New Guidance on Plan and Large Employer Reporting under the Affordable Care Act

The Treasury Department and the Internal Revenue Service (IRS) recently released new guidance on reporting requirements for health plans and large employers (defined as those with 50 or more full-time employees, including equivalents) under Sections 6055 and 6056 of the Internal Revenue Code, which were added by the Affordable Care Act. Plan sponsors and large employers will complete the reporting forms for 2016 in the same manner as they did for 2015 with minor changes.

The guidance consists of:

  • New instructions for the 2016 IRS Form 1095-C, which large employers must give to certain employees, and Form 1094-C, a transmittal form for the IRS;[1]
  • New instructions for the 2016 IRS Form 1095-B, which small employers, health insurers and multiemployer plans use to report enrollment in health coverage, and Form 1094-B, a transmittal form for the IRS;[2] and
  • A new proposed rule from the Treasury Department and IRS on plan reporting under Section 6055.[3]

2016 Instructions for IRS Forms 1095-C and 1094-C

The most significant change in Form 1095-C reporting is that for 2016 large employers will now be required to report “conditional” offers of coverage to spouses. A conditional offer is an offer of coverage that is subject to one or more reasonable, objective conditions (e.g., an offer to cover an employee’s spouse only if the spouse is not eligible for coverage under Medicare or a group health plan sponsored by another employer). The instructions provide two new indicator codes that must be used for reporting these conditional offers in line 14 of Form 1095-C.

Large employers are not required to offer coverage to spouses in order to avoid the employer penalty.[4] However, reporting the offer of coverage to a spouse (including whether it is a conditional offer) will help the IRS determine whether the spouse is entitled to a premium assistance tax credit.[5]

Solicitation of Taxpayer Identification Numbers (TINs)

The proposed rule sets out a new schedule that reporting entities will need to follow when soliciting TINs (typically, Social Security numbers) from employees or dependents.[6]

Under the proposed rule, if the coverage application or enrollment form asks for TINs, the reporting entity’s “initial” TIN solicitation is made at the time the reporting entity receives a substantially complete application for coverage. If a TIN is not provided, the reporting entity must make a second solicitation within 75 days of the initial one. If a TIN is still not received, the entity must ask again by December 31 of the year after the initial solicitation was made.[7]

The proposed rule also states that it is sufficient to ask the responsible individual (e.g., the employee) for the TINs of his/her dependents. In other words, separate solicitations to each covered individual are not required. 

Pending issuance of a final rule, reporting entities may follow the solicitation schedule in the proposed rule or the one set out last year in Notice 2015-68.[8]

Employers that Contribute to Multiemployer Plans Can Report 2016 Data in the Same Manner as in 2015 for IRS Forms 1095-C and 1094-C 

Under the instructions for 2016, contributing employers to multiemployer plans will continue to report their offers of coverage to employees for whom they contribute to a multiemployer plan in the same way they reported these offers for 2015. The instructions reflect the continued application of the interim multiemployer rule under IRC Section 4980H. This rule provides that the employer is protected from an employer shared responsibility penalty as long as it is making contributions to a multiemployer plan that provides affordable and minimum value coverage to eligible participants and also offers coverage to their dependents up to age 26. Contributing employers will continue to use indicator code 1H (“no offer of coverage”) in line 14 of Form 1095-C and code 2E (multiemployer interim relief rule, as described here) in line 16 for the months in which they are required to contribute to a multiemployer plan.[9]

Supplemental Coverage

The proposed rule, if finalized, would change the rule applicable to Medicare supplemental coverage. The current regulations do not require reporting of coverage that supplements Medicare. The proposed rule appears to require that such coverage be reported. For group health plans, the proposed rule exempts supplemental coverage only when the same “employer” sponsors both the primary coverage and the supplemental coverage. Since employers do not sponsor Medicare coverage, this would appear to eliminate the current exemption for Medicare supplemental coverage.

Implications for Plan Sponsors

Plan sponsors that are missing TINs for dependents will want to review the new proposed solicitation schedule and decide whether they will adopt it. If so, they will need to adhere to the 75-day deadline for sending out the second solicitation.

How Sibson Can Help

Sibson works with plan sponsors, plan administrators and their legal counsel on compliance issues. Sibson can help plan sponsors and employers understand these reporting requirements and select vendors that can assist with form preparation and transmission to the IRS.


For more information about how these proposed rule may affect your plan, please contact your Sibson consultant or the Sibson office nearest you.


1 The instructions are on the IRS website. The 2016 IRS Form 1095-C, and 2016 Form 1094-C have also been released. They are nearly identical to the current forms used for 2015 reporting.

2 The instructions are on the IRS website. The 2016 IRS Form 1095-B and 2016 Form 1094-B have also been released. The forms and instructions are nearly identical to the current forms used for 2015 reporting.

3 The proposed rule was published in the August 2, 2016 Federal Register. Large employers with self-insured group health plans generally comply with Section 6055 by completing Part III of IRS Form 1095-C. Self-insured multiemployer plans comply with Section 6055 by completing IRS Form 1095-B.

4 Large employers are required to offer coverage to dependent children through the end of the month in which they turn 26, but are not required to offer coverage to spouses in order to avoid (or minimize) the employer penalty.

5 Individuals who purchase coverage through the federal Marketplace or a state Exchange are eligible for a premium assistance tax credit (also known as a “subsidy”) if their household income is least 100 percent of the federal poverty line for their family size, but is not more than 400 percent of the federal poverty line. In general, a person who is eligible for employment-based health coverage will not qualify for the premium assistance tax credit, unless the group coverage is unaffordable or does not meet the 60 percent minimum value test. A plan meets the 60 percent minimum value test if it is expected to pay, on average, at least 60 percent of claims costs and provides substantial coverage of inpatient hospital services and physician services.

6 The applicable regulations, which predate the Affordable Care Act, are found in 26 CFR 301.6724-1.

7 The introduction to the proposed rule includes a transition rule that applies to individuals enrolled in coverage on any day before July 29, 2016 (the date the proposed rule was released). If the reporting entity asked for a TIN as part of the application process or at any time before July 29, 2016, the entity has made the initial solicitation, and the period for making the second solicitation is 75 days after July 29.

8 There is also an explicit statement that a large employer relying on the special multiemployer rule should use code 2E (multiemployer interim relief rule) in line 16 and not codes 2F-2H (which describe various affordability safe harbors). (The 2016 instructions, like the 2015 instructions, indicate that the employer should also not use 2C (enrolled in coverage) or 2D (limited non-assessment period) even if those codes apply.)

9 For information about Notice 2015-68, which is on the IRS website, see Sibson Consulting’s October 1, 2015 Update, “The IRS Has Issued Final Instructions on Affordable Care Act Reporting that Clarify Key Issues for Employers.”


Update is Sibson Consulting’s electronic newsletter summarizing compliance news. Update is for informational purposes only and should not be construed as legal advice. It is not intended to provide guidance on current laws or pending legislation. On all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for legal advice.


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News Highlights:

  • The reporting forms, as well as the instructions for IRS Forms 1095-C, 1094-C, 1095-B and 1094-B indicate few changes for 2016.
  • A proposed rule on plan reporting appears to require plan sponsors to report enrollment in coverage that supplements Medicare.
  • A new schedule for asking employees for Taxpayer Identification Numbers for inclusion on the reporting forms is proposed.