Tax Advising A delayed, but inevitable, result of the The Affordable Care Act is a provision which requires employers to make reports to the IRS regarding the health care situation for each of their employees. The reporting begins in 2016, but employers should begin now to prepare for their compliance. The instructions portions of the reporting requirement have been anticipated since the drafts of the actual forms were first released in the summer of 2014. Although the instructions do give much needed guidance on the IRS’s expectations for employers and insurers, they also served to confirm that the reporting task will be complicated, expensive and burdensome to employers.

“The instructions are voluminous and reflect the complexity behind the information, particularly that employers are going to have to provide,” says Amy Bergner, managing director, human resource solutions at PricewaterhouseCoopers in Washington, DC.

Now that the instructions are available, employers and their tax advisors have the details on the data and reporting structures that will be required. A review of instructions indicates the IRS emphasis that employers will be required to start tracking and gathering information on a monthly basis.


Bergner says employers should review the draft instructions as soon as possible with all third-party providers who help them with tax reporting. “Even though these reports are not filed with the IRS or sent to employees until early in 2016, employers have to be capturing the information on a monthly basis starting in January 2015.”


The purpose of the forms is three-fold:

1. When individuals file their individual tax returns, they’re going to have to report whether or not they have health insurance as required by the ACA’s individual mandate. The IRS can compare what the individual is reporting with what the employer is reporting. (See our previous post on Job-Based Covergae Here)

2. The IRS can double check whether people who have received federal government subsidies to buy insurance on the exchanges were actually entitled to it. People who are offered employer-sponsored coverage are not entitled to the subsidy.

3. The IRS can enforce the employer mandate, which requires employers with 50 or more full-time employees to offer health insurance.

Bergner explains: “The instructions include many of the complicated and detailed rules about the employer mandate, details usually reserved for regulations or other technical guidance. We expect that many employers and insurers will need assistance decoding the instructions and the underlying rules to be able to ultimately provide timely and accurate reports.”


Forms 1094-C and 1095-C are used by organizations that are subject to the employer mandate. Copies of the IRS Forms and Instructions Here


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