Form 1094-B

What is ACA Form 1094-B: Transmittal of Health Coverage Information Returns?

Form 1094-B is a transmittal form used by insurance providers and certain other entities in the United States to report information to the IRS about health coverage offered under the Affordable Care Act (ACA). It serves as a cover sheet for Form 1095-B, summarizing the individual 1095-B returns being transmitted. The form is utilized to provide the IRS with details about the responsible entity and the number of associated 1095-B forms. It plays a vital role in the IRS's ability to enforce ACA provisions and verify compliance with health coverage requirements.

When to use Form 1094-B over 1094-C?

Form 1094-B and Form 1095-C are used for different purposes under the Affordable Care Act (ACA) reporting requirements. Form 1094-B is a transmittal form used by insurance providers and certain small employers that offer self-insured health coverage. It serves as a cover sheet for Form 1095-B, summarizing information about health coverage provided to individuals. On the other hand, Form 1095-C is used by Applicable Large Employers (ALEs) to report information about the health coverage offered to their full-time employees. The accompanying transmittal form for 1095-C is Form 1094-C, not 1094-B. Essentially, the choice between using 1094-B and 1094-C depends on the entity's role and responsibilities in providing health coverage, with 1094-B being related to insurers and small self-insured employers, and 1094-C pertaining to large employers.

What is the penalty for not filing form 1094-B?

The penalty for not filing Form 1094-B (along with the associated Forms 1095-B) can be substantial. The penalty is generally $310 per return, with a maximum annual penalty of $3,783,000. If the failure to file is due to intentional disregard, the penalty per return increases, and there is no maximum annual penalty. These amounts can be adjusted for inflation, and various factors may influence the exact penalty, such as the timing of the filing and whether the failure was due to reasonable cause.

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How do employers know if they are an Applicable Large Employer (ALE)?

An Applicable Large Employer (ALE) is defined under the Affordable Care Act (ACA) as an employer that had an average of at least 50 full-time employees, including full-time equivalent employees (FTEs), during the preceding calendar year. To determine ALE status, employers must calculate both their full-time employees (those working 30 or more hours per week) and their FTEs (a combination of part-time employees' hours). The following steps can guide employers in determining their ALE status:

1. Calculate Full-Time Employees: Count the number of employees who work 30 or more hours per week on average for each month of the prior year.
2. Calculate Full-Time Equivalent Employees: For part-time employees, combine their monthly hours and divide by 120 to calculate the number of FTEs for each month.
3. Combine Full-Time and Full-Time Equivalent Employees: Add the full-time employees and FTEs for each month, then divide by 12 to find the average for the year.
4. Assess ALE Status: If the average is 50 or more, the employer is considered an ALE for the current calendar year.

How to count employees when making calculations?

When calculating Applicable Large Employer (ALE) status under the Affordable Care Act (ACA), the following employees are considered:

• Full-Time Employees: Employees who work on average 30 or more hours per week, or 130 or more hours in a calendar month. This includes all common-law employees, regardless of whether they are eligible for or enrolled in the employer's health coverage.
• Full-Time Equivalent Employees (FTEs): The combination of part-time employees' hours, calculated by adding the hours worked by part-time employees in a month and dividing by 120. This allows part-time employees' hours to be translated into the equivalent number of full-time employees for the purposes of the ALE calculation.

Some categories of employees may be subject to special rules or exceptions, such as seasonal workers, temporary employees, or employees in specific industries. Additionally, the calculation may differ if the employer is part of a controlled group or uses specific measurement methods allowed under ACA regulations. Consulting with a human resources professional or legal advisor with ACA expertise can ensure that the correct employees are counted in the ALE determination.

What is the deadline to submit Form 1094-B?

The deadline to submit Form 1094-B to the IRS, along with the associated Form 1095-B, depends on the method of filing:

• Electronic Filing: If filing electronically, the deadline is generally March 31st of the year following the calendar year to which the information return relates.
• Paper Filing: If filing by paper, the deadline is typically February 28th of the year following the calendar year to which the information return relates. Paper filing is usually only allowed if the reporting entity is submitting fewer than 10 returns.

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What is Minimum Essential Coverage (MEC)?

Minimum Essential Coverage (MEC) is a term used in the context of the Affordable Care Act (ACA) to describe the type of health insurance coverage an individual must have to meet the legal requirement for health coverage. MEC includes a broad array of coverage options, encompassing both public and private health insurance plans. Some examples of MEC include:

• Employer-Sponsored Plans: Health insurance provided through an employer, including both large and small employers, governmental employers, and self-insured plans.
• Government-Sponsored Plans: Coverage under programs such as Medicare Part A, Medicaid, the Children's Health Insurance Program (CHIP), and TRICARE.
• Individual Market Plans: Health insurance purchased through the Health Insurance Marketplace or directly from an insurance company.
• Certain Other Health Coverage: Specific types of coverage recognized by the Department of Health and Human Services (HHS) as MEC, including certain student health plans and foreign coverage.

Having MEC is essential to comply with the ACA's individual mandate, which requires most individuals to have health coverage or potentially pay a penalty. Certain exemptions may apply, and the mandate's enforcement varies by state.

Tips to Remember

Completing Form 1094-B accurately is crucial for ACA reporting compliance. Here are some tips to assist you in the process:

• Review Instructions: Carefully read the official IRS instructions for Forms 1094-B and 1095-B. Understanding these guidelines will help ensure that the forms are filled out correctly.
• Gather Necessary Information: Before you begin, assemble all necessary information, including details about the responsible entity, the type of coverage provided, and the number of associated Form 1095-B returns.
• Use Accurate Employee Counts: Ensure that you accurately count and report the number of individual 1095-B forms being transmitted.
• Consider Electronic Filing: If you are filing for multiple individuals, electronic filing may streamline the process. Depending on the number of returns, electronic filing may be mandatory.
• Double-Check All Entries: Verify all information entered on the form for accuracy, as errors can lead to penalties or the need to file corrected returns.
• Meet Filing Deadlines: Be aware of the filing deadlines, which differ depending on whether you are filing electronically or by paper, and ensure timely submission.

Following these tips and referring to the latest IRS guidelines will help you navigate the completion and submission of Form 1094-B.

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