First steps to take with IRS draft ACA reporting instructions

The Internal Revenue Service late last week released a set of long-awaited draft instructions for the forms employers will need to file to comply with the Affordable Care Act’s employer mandate, providing an opportunity for benefit advisers and their employer clients to begin preparing for the new reporting requirements set to begin in 2015.

The draft instructions are available for Form 1095-A, “Health Insurance Marketplace Statement;” Forms 1094-B and 1095-B, “Transmittal of Health Coverage Information Returns” and “Health Coverage;” and Forms 1094-C and 1095-C, “Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns” and Employer-Provided Health Insurance Offer and Coverage.”

The draft forms were released in July, but without instructions, they gave advisers and employers only a glimpse of what the new reporting requirements will be.

See related story: Feds release draft tax forms for employer compliance with ACA

Legal and industry experts agree the forms are complex, but attorney Alden Bianchi of the Boston, Mass.-based law firm MintzLevin says that’s to be expected considering “the statue is complex and the final regulations are complex.”

“But the forms have been complicated further by a dizzying array of compliance options that were included in the final rules,” he notes.

Employers can review the draft instructions with their benefit advisers, but also should consult with their payroll vendors or other vendors of third-party software, Bianchi says.

“The first step is coding. Employers or their vendors will need to know what data goes where as they build software to populate the forms. Once that’s done, then it is a matter of collecting the data,” Bianchi says.

In a blog post following the publication of the draft forms, Keith McMurdy, a partner with Fox Rothschild, urged employers to “take a look at these drafts just to get a feel for what information they will have to provide and develop a system for making sure that information is collected in a timely manner.”

Forms 1094-B and 1095-B are used by organizations that are not reporting to the IRS as large employers – insurers and sponsors of multiemployer plans, for example. Forms 1094-C and 1095-C, meanwhile, are used by organizations that are subject to the employer mandate.

The IRS says both the forms and instructions will be finalized later this year.

The agency says it has simplified the paperwork and reduced the number of forms and categories some companies will be required to complete. For example, the forms allow some employers to check a box that says an employee is covered on the employer-sponsored group plan for 12 months, rather than reporting coverage on a monthly basis.

Source: Employee Benefit Adviser