C
Example 2:
The same facts, except the FTE chooses not to enroll in the COBRA continuation coverage.
Line 14 – 1E
Line 15 – Enter COBRA premium amount Line 16 – 2F, 2G or 2H
The ALE should complete Lines 14 and 15 in the same manner as Example 1. However, the applicable indicator code, if any, for Line 16 is determined as it would be for any other active employee. The indicator code will depend on whether the FTE is treated as an FTE for purposes of the employer mandate, and if so, whether the offer of COBRA continuation coverage for the FTE satisfies one of the affordability safe harbors (Code 2F, 2G or 2H).
C. Differences for Self-Insured Plans
Q11. If an ALE sponsors a self-insured plan, how should the ALE report coverage of an FTE’s spouse who separately elects to receive COBRA coverage?
A. If an ALE sponsors a self-insured plan, it should report coverage of each non-employee spouse that separately elects COBRA continuation coverage on a separate Form 1095-B (or Form 1095-C; see Question 9 above).
If a spouse or former spouse receives COBRA continuation coverage because an FTE has elected COBRA continuation coverage that also provides coverage to the spouse (e.g., family coverage), then the coverage of the FTE and spouse should be reported together on the same Form 1095-C or Form 1095-B that is provided to the FTE.
Example:
An FTE elects to receive self-and-spouse coverage under the self-insured ALE health plan effective for the plan year beginning Jan. 1, 2015. On June 15, 2015, the FTE gets a divorce and his/her spouse loses eligibility for coverage under the plan. The ALE makes an offer of COBRA continuation coverage to the spouse, who elects to enroll in the COBRA continuation coverage and remains enrolled from June 15, 2015, through Dec. 31, 2015.
The ALE should report the FTE’s enrollment on Part III of Form 1095-C by reporting that the FTE was enrolled in MEC for January through June, and that his spouse had coverage, due to the FTE’s enrollment in coverage providing coverage to a spouse, for the months January through June.
For the period July through December, the spouse should receive a separate Form 1095-B or Form 1095-C reporting his/her enrollment in MEC under the ALE’s plan.
IV. VARIABLE-HOUR AND SEASONAL EMPLOYEES IN A MEASUREMENT PERIOD
Q12. If an ALE hires variable-hour or seasonal employees for the summer and uses look-back measurement periods to determine FTE status, should the ALE report on those employees?
A. An ALE would only need to report on a variable-hour or seasonal employee if the employee finished their initial measurement period, were determined to be full time and were offered coverage as an FTE for any month of the year. In that situation, for the months the employee was in the measurement period, the ALE would use code 1H on Line 14 and code 2D on Line 16.
For any months a variable-hour or seasonal employee was treated as an FTE and offered coverage, the ALE would use codes 1B through 1F (depending on the type of coverage offered) on Line 14 and 2C on Line 16 if they enrolled in coverage. If the employee waived coverage, the ALE would enter one of the affordability safe harbors represented by codes 2F, 2G and 2H, if applicable, on Line 16. The ALE would not report on a variable-hour or seasonal employee who was determined not to be an FTE based on the hours worked during the measurement period.
Additionally, on Part III, column (b), of Form 1094-C, the ALE would only include the FTE count for each month, meaning the ALE would not include employees in their initial measurement periods. However, for column (c), it would include every employee – part-time, full-time, variable and seasonal – for the total count.
V. “SIMPLIFIED METHODS” OF REPORTING
Qualifying Offer Method Advantages
• The employer has the option to distribute an employee
statement, rather than a copy of the Form 1095-C, to each employee who has been offered coverage. Thus, the employer could prepare and send identical notices to every FTE who received a qualifying offer for all
12 months, eliminating the need to match forms to specific employees.
• When using the Qualifying Offer Method Transition Relief, the employer can provide the statement to all FTEs (even those who received an offer for only a portion of the year or received no offer).
• Under the Qualifying Offer Method and the Qualifying Offer Method Transition Relief, the employer doesn’t have to report employee contribution information on Line 15 for all 12 months of 2015.
Disadvantages
• The Qualifying Offer Method and the Qualifying Offer Method Transition Relief are only available to employers who used the FPL affordability safe harbor. Most employers aren’t using this safe harbor.
• While distributing a simple statement to employees may sound like a simplification, the statement must meet certain requirements and be substantially similar to Form 1095-C. Therefore, it may be easier to simply distribute the 1095-C, particularly since the employer still has to file a 1095-C for each employee with the IRS.
98 Percent Offer Method Advantage
• The employer is not required to identify which of the
employees for whom it is filing were FTEs (i.e., doesn’t have to calculate the hours of each employee), but the employer must still file Forms 1095-C on behalf of all of its FTEs. So, the employer doesn’t have to report the total number of FTEs (usually done through column (b) on Part III of 1094-C).
Disadvantages:
• The employer must offer MV coverage to at least 98 percent of all employees it is reporting on.
• The employer isn’t allowed to distribute a statement to employees in lieu of a Form 1095-C. Since the employer still must distribute a Form 1095-C to each FTE, there’s no simplification.
• The employer may complete forms for a part-time employee for which it is otherwise not required to complete a form.
Q13. If an ALE believes it is eligible to use the Qualifying Offer Method for an FTE, how does it report?
A. If an ALE can certify that it made a qualifying offer for all 12 months of the year to an FTE (and the FTE did not enroll in self- insured coverage), then it may use an alternate reporting method for the FTE. A qualifying offer is an offer that satisfies all of the following criteria:
• Offer of MEC that provides MV
• Employee cost for employee-only coverage for each month does not exceed 9.5 percent of the mainland single FPL divided by 12
• An offer of MEC is also made to the employee’s spouse and any dependents
The ALE should check box A, “Qualifying Offer Method,” on Form 1094-C, Line 22, “Certifications of Eligibility.”
On Form 1095-C, Line 14, the ALE should enter code 1A. No entry is required on Line 15. The ALE should enter the affordability safe harbor represented by code 2G on Line 16 because one of the criteria of a qualifying offer is that the employee cost for employee- only coverage for each month does not exceed 9.5 percent of the mainland single FPL divided by 12.
Line 14 – 1A
Line 15 – No Entry Line 16 – 2G
The Form 1095-C must be filed with the IRS. However, the ALE may provide the FTE with a general statement in lieu of a copy of the Form 1095-C containing certain information and stating that the FTE is not eligible for the premium tax credit because he/she received a qualifying offer.
This alternative may not be used by self-insured employers with respect to any employee who has enrolled in the coverage under the self-insured plan, because the employer is required to report that coverage on Form 1095-C.
Q14. If an ALE believes it is eligible to use the Qualifying Offer Method Transition Relief for 2015 for an FTE, how does it report?
A. If the ALE can certify that it made qualifying offers for one or more months of 2015 to at least 95 percent of its FTEs, it must file form 1095-C with the IRS, but it may use an alternate reporting method for the FTE.
If eligible, the ALE should check box B, “Qualifying Offer Method Transition Relief,” on Line 22, “Certifications of Eligibility,” of Form 1094-C.
The ALE should enter code 1A on Line 14 of Form 1095-C for any month for which the FTE received a qualifying offer, or code 1I, Qualifying Offer Transition Relief 2015, for any month for which the FTE did not receive a qualifying offer. No entry is required on Line 15. On Line 16, the ALE should enter one of the affordability safe harbors (Code 2F, 2G or 2H). For at least 95 percent of its FTEs, the ALE should enter the affordability safe harbor represented by code 2G on Line 16 on Part II of Form 1095-C, because
one of the criteria of a qualifying offer is that the employee cost for employee-only coverage for each month does not exceed 9.5 percent of the mainland single FPL divided by 12.
Line 14 – 1A or 1I Line 15 – No Entry Line 16 – 2F, 2G or 2H
When using the Qualifying Offer Method for 2015, the ALE may provide the FTE with an alternate statement rather than providing a copy of Form 1095-C. The alternate statement must contain certain information and state whether the FTE received a qualifying offer, and thus whether he/she was or was not eligible for the premium tax credit. This alternative may not be used by self-insured employers with respect to any employee who has enrolled in the coverage under the self-insured plan, because the employer is required to report that coverage on Form 1095-C.
Q15. If an ALE believes it is eligible for the 98 Percent Offer Method, how does it report?
A. If the ALE can certify that for all months of the calendar year it offered affordable, MV health coverage to at least 98 percent of its employees for whom it is filing a Form 1095-C, and offered MEC to those employees’ dependents (spouses not required), then it may be eligible to use the 98 Percent Offer Method.
If eligible, the ALE can check box D, “98% Offer Method,” on Line 22, Certifications of Eligibility, on Form 1094-C. The ALE is not required to determine whether all employees for whom it is filing were FTEs and, therefore, is not required to complete Form 1094-C, Part III (b), Full-Time Employee Count for ALE Member, on its authoritative transmittal. However, the ALE is still required to complete Forms 1095-C for all of its FTEs.
On Form 1095-C, for the 98 percent of FTEs that received the offer, the ALE should enter code 1C or 1E on Line 14, as applicable, and should report on Line 15 the employee contribution for the lowest-cost monthly premium for self-only MEC providing MV offered under the plan. On Line 16, the ALE should enter the code for the applicable affordability safe harbor (code 2F, 2G or 2H).
Line 14 – 1C or 1E
Line 15 – Enter employee share of lowest-cost monthly premium Line 16 – 2F, 2G or 2H
VI. TRANSITION RELIEF
Q16. If an ALE believes it is eligible for transition relief (additional delay) in 2015 for an employer with 100 or more full-time-equivalent employees and a non-calendar-year plan, then how should the ALE report?
A. On Form 1094-C, the ALE should check box C, “Section 4980H Transition Relief,” on Line 22, “Certifications of Eligibility.” In addition, on Part III, column (e), “Section 4980H Transition Relief Indicator,” the ALE should enter code B.
On Form 1095-C, the answer depends on whether coverage was actually offered. As an example, assume an ALE’s plan year begins on June 1, 2015, and the ALE qualifies for non-calendar year plan transition relief. Lines 14-16 would look like this:
No Coverage Offered: Line 14 – 1H
Line 15 – No Entry Line 16 – 2I
Coverage Offered, Employee Enrolls: Line 14: 1C, 1D, 1E or 1F
Line 15: Employee contribution amount Line 16: 2C
Coverage Offered, Employee Waives: Line 14: 1C, 1D, 1E or 1F
Line 15: Employee contribution amount Line 16: Affordability safe harbor (2F, 2G or
2H) or, if unaffordable, 2I.
However, FTEs should be eligible for affordable, MV coverage on June 1, 2015, or the ALE will be at risk for employer mandate penalties. For June through December, on Line 16, the ALE should be able to enter code 2C or one of the affordability safe harbor codes (2F, 2G or 2H). The ALE must also report on Line 15 the employee contribution for the lowest-cost monthly premium for self- only MEC providing MV offered under the plan to its active employees. Thus, for June through December, Lines 14-16 would look like this:
Line 14 – Applicable Code Required
Line 15 – Enter employee’s share of lowest-cost monthly premium Line 16 – 2C, 2F, 2G or 2H
Q17. If an ALE has between 50 and 99 FTEs or equivalents and a calendar-year plan and believes it is eligible for transition relief (additional delay) in 2015, then how should the ALE report?
A. On 1094-C, the ALE should check box C, “Section 4980H Transition Relief,” on Line 22, “Certifications of Eligibility.” In addition, on Part III, column (e), “Section 4980H Transition Relief Indicator,” the ALE should enter code A.
On 1095-C, answer depends on whether the employee was offered coverage in 2015.
If no coverage offered: Line 14 – 1H
Line 15 – No Entry Line 16 – 2I
Coverage offered, employee enrolled: Line 14: 1C, 1D, 1E or 1F
Line 15: Employee contribution amount Line 16: 2C
Coverage offered, employee waived: Line 14: 1C, 1D, 1E or 1F
Line 15: Employee contribution amount Line 16: Affordability safe harbor
(2F, 2G or 2H) or, if unaffordable, leave blank.
VII. GENERAL EMPLOYER REPORTING
Q18. When do employers check the box“authoritative transmittal” on Line 19 of Form 1094-C?
A. Generally, the answer is “always.” A single entity (one EIN) has the option to submit more than one Form 1094-C but then designate one of the forms as the authoritative transmittal in which the information is aggregated. This option will have limited application and likely be used only by very large companies with multiple divisions under one EIN. For the majority of employers, one Form 1094-C will be sufficient, and thus it will be the authoritative transmittal.
Q19. How do controlled group members report?
A. If an employer is a controlled group member, then it is separately responsible for offering coverage, ensuring that it is affordable and complying with the related reporting obligations. Specifically, each member of an ALE group is responsible for filing Forms 1094-C and 1095-C with the IRS as well as distributing a 1095-C statement to each FTE. Members in a controlled group can identify one member to file on behalf of all other members. However, that does not shift liability for a filing failure from the individual member to the identified filing member. The individual member remains exposed to IRS penalties if the filing member fails to actually file. This is because the employer mandate penalties are determined on a single-employer level per EIN. Further, each employer in the controlled group must identify the other employers in the group on Part IV of 1094-C.
The reporting obligations are complex and these FAQs are not meant to provide guidance on every reporting situation.
