On November 13, 2019, the IRS posted on its website draft IRS Form 1095-B, Health Coverage and draft IRS Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, which are used to report information required by the Affordable Care Act (ACA) to the IRS and covered individuals. Both forms remain substantially the same from 2018.

Practitioners have been waiting for the new draft forms because of the change to the "individual mandate." IRC Section 5000A, added by the ACA, generally requires individuals to either carry health insurance or pay an excise tax (the so-called individual mandate). The Tax Cut and Jobs Act of 2017 (TCJA) amended IRC Section 5000A to reduce the excise tax to $0 beginning in calendar year 2019.

Form 1095-C

Applicable large employers (ALEs) (employers with 50 or more full-time employees or full-time equivalents) must file for the entire calendar year a Form 1095-C for each full-time employee who worked at least one month during the year and send each employee a copy of the form.

Form 1095-C is used to determine whether (i) an ALE owes a payment under the IRC Section 49809H employer shared responsibility provisions for failing to provide minimum essential coverage, and (ii) an employee is eligible for the premium tax credit (a refundable tax credit for eligible taxpayers who purchase insurance through the health insurance marketplace).

The 2019 Form 1095-C remains the same from 2018.

Form 1095-B

Form 1095-B must be filed by providers of minimum essential coverage that are not ALEs:

• Insurance carriers (for a fully-insured plan)
• Employers (for a self-insured health plan)
• Employers that are not ALEs, and that offer self-insured coverage under a single-employer plan or as a participating employer in a multiple employer welfare arrangement (MEWA)
• Joint boards of trustees of multiemployer plans

Form 1095-B is used to report information about which individuals have minimum essential coverage, and therefore are not liable for the individual shared responsibility payment under IRC Section 4980H.

The only change in Draft 2019 Form 1095-B reflected the elimination of the individual mandate. The draft form states: "Before 2019, individuals who did not have minimum essential coverage and did not qualify for an exemption from this requirement could be liable for the individual shared responsibility payment. Beginning in 2019, individuals will not be responsible for the individual shared responsibility payment because the payment amount is reduced to $0. However, if individuals in your tax family are eligible for certain types of minimum essential coverage, you may not be eligible for the premium tax credit."

The rest of draft 2019 Form 1095-B is the same as the 2018 form.

Draft 2019 Instructions

The draft 2019 instructions for both the 1095-B and 1095-C remain the same as the 2018 instructions, except for two numerical changes: (i) increasing the maximum penalty for failing to file correct information returns or furnish correct payee statements to $3,339,000 (from $3,275,500 in 2018), and updating examples with the correct year; and (ii) changing the affordability threshold percentage to 9.86% (from 9.56% in 2018).

Implications

While there has been some speculation in the press that the delayed issuance of this year's draft forms indicated that the IRS would grant relief from filing or furnishing these forms because of the elimination of the individual mandate penalty, that appears to not be the case. The reporting requirements were not amended or eliminated by the TCJA. The new language added to the explanation of purpose for the Form 1095-B indicates that these forms will still need to be filed and furnished due to their use by the IRS in administering premium tax credits. Forms 1094-C and 1095-C continue to be essential to the administration of the employer shared responsibility payments.

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