Final 2020 ACA Forms & Instructions Released

At A Glance

• IRS published final 2020 Form 1094-C, Form 1095-C, and Instructions
• Plan start month will be required for the 2020 Form 1095-C
• Eight additional Series 1 Codes have been added for use on Line 14, Form 1095-C to report Individual Coverage HRAs (ICHRAs)
• New data fields for reporting information for individuals offered individual coverage HRAs (ICHRAs); this includes an “Age as of January 1” field and Location Safe Harbor Zip Code reporting on the new Line 17.

Introduction

On October 16, 2020, the IRS published the final Form 1094-C, Form 1095-C and related Instructions for the 2020 tax year. The Form 1094-C remains unchanged. However, there are some significant updates to the 1095-C form from the 2019 version. These include two new additions in Part II: a data field labeled “Employee Age on January 1” and a newly added Line 17 labeled “Zip Code”. In addition, the Instructions for Form 1095-C include directions on offers of Individual Coverage Health Reimbursement Arrangements (ICHRAs) will be reported.

Form 1095-C

For plan years beginning on or after January 1, 2020, employers may offer ICHRAs. Form 1095-C has been modified to add new codes for reporting offers of individual coverage HRAs and new lines for reporting required information.

The new codes are:

• 1L. Individual coverage HRA offered to employee only with affordability determined by using employee’s primary residence location ZIP code.
• 1M. Individual coverage HRA offered to employee and dependent(s) (not spouse) with affordability determined by using employee’s primary residence location ZIP code.
• 1N. Individual coverage HRA offered to employee, spouse, and dependent(s) with affordability determined by using employee’s primary residence location ZIP code.
• 1O. Individual coverage HRA offered to employees only using the employee’s primary employment site ZIP code affordability safe harbor.
• 1P. Individual coverage HRA offered to employee and dependent(s) (not spouse) using the employee’s primary employment site ZIP code affordability safe harbor.
• 1Q. Individual coverage HRA offered to employee, spouse, and dependent(s) using employee’s primary employment site ZIP code affordability safe harbor.
• 1R. Individual coverage HRA that is NOT affordable offered to employee; employee and spouse, or dependent(s); or employee, spouse and dependents.
• 1S. Individual coverage HRA offered to an individual who was not a full-time employee.

The additional new data fields for those offered individual coverage HRA (ICHRA) include:

• The individual’s age as of January 1
• Zip Code on Line 17 will be required to apply the Location Safe Harbor to identify the applicable lowest cost silver plan for affordability calculation:
  • Enter individual’s residencia zip code if codes 1L, 1M or 1N was entered on Line 14 or
  • Enter the individual’s primary worksite zip code if codes 1O, 1P or 1Q was entered on Line 14

Plan Start Month

For the first time, ALE’s will be required to report the plan’s start month in Part II of the 1095-C. This field was optional in previous reporting years.

Next Steps

Paylocity is in the process of updating our forms to include the additional data fields and new codes on the IRS Form 1095-C.