Adam: Yeah, well part two is the real meat of the 1095-c form. So part one is information that’s pretty standard, you shouldn’t have any problem with that; that’s an employee’s name, address, social security number and all the basic stuff. Now part two is the three, there are three lines; line 14 asks for information about the offer; essentially did you offer these employee insurance, was it available to their spouse and dependents and they have different cases for you know spouse but not dependents – dependent but not spouse; all three, none and all that; was it affordable, did you not offer it at all. Then line 15 is the contribution amount but that’s a little bit tricky. They’re asking for the employee’s share of employee only coverage that they could have gotten. So it’s not what the employee actually enrolled in, it’s not the full amount of the monthly premium, it’s not just because you offered coverage to their employee and you just said that the line above. They’re no longer concerned with the fact that you just offered coverage to their spouse and six dependents. They want to know what it would have cost them for the employee only. So that can be a little misleading and a real stumbling block for a lot of people. And then line 16, the final line in part two asks you to basically describe what happened as a result of the line 14 action of the offer or non offer, non qualifying offer. So you would put down if you offered, or they weren’t offered insurance, you know if you don’t put anything or you know that means you’re probably going to get a penalty. But you could have a valid reason like they’re part-time or they’re in a measurement period, what they call limited non assessment period because they don’t want to make the language clear for anybody. Or code 2C if they enrolled or what they call safe harbors; meaning you’re insuring, you’re acknowledging that the offer was considered affordable but that the employee did not enroll. But the language can be quite confusing.
BIR: It sounds like it, I’m confused right now.
Adam: I apologize if I went on a little bit of a rant there.
BIR: No no no, I’m just messing with you a little bit. It’s the government that’s confusing us with all these rules and regulations… do this but don’t do that, etc. etc. We need more experts in the field educating business owners like yourself to help shed light on this because nobody wants to get that nasty letter in the mail or phone call or fine or whatever the things they’re doing these days. It’s just crazy.
Adam: Absolutely and for many businesses the hard part is the reporting. They’re already offering insurance or maybe they’ll start if they weren’t before. But the difficult part is the actual reporting. It can be such a burden to do it correctly and to do it at all. Whether you’re filing paper forms or if you have over 250 employees, you must file electronically. So just the act of recording can be worse than the actual providing insurance coverage to your employees.
BIR: Yeah, I can see that definitely. So what would be your best advice to our readers who are considering dealing with this or having an issue or realizing that maybe they might not be doing it right or just looking for some help?
Adam: Well if you’re going to tackle it yourself, know what you’re in for. Educate yourself and the sooner the better because by reporting season it may be too late to avoid those penalties. Once someone is due an offer of coverage, you can’t go back and make it retroactive, you’ve already missed it. If you’ve missed it – you’re gonna get fined for that. So educate yourself and I’m not talking about the actual 2,000 page law. Start by just googling the 1095-c instructions and go right to the source. You’ll see a link to the IRS and you can download the PDF. It’s a 19 page manifesto from the IRS. So grab a double from Starbucks because it reads like you would expect anything from the IRS to read. And if you’re able to get through it at least you’ll have an idea of what’s ahead of you.
BIR: Great advice. And if someone doesn’t want to tackle it themselves, what’s the first thing they should do if they’re ready to reach out for some help?
Adam: Well if you do get overwhelmed, call a professional… an ACA specialist. So not an accountant, not a shrink though you may need one of them too. But an ACA expert will know the questions to ask and the best course of action to take. So as I just mentioned before, if you have a hundred employees, every one of them full-time and every one of them offered affordable coverage – that’s a straightforward case. And even if you’re completing all the 1095c’s by hand, though it’s time-consuming, its not really difficult. When you have to make full-time and part-time evaluations, that’s when it can exponentially complicate your task and increase your risk of penalty if you miss one of those full-time employees. And then when you get over 250 forms to file, again you’re required to submit electronically and you categorically need some specialized software or service to get that done. There’s no way you can do that manually. It’s not like a web form or anything. It’s an XML document that you have to upload to the IRS and there’s no way that 99% of companies can prepare this on their own. So be aware that most of these options still lack the tracking and management that a lot of businesses need throughout the year but at least that will get you a general approach.
BIR: Great, that’s perfect, that’s excellent. It’s exactly what I was looking for, thank you. So how can our readers find out more about how they can go about doing this, how they can reach out for help if they find what you’ve shared with them is helpful and want to consider looking at your software to simplify this; what’s the first thing they should do?