Tax season is just around the corner. Under the Affordable Care Act, large employers must provide information regarding their employees’ health insurance coverage on form 1095-C. Keep in mind that ‘large employer’ is one that has at least 50 full-time employees on staff. Employers are also required to file this form with the IRS on paper or electronically (online e-filing). Now that it’s the end of the year, chances are that your organization is busier than ever. But it’s imperative to take the steps now toward completing form 1095-C for your employers. Keep reading for e-file tips.
Use your 2016 employee count to determine your status for the 2017 filing year – Here’s the thing: Your large employer status is determined each calendar year. Depending on any layoffs and/or new hires, your workforce total varies from one year to the next. For 2017 only, you may use any consecutive six months of 2016 to determine if you are a large employer. Those who have fewer than 50 employees in their organization aren’t necessarily off the hook, though. Consider asking a professional if you still have an ACA filing requirement.
Multiple companies with a common owner must combine their workforce totals when determining large employer status – Let’s say the combined total of their full-time employees is greater than or equal to 50. In this case, each separate company is considered a large employer even if their individual workforces alone don’t total 50 or more. Not only that, but each separate company must complete form 1095-C for any applicable employees.
Large employers are required to file form 1095-C for every one of their full-time employees regardless of whether coverage is offered – Some employees decide to waive health coverage that is offered. That said, form 1095-C must still be filed for this employee. Such filing may seem like an unnecessary inconvenience, but it’s required.
Be extra careful when handling employee terminations and coverage – Even after an employee leaves your organization, you still may need to report information on form 1095-C about the coverage offered during the month the termination occurred. Consider this instance: If an employee terminates employment on any day other than the last day of a month and the coverage or coverage off expires upon termination of employment, then you must enter code 1H on line 14. Then again, if the coverage or coverage offer would have continued should the employer had not terminated employment during the month, be sure to enter 2B on line 16.
Not all large employers are required to enter a code on line 16 of form 1095-C – It’s important to know that Line 16 is used to indicate whether the large employe qualifies for an exception to the penalty. Remember to leave line 16 blank if no code is applicable for a given month.
Now that you know more about form 1095-C, let’s dive into two of the more commonly asked questions. First, what is the deadline to file form 1095-C? Well, it’s the end of February if filing on paper. If choosing to e-file, the deadline is the end of March. Just know that the deadline to provide employee copies is the end of January. Next, let’s review the potential penalty for failure to file form 1095-C. For 2017, the IRS will not impose penalties for filing incorrect or incomplete information if the filer/employer has made a good faith to comply with the reporting requirements. Employers that fail to file in a timely fashion may still be eligible for penalty relief if the IRS deems the standards for reasonable cause are satisfied.
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