This month, the Internal Revenue Service (“IRS”) published draft instructions for the 2015 Pay or Play Reporting forms under the Patient Protection and Affordable Care Act (“ACA”). The 2015 draft instructions provide important guidelines on the filing of the ACA reporting forms 1094-C and 1095-C as well as 1094B and 1095B.

The ACA contains an employer mandate applicable to large employers which requires that those employers offer minimum essential coverage to full-time employees (average 30 hours or more per week) and further that the coverage be affordable and provide minimum value. If not, the large employer may be required to pay penalties. To facilitate the ability of the IRS to monitor large employer compliance with the coverage mandate, the ACA requires that large employers meet certain reporting obligations to the IRS and to employees. Specifically, under IRC Section 6056 and implementing regulations, large employers are directed to use Form 1094-C (transmittal form that also summarizes the employer shared responsibility compliance) and Form 1095-C (addressing each employee’s coverage) to report how they are satisfying their Pay or Play obligations. Reporting begins during the first quarter of 2016.

The ACA further requires individuals to secure minimum essential coverage or to pay a corresponding penalty under the individual mandate. Under IRC Section 6055 and implementing regulations, employers, insurance companies and other entities that provide health coverage to individuals are required to meet certain reporting obligations to the IRS and to covered individuals by using Forms 1094-C and 1095-C (if the reporting entity is an employer sponsor of the self-insured plan) or Form 1094-B (transmittal form) and Form 1095-B (identifying the covered individuals) if the reporting entity is an insurance company or a non-employer that is the source of health coverage for the individual period.

Throughout the draft instructions, the IRS notes penalties that could apply if the ACA reporting rules are not followed. These penalties include $250 for each Form 1095-C that an employer fails to file with the IRS or send to an employee or other recipient. We urge employers to be on the look out for final 2015 instructions, to be prepared to familiarize themselves with the final reporting documents and to prepare for the filing process which will begin the first quarter of 2016.

Questions should be directed to Cynthia Borrelli or Jed Marcus.


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