ACA Takes on a New Life with Recent Code Changes

July 20, 2020 Marshall Slaybod, J.D.

New 1095-C Indicator Codes: 2020 Draft Forms Breathe Life into ACA

After being de-emphasized for years, the Affordable Care Act is back in the spotlight with several new changes to employer information reporting requirements.

On July 13, 2020, the Internal Revenue Service (IRS) released draft versions of Forms 1094-C and 1095-C for the year 2020 (to be reported in 2021). Forms 1094-C and 1095-C are used by Applicable Large Employers (ALEs) to report information about health coverage offered to full-time employees in accordance with the Affordable Care Act (ACA).

Below is what we think you should know about the new draft forms.

1095-C Changes

Line 14: New Indicator Codes

Eight new Line 14 Offer of Coverage indicator codes (1L through 1S) have been added to the draft version of Form 1095-C. These codes help identify and separately track offers of coverage under Health Reimbursement Arrangements (HRAs).

  • The first six new indicator codes (1L through 1Q) capture offers of coverage under HRAs. There are variations depending on which family members were eligible and what location is used to determine affordability.
  • The final two new indicator codes capture scenarios in which (1R) coverage offered under an HRA was unaffordable or (1S) HRA coverage was offered to an individual who was not a full-time employee.

Line 17: ZIP Code

Previously used for reporting Covered Individuals, Line 17 of the draft 1095-C is now labeled “ZIP Code” to provide employers a place to enter the ZIP code of the employee’s primary residence location or primary employment site, depending on which is being used to determine affordability for coverage under an HRA. Reporting of Covered Individuals now begins on Page 3, Line 18.

1094-C Changes

In its draft form, minor changes were made to Form 1094-C to refresh dates and update other text for 2020 reporting. We currently see no substantive changes to Form 1094-C.

Subject to Change

Please note: Although Forms 1094-C and 1095-C have changed very little between draft and final versions in previous years, these draft forms are still subject to change. We anticipate that draft instructions and final versions of the forms and instructions will be released over the coming months.

Offer Feedback

If you wish to submit comments on the draft forms to the IRS, you may do so here:

Comment on Tax Forms

Links to Draft Forms

The most current draft versions of Forms 1094-C and 1095-C may be found here:

Draft Form 1094-C

Draft Form 1095-C

 

Disclaimer: The information contained in this communication is NOT intended to be relied on as legal or tax advice. It is being provided for informational purposes only.

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