Benefits

Form Follows Function … Until It’s Tax Season

By Rick Bell

Jan. 14, 2016

Employers are dealing with the first new tax form since the W-2 was introduced during World War II. You’d think they’d be all over it.

And you’d think that employees would be prepped enough to anticipate a piece of info crucial to getting a fat refund when they visit their friendly neighborhood tax preparer. Unless of course they’re using TurboTax; not surprisingly the TV commercials featuring the geniuses and Nobel Laureates tutoring the person trying to file on his own have yet to ask this befuddled schmo if he has received his new form yet. Shocking.

But … you’d be wrong. It appears that employer, employee and Nobel Laureates alike are unaware of it. In this age of communicating EVERYTHING, Form 1095-C is cloaked in a big giant “huh?” from employers and employees alike. Call Robert Stack, because this tax form could fit right in as his next unsolved mystery.

See: ACA Reporting Takes '12 Minutes'?

ADP just released a survey of employers regarding Form 1095-C, stating that 2 in 5 employers are unfamiliar with the form. Frankly, I’m surprised the numbers are that high given the poor communication that’s come down from federal agencies like the IRS.

Now, if employers are that unaware, what will workers think when they get another form for tax filing? As one speaker at last fall’s EBN benefits conference noted, just making them aware to look for it in the mail is a good first step.

So, there is actually two new tax-filing forms … wait, make that three forms (stay with me here). Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, includes identifying information for the employee and employer, and the employer’s offer of health coverage (if any). 

All large employers offering coverage — and for that matter even those that don’t — must provide a Form 1095-C to all full-time employees. Then there’s Form 1095-B that is distributed to part-time employees who are offered coverage. The forms must be in employees’ hands by March 31 — a two-month extension — of each year starting this year.

Finally, Form 1094-C is the employer transmittal form that goes to the IRS by Feb. 29 if in paper form or March 31 if filed electronically. It summarizes information contained in the 1095-C.

Got it? Then you are among the minority of employers that do. Actually, my guess is that you are a really savvy benefits manager or HR pro who’s on top of these things. Whoever responded to the ADP survey resides in the C-suite and has no clue as to what’s really going on.

Other fun facts from the report:

Some 83 percent of midsized employers and 57 percent of large employers don't think their employees clearly understand the forms or how they may be related to their 2015 tax filing obligations, ADP said in a news release regarding its employer confidence report. And, only 20 percent of midsized businesses and 32 percent of large organizations have started communicating with their workforce about the new form and the implications it carries.

The study adds that more than half of midsized businesses and 45 percent of large employers are unsure if they’re at risk of violating ACA compliance requirements this year. And, nearly 1 in 5 employers think they are at risk of not complying with Form 1095-C requirements.

Finally, the report also revealed that 32 percent of large enterprises (those with 1,000 employees or more) and 18 percent of midsized businesses (those with 50 to 999 employees) planned to file for an extension. Whether that’s due in part or in whole to the forms, I don’t know.

If you have questions, ADP has its Form 1095-C Guide for Employers. Pass it along to your clueless bosses. Or to the geniuses and doofuses on the TurboTax spots.

Rick Bell is Workforce’s editorial director. For comments or questions email editors@workforce.com.

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