1094-C: Reporting Requirements: A Step-by-Step Guide

The Affordable Care ActReporting Requirements: A Step-by-Step Guide to Form 1094-C
1

These slides were last updated on February 11, 2016.
2

First things first, this is not a basic guide.
3

This guide assumes you know how the Employer Mandate
basically works under the Affordable Care Act.
4

Which brings me to a very important point. The reporting
requirements are their own separate, free-standing requirement
under the Affordable Care Act.
5

I’ve helped hundreds of employers since the Affordable Care Act
was signed on March 23, 2010.
6

I’ve written scholarly articles for peer-reviewed legal journals on
the Affordable Care Act.
7

I’ve written three editions of a comprehensive guide on the
Affordable Care Act for employers called The Employer Mandate
Handbook. The third edition was released in September 2015.
8

When I wrote my articles and books, I tried to cite as many legal
authorities as possible so people could verify my claims. So unlike most
books, when I make seemingly outrageous (or even non-outrageous)
claims, I have endnotes so you can see that I am not a liar, liar with my
pants on fire.
9

I have spent years working on this stuff every day.
10

I have been quoted in the Houston Chronicle, Forbes, and the New
York Times.
11

But even after all of that, I don’t know everything, and you should
run (very fast) from anyone that claims they do.
12

I do know that if you were an Applicable Large Employer or an
Applicable Large Employer Member during 2014, you have a legal
duty to file the reports discussed on these slides with the IRS in
2016.
13

The reporting requirements were optional in 2015 (for the 2014
tax year); they are not optional in 2016 (for the 2015 tax year).
14

Your duty to report in 2016 exists even if you are not currently
offering insurance (during 2015) because (1) you like to live
dangerously, or (2) your lawyer, accountant, or other confidant
said you did not have to under the law.
15

Again, it does not matter if you had fewer than 99 full-time
employees or their equivalent during 2014.
16

And it does not matter if you have a non-calendar year plan that
has not yet come up for renewal in 2015.
17

Whether you are an Applicable Large Employer or Applicable
Large Employer Member, as of January 1, 2015, remains the only
barrier standing between you and the legal duty to comply with
the ACA’s reporting requirements.
18

If you don’t know the answer to the last slide,
19

Stop.
Investigate.
Then Come Back.
20

The Due Date of the Form 1094-C (and 1095-C) has changed since
December 2015--both the delivery date to the recipient and the
delivery date to the IRS have been extended.
See Notice 2016 – 4 (the orange text is a direct link to the IRS)
22

The Penalties for good-faith compliance will apparently be waived by
the IRS if you can prove good faith compliance. The IRS seldom gives
people “As for Effort,” but this is one of those rare times.
As long as you can prove that you tried your best, the IRS is claiming
it will leave you alone. So if you can’t crack this riddle that you and
only I understand, just relax and try to comply in good faith.
See Notice 2015-87 (the orange text is a direct link to the IRS).
23

Why do I have to report in the first place?
The IRS will use the information reported on Form 1094-C to
determine the sum, if any, that a particular employer will pay
in penalties under the Employer Mandate.
24

Where can I find this Form?
You can find it on the IRS website, by clicking here.
25

Understandably, some people will not click links online sent by
people they don’t know.
26

I like your paranoia. Paranoia is good when dealing with IRS
forms.
27

Please ensure you have picked up, and are completing, the correct
Form 1094-C through whatever means you are comfortable employing.
29

I know that sounds a bit silly, but I have audited employer forms
where the employer had the completely wrong form.
30

You do not want to be that employer.
31

In fact, the IRS has released several versions of Form 1094-C just
during the time I have had these slides online. If you do not visit
the IRS website every time you complete these forms, you are
probably doing it wrong. Resist the urge to print 100 of these and
shove them in a drawer.
32

Ensure you have the right IRS form by checking the top-left corner.
It should look like this:
33

The correct Form 1094-C is also titled like this:
34

Notice the word transmittal in the name of the Form.
35

Form 1094-C is a coversheet that must accompany every Form
1095-C a reporting employer sends to the IRS.
36

If you find yourself sending a Form 1094-C, without attaching
Forms 1095-C, to the IRS, you are doing it wrong.
37

Also, ensure you have the right form for the right year. In 2016,
your form should have a 2015 on the top-right corner of the form
you are completing.
38

There is no Form 1094-C with 2016 in the top-right corner, stop
looking for it.
39

We checked the Form’s number.
We checked the Form’s name.
We checked the Form’s year.
40

Again, it might sound silly, but many employers complete the
wrong form. It is important that you verify everything on the last
slide every time you complete IRS forms.
41

Every Applicable Large Employer Member that employs at least
one full-time employee must file at least one Form 1094-C.
42

What the heck is an Applicable Large Employer or an Applicable
Large Employer Member (ALEM)?
43

If you don’t know what that is, you are not ready to complete Form
1094-C. The IRS provides a definition that is everything you would
expect an IRS definition to be on the 9th page of the instructions.
44

Let’s assume Acme, Delta, Beta, and
Echo are all employers.
Together, the four legal entities
employ more than 50 full-time
employees or their equivalent during
2015.
The four collective companies are an
Applicable Large Employer.
45

The group of companies is called an
Applicable Large Employer
(everything inside the circle).
The Form 1094-C refers to the same
concept as the “Aggregated ALE
Group.”
46

The individual companies inside the
circle are called Applicable Large
Employer Members (ALE Members
or ALEMs).
47

Every ALEM in the group (inside the circle) is responsible for filing
its own Form 1094-C if it employs at least one full-time employee.
48

If you have 100 legal entities within an ALE, you need at least 100
Forms 1094-C completed every tax year (so long as each ALEM
employs at least one full-time employee).
49

If you only have one legal entity that employs a full-time employee,
you only need to complete at least one Form 1094-C every
applicable tax year.
50

Do you know if you are part of an ALE? Do you know all the ALEMs
that are in that ALE? If you do not,
51

Stop.
Investigate.
Come Back.
52

Part I just asks for information regarding the particular ALEM on
whose behalf the particular Form 1094-C is being filed and really,
Part I is the coversheet part of the Form (more on this later).
54

Once you know your ALEM/ALE status, Part I is relatively
straightforward (except for Line 19). The tricky part is knowing
the status to ensure you enter the right data in each line.
56

Nevertheless, let’s take it one line at a time.
57

Line 1 asks for the name of the ALEM for which the Form 1094-C is
being completed.
58

Line 2 requires that the ALEM enter its FEIN / EIN number (don’t
forget the dash).
59

If I do not have an EIN number, I can just input my Social Security
Number in there, right?
60

Wrong.
Without an EIN number you cannot complete a Form 1094-C. If
you do not have one, you must get one to complete a Form 1094-C.
61

Lines 3 through 6 ask for the ALEM’s address:
62

Even the address is tricky on Form 1094-C. You want to keep track
of two issues when you are completing the address portion.
63

First. If you are completing a Form 1094-C for an ALEM you have to
decide whether to put one of three addresses (assuming they are
different): (1) the location’s address, (2) the ALEM’s corporate
address, or (3) the ALE’s corporate address.
64

Second. You must ensure that the address (whichever one you
choose) matches the address on the corresponding Forms 1095-C.
You do not want to have one address on Form 1094-C and a
different address on the Form 1095-C.
65

Lines 7 and 8 require the ALEM designate a person to contact and
a telephone number. It is very important that this person be
someone that the employer trusts to talk to the IRS.
66

Moving on to Line 9:
What the heck is a DGE?
67

Good news—if you don’t know what a DGE is, you are probably not
a DGE.
68

To make it easier on government employers, government
employers can designate a sister-agency or –department as the
go-to entity for all Form 1094-C compliance requirements.
69

That designated government entity must then complete Lines 9
through 16 to make it clear to the IRS that an intermediary was
used.
70

If you are not a government employer you can ignore everything
highlighted in blue in the image below and just skip from Line 8
through Line 17:
71

I have received several calls about Line 17. Regulators don’t like
reinventing the wheel (or Form) every time they want to ask an
additional piece of information. To fix that, they often reserve
sections on Forms to where they can add questions without
changing the entire form.
72

Recall the at the start of these slides, I said that Form 1094-C acts
as a coversheet for Form 1095-C. Line 18 makes that evident by
expressly asking how many Form 1095-Cs are being filed along
with a particular Form 1094-C. This is basically the part of any fax
coversheet where it says “How many attached pages?”
73

Ideally, you want to file one Form 1094-C per ALEM with all of that
particular ALEM’s Form 1095-Cs attached.
74

The last question (Line 19) in Part I concerns the two roles Form
1094-C plays in ACA compliance.
75

The first role Form 1094-C plays regards the Form’s status as an
authoritative transmittal of vital information the IRS needs to
administer and enforce ACA compliance for employers (these
items are requested on Lines 20 through 65) .
76

The second role Form 1094-C plays regards the Form’s
administrative use as nothing more than a cover sheet (Lines 1
through 19) for the attached Forms 1095-C.
77

Every time you sit down to fill out a Form 1094-C you have to ask
yourself a fundamental question:
78

Are all of my Form 1095-Cs attached to this Form 1094-C?
79

If the answer is Yes, then this will be your authoritative
transmittal and you have to go beyond Line 19 (and Part I).
80

If the answer is No, then you will have to file at least one Form
1094-C that goes beyond Line 19 and one that does not.
81

Either the first one, the second one, or the 99th one can be the
authoritative one, but you only need to file one authoritative
transmittal (before the applicable deadline).
82

The rest of your Forms 1094-C (whether there is one or a
hundred) are all very fancy coversheets that do not have to be
filled out beyond Line 19.
83

If you have more than one Form 1094-C for any one ALEM in any
given year that goes beyond Line 19, you are doing it wrong.
84

If you know this is not your authoritative Form 1094-C you can
stop at Line 19, sign, and file it.
85

When would I be purposefully filing a non-authoritative Form
1094-C?
86

For example, let’s say you collect all your Form 1095-Cs and file
them in February with the IRS (and send along an authoritative
Form 1094-C).
A month later, you realize that you forgot to attach one Form
1095-C to your original batch. You have to send that lone Form
1095-C with its own Form 1094-C. That second Form 1094-C is
not an authoritative version and you know it when you are
completing it.
87

Otherwise, if you know you are only filing one Form 1094-C
(because all of your 1095-Cs are attached)
OR
If you know that the form you are working on will be the
authoritative transmittal even though you will be filing other
Forms 1094-C.
88

Line 20 exists so that the IRS can check how many total Forms
1095-C your ALEM has filed.
Remember, you only go beyond Line 19 on the authoritative
Forms 1094-C.
90

Ideally, again, you will only file one Form 1094-C per ALEM every
year. If you do so, Lines 18 and 20 should be the same number.
91

Also remember that Line 20 and beyond only get completed on
authoritative Form 1094-C forms.
92

If the Form 1094-C you are completing is not the authoritative
one, Line 20 should be left blank.
93

If you did your research, as I suggested in the opening slides, Line
21 should be fairly easy to answer at this point.
94

Otherwise,
Stop.
Investigate.
Then Come Back.
95

If you are certain that your particular ALEM is not part of a larger
ALE, then you can skip Section (d) of Part III and Part IV
altogether. Don’t worry, I’ll highlight these sections as we move
through the rest of the Form.
97

Having completed Line 21, we now arrive at what causes people
the most headaches in all of 1094-dom, Line 22. The line reads as
follows:
98

Make no mistake about it: Line 22 is the toughest section in all of
Form 1094-C.
99

Basically, Line 22 offers employers the opportunity to certify that
they are eligible for four different kinds of relief.
100

And that’s why there are four certifications on Line 22:
A, B, C, and D.
101

Lines 22A and 22B are related, while 22C and 22D are completely
different forms of relief from each other and Lines 22A and 22B.
102

Those four kinds of relief, have four different requirements, and
four different “rewards” that depend on the applicable
certification.
103

Not all employers will qualify for at least one certification of
eligibility.
104

Indeed, many employers may not qualify for any of them.
105

Conversely, notice the “select all that apply” on Line 22.
106

Some ALEMs may qualify for multiple forms of relief and you
should check to ensure you don’t leave some relief on the table.
107

Again, the first step to understanding how Line 22A, 22B, 22C, and
22D work is to appreciate that Lines 22A and 22B are closely
related to one another and only slightly different.
108

In order to understand the subtle difference between
Certifications A and B, you must appreciate what “qualifying” for
either Certification does to an ALE’s reporting requirements.
109

The default reporting requirements require ALEs to provide every
full-time employee with a copy of a Form 1095-C detailing the
ALE’s offer of coverage and other individualized specifics
regarding that particular full-time employee’s benefits (this is
called general method reporting).
110

That is a lot of work for employers with thousands of employees
(or even smaller employers that do not have the infrastructure,
payroll, or HR resources to tackle such a monumental task).
111

And for some employers, all that work is for nothing. Specifically,
remember that the entire point of Form 1094-C and Form 1095-C
(from an employer’s perspective) is to provide reports so that the
IRS can determine if the reporting employer is liable for employer
mandate penalties.
112

If a general method reporting employer offers great healthcare to
all full-time employees, at a legally affordable price, and goes
beyond the minimum requirements of the ACA, all of its work
compiling custom Forms 1095-C will be for nothing because the
IRS is unlikely to fine that employer under the circumstances.
113

So when you combine the massive amounts of work involved in
general method reporting with the likelihood that in some
circumstances those reports will never lead to employer mandate
penalties, simplified reporting method was born.
114

Certification A (Line 22A) and Certification B (Line 22B) are
simplified methods of reporting where the employer can skip
giving the full-time employee a copy of Form 1095-C by January
31 and instead can give certain full-time employees a generic, pro-
forma statement.
Important: simplified method reporting is optional. If you
understand general method reporting and are comfortable doing
so, then you should just ignore simplified method because it’s
completely optional and somewhat complicated for the
uninitiated person scrambling to comply with compliance for the
first time in 2016.
115

Unless, of course, you are a self-insured employer—then it’s not
even on the table. Self-insured employers cannot use the
“alternative method of furnishing Form 1095-C” (which is the
entire point of Line 22A and 22B).
Others may disagree, but I think that renders Certification A and
Certification B largely useless to self-insured employers and most
self-insured employer should just skip Line 22A and Line 22B.
116

Again, there are two types of Form 1095-C reporting: general
method of reporting and simplified reporting. If you barely
know what the heck you are doing in 2016, you need to focus on
general method of reporting. Otherwise, it’s like trying to do
calculus but not knowing algebra.
117

So to carry the analogy:
Algebra Calculus E=MC2
1B 1A 1I
1C (Line 22A) (Line 22B)
1D
1E (Step 1) (Step 2) (Step 3)
1F (General) (Simplified) (Simplified)
1G
1H
If you do not know when 1B, 1C, 1D, 1E, 1F, 1G, or 1H apply (on Form 1095-C)
go ahead and table trying to figure out 22A and 22B because using 22A and
22B require even more knowledge and you do not have to use either relief,
they are optional for the ACA astrophysicists out there. You can stop on the
far left and be fully compliant.
118

Note: ALEs that meet the requirements of Certification A or B still
have to give the IRS a Form 1095-C for any such full-time
employee, but instead of having to have Forms 1095-C ready by
January 31 (standard rule) of the applicable year for those full-
time employees, qualifying employers can wait until March 31st
(standard rule) to provide them to the IRS. For many employers,
those three months are extremely valuable, especially the first
year. But, remember that in 2016, we got some extra months (see
slide 22 of this deck for details).
119

Employers that want to give all of their full-time employees
generic substitute statements (instead of Form 1095-C) informing
the employee that he or she is not eligible for a tax subsidy must
fully comply with the next slide.
121

Certification A: Qualifying Offer Method Means the ALEM:
Offered a QHP to all full-time employees;
Offered at least MEC or More to a spouse and dependents;
Full-time employees that received such offers did not pay
more than 93.18 dollars a month for the employee-only
coverage; and
That was true for all months in the calendar year where that
employee was a full-time employee.
122

Employers that can give some of their full-time employees (but
not all because some employees did not satisfy Slide 119) generic
substitute statements informing the employee that he or she is
not eligible for a tax subsidy, instead of a Form 1095-C, must fully
comply with the next slide.
123

Certification A: Qualifying Offer Method Means the ALEM:
Offered a QHP to some full-time employees;
Offered at least MEC or More to a spouse and dependents;
Full-time employees that received such offers did not pay
more than 93.18 dollars a month for the employee-only
coverage; and
That was true for all months in the calendar year where that
employee was a full-time employee.
124

Full-time employees captured by slides 122 and 124 are the
employees that the employer completed “1A” for on Form 1095-C.
A 1A full-time employee gets a substitute statement instead of
Form 1095-C under Line 22A so long as that 1A applies to all the
months where the full-time employee was a full-time employee.
125

But, I only offered a skinny, MEC, rust, barebones, something-
other-than QHP plan to my full-time employees?!
126

Or, I didn’t offer anything to my full-time employee’s dependents.
127

Or, even though I offered something, my full-time employees had
to pay more than 93.18 dollars a month.
128

Or, I did all those things on the slide, I just didn’t do it for all
months where the employee was a full-time employee because
[insert irrelevant excuse here].
129

Well then . . .
No Qualifying Offer Method for You!
130

Qualifying Offer Method (Line 22A on Form 1094-C) is unlikely to
apply in industries where full-time employees have not
traditionally had health insurance or where the employer does
not pick up an extremely generous amount of the health
insurance tab.
131

In short, Qualifying Offer Method is hard, very hard, to satisfy. So
hard, in fact, that it led to the creation of Line 22B (but more on
that later).
132

If you are not self-insured, and comply with Certification A
requirements (slide 122), you can get away with a substitute
statement that says something like the next slide for all full-time
employees instead of a Form 1095-C.
133

John Q. Taxpayer
Widgets Company, LTD
123 Internal Revenue Love
Houston, Texas 123654
Ph. (281) 555 – 3986
Dear [22A-Eligible Full-Time Employee]:
Widgets Co. records indicate that you received a qualifying offer, along with your spouse and
dependents, if any, for all months in which you qualified as a full-time employee. According to our
records, you are therefore not eligible for a premium tax credit on the individual marketplace.
However, you are directed to see IRS Pub. 974, Premium Tax Credit (PTC) for more information on your
eligibility for a premium tax credit. For information about the offer of coverage you received or
inquiries regarding what Widgets reported to the IRS on Form 1095-C, please contact, via telephone,
the person listed above.
All the best,
Federal Employer Identification No. 36--12536548
134

If you are not self-insured, and comply with Certification A
requirements (slide 122) for some full-time employees, you can
get away with an substitute statement that says something like
the next slide for those particular full-time employees.
135

John Q. Taxpayer
Ph. (281) 555 – 3986
Dear [Full-Time Employee]:
dependents, if any, for all months in which you qualified as a full-time employee. According to our
records, you therefore are not eligible for a premium tax credit on the individual marketplace.
However, you are directed to see IRS Pub. 974, Premium Tax Credit (PTC) for more information on your
eligibility for a premium tax credit. For information about the offer of coverage you received or
inquiries regarding what Widgets reported to the IRS on Form 1095-C, please contact, via telephone,
the person listed above.
All the best,
136

Go back to Slide 122. If you cannot say that you satisfied that slide
for every full-time employee, for every month such full-time
employees were full-time employees, or you operated on a self-
insured basis, you will not be able to give substitute statements to
all full-time employees. If that is what you are after, skip to Line
22B and Certification B.
137

Line 22A will be the standard rule for all full-time employees that
have a 1A offer for all 12 calendar months in the year being
reported.
Line 22B exists to give employers one last chance at sending full-
time employees a substitute statement instead of Form 1095-C
and is far more temporary than Line 22A (some speculate it will
not be available in 2017 for the 2016 tax year).
138

Certification B: Qualifying Offer Method Transition Relief
The easiest way to understand the difference between
Certification B and Certification A is to show you the 1 series
codes for a 12-month period on a Form 1095-C and how they
affect whether a particular employer uses Certification A or B.
139

Recall from Slides 122 and 124 that in order to qualify for 22A
status a particular full-time employee has to satisfy the
requirements of Slide 122 or 124 for all months where the
employee was a full-time employee (so someone that worked for
you every month in 2015, would have to have 12 1As).
140

So that begs the question: What happens when you have a 1A-
eligible full-time employee for only some instead of all months in
the calendar year where that particular full-time employee was a
full-time employee?
141

Under the standard Line 22A rules, such a full-time employee is
automatically entitled to a Form 1095-C (and the employer is not
eligible for 22A relief as regards that particular full-time
employee).
142

This is where Line 22B becomes very relevant to some employers.
143

For example, in the full-time employee example below, this full-
time employee (who worked for you from January through
December of 2015) would have to receive a Form 1095-C because
of the non-offer in January (and thus would be ineligible for Line
22A relief).
144
January February March April May June July August September October November December
1H 1A 1A 1A 1A 1A 1A 1A 1A 1A 1A 1A

In 2016 (for the 2015 tax year) there is a middle ground between
1A qualification, and say, 1H non-qualification, and that is 1i.
145

The best way to think about how 1i works is as a middle-ground
between 1A and 1H.
146

But not all employers can take advantage of this middle ground.
In fact, for every particular month in which you want to transform
a 1H into a 1I (like January below), the employer must have
offered 95% of full-time employees a QHP.
Note that the 95% excludes full-time employees in limited non-
assessment periods (e.g., waiting periods).
147
1H 1A 1A 1A 1A 1A 1A 1A 1A 1A 1A 1A

So assume that the employer below had 100 full-time employees
during January.
Of those 100, 9 were in waiting periods.
Line 22B requires 95% of 91 not 95% of 100 to qualify for Line
22B transitional relief (in others words, to transform the 1H into
a 1I during January in the example below).
148
1H 1A 1A 1A 1A 1A 1A 1A 1A 1A 1A 1A

Once an employer qualifies to transform a 1H into a 1I (see
below), this particular full-time employee is now eligible for Line
22B’s substitute statement.
149
1H 1I 1A 1A 1A 1A 1A 1A 1A 1A 1A 1A 1A

Under Line 22B, just like 22A, you also get to send a letter
(instead of the 1095-C), but you have to tweak it a bit because you
didn’t offer a qualifying offer for all the months the employee was
a full-time employee (that’s why you had to rely on Line 22B in the
first place). See the next slide for the modification.
150

John Q. Taxpayer
Ph. (281) 555 – 3986
Dear [22-B Full-Time Employee]:
dependents, if any, for some months in which you qualified as a full-time employee. According to our
records, you might be eligible for a premium tax credit on the individual marketplace for the months
that you did not receive such a qualifying offer. However, you are directed to see IRS Pub. 974, Premium
Tax Credit (PTC) for more information on your eligibility for a premium tax credit. For information
about the offer of coverage you received or inquiries regarding what Widgets reported to the IRS on
Form 1095-C, please contact, via telephone, the person listed above.
All the best,
151

Please also appreciate that although you may qualify to send an
employee the letter described in the last slide (instead of the
Form 1095-C), the IRS still wants its Form 1095-C by March 31st
(under the standard rules, but I explained available extensions
at the start of this deck) of every year for employers that qualify
for Certification A or Certification B. All Certifications A and B
do for an employer is minimize the custom forms they give full-
time employees—the IRS still gets its Forms.
152

Thankfully, Certification C and D are much simpler.
153

Certification C: Section 4980H Transition Relief
ALEs with fewer than 100 full-time employees or their
equivalent (ALEs with 50-99), or
ALEs with more than 99 full-time employees or their equivalent
(ALEs with 100+) can get an 80-employee discount instead of a
30-employee discount during 2015 when the IRS calculates
appropriate penalties for failing to offer any medical benefits to
full-time employees.
154

Before February 12, 2014, everyone thought the employer
mandate (having to offer insurance or pay a penalty) would go in
effect on January 1, 2015.
155

On February 12, 2014, the IRS announced that ALEs with fewer
than 100 full-time employees would be given another year before
having to offer insurance or pay a penalty if certain conditions
were met by those employers.
156

One of those conditions is certifying under oath that you have
read what is required and swear, under penalty of perjury, that
you are eligible.
157

That is the point of Certification of Eligibility C—affirming that
you are eligible under oath and penalty of law.
158

If you are unsure about whether you are eligible you should find
out sooner rather than later because, forget the reporting
requirements, you could be accruing penalties for failing to offer
insurance. If you are unsure . . . .
159

Stop.
Investigate.
Then Come Back.
160

The second part of Certification of Eligibility C is for ALEs that had more
than 99 full-time employees or their equivalent during 2014.
162

These are often referred to as the “larger ALEs” in ACA sewing
circles.
163

Larger ALEs did not get until 2016 to comply with the
requirement to offer full-time employees medical benefits or risk
paying a penalty; these folks had to be ready to go in January 2015
under the default rules.
164

Sidebar: if a larger ALE did not offer anything to full-time
employees, under the standard rules, the particular affected
ALEM would have to share, proportionately to its full-time
employee count, in an ALE-wide 30-full-time employee discount
when the IRS calculated penalties.
165

To help these folks out, just like smaller folks got a one-year
reprieve, the IRS increased the amount of the full-time employee
discount from 30 to 80 for 2015. The second portion of
Certification of Eligibility C is for larger ALEs to take advantage of
this transition relief.
166

Certification D: 98% Offer Method
The last Certification of Eligibility, Letter D, requires an eligible
ALEM to have offered a QHP to 98% of its full-time employees and
their dependents. The bolded “its” should make it clear that the
98% rule applies on an ALEM-BY-ALEM basis.
Additionally, the full-time employee’s offer of self-only coverage
was legally affordable under the Affordable Care Act (no more
than 9.5 percent of the employee-only income).
167

The “reward” is that the employer who takes advantage of
Certification D does not have to complete “Full-Time Employee
Count” in Part III, column (b), of the authoritative Form 1094-C.
168

Don’t worry, when we get there, I’ll remind the Certification D
folks of the Lines they can skip.
169

Before we move on, don’t forget to sign the Form 1094-C right
underneath Line 22.
170

We finally arrive at Part III!
171

Part III requires ALEMs to report, typically on a month-by-month
basis, several variables for the particular ALEM.
172

The first thing ALEMs have to report on Part III is whether the
particular ALEM offered at least a MEC plan to at least 70% of full-
time employees. If you offered a skinny plan, bare bones plan,
rust plan, etc., you get to say “yes” here for every month that you
did so.
173

Likewise if you offered more robust insurance, like a QHP, you
also get to say “yes” here for every such month.
174

Several people have asked me whether they should complete Part
III by row or by column.
I find it easier to do columns. You should do one column at a time
starting with Column (a) which again, looks like this:
175

Working your way down Column (a), the first question is whether
you offered Minimum Essential Coverage All 12 Calendar Months.
176

If you did, you can just denote that by checking “Yes” under All 12
Months.
177

Likewise, if you didn’t offer minimum essential coverage for all 12
months, to at least 70 percent of your full-time employees, you
can just denote that by checking “No” under All 12 Months.
178

Most employers, especially those who just entered the benefits
world, will have a mixture of “Yes” and “No.” The 1094-C form
allows employers to report that by allowing spaces to report on a
month-by-month basis as shown below:
179

After you report whether you
offered at least minimum
essential coverage or not, the IRS
wants to know how many full-
time employees the reporting
ALEM had on a month-to-month
basis.
180

The specific boxes (Section b)
below confuse people for a few
reasons. First, the number you
put in each box, each month,
must be calculated every month.
181

No, look-back measurement
periods and all of that do not
count here. Here, every month
you have to calculate how many
full-time employees you have and
whether they are in limited non-
assessment periods.
182

Wait a second. I don’t know how
to calculate full-time employees
and I have no idea what a limited
non-assessment period is.
183

Stop.
Investigate.
Then Come Back.
184

The number of full-time
employees for a particular ALE
member is exclusive of full-time
employees in limited non-
assessment periods. In the 2014
version of the Form, the all-12-
months option was greyed out
(see here to the right). In the
2015 form, accepting that some
employers have the same amount
of full-time employees all 12
months, the IRS will now allow an
all-12-month option.
186

Section (c) of Part III is relatively
straightforward. You must report
how many human beings work
for the ALEM in Section (c).
187

The only tricky part with (c) is the point at which you take the
“snap shot” to report how many human beings work for the ALEM
during any given month. On February 9, 2015, we got an answer.
Ensure you use the same method every month during the year.
1) The first day of each month;
2) The last day of each month;
3) The first day of the first payroll period that starts during
each month; or
4) The last day of the first payroll period that starts during each
month (the last day of such a payroll can’t be in another
month).
5) The 12th day of the month. 188

Section (d) is only for ALE/ALEMs
that are part of a larger group of
aggregated companies.
189

Look at your Form, did you answer “No” to Line 21?
If you did answer “No” you don’t have to complete Section (d)
of Part III.
If you answered “Yes” to Line 21, you have to complete
Section (d) of Part IV.
190

If the particular ALEM completing the
1094-C Form was a member of a larger
ALE group all 12 months, just check the
all-12-months box.
Otherwise, entities that were acquired
during the course of the year will have
to do a month-by-month report so that
the IRS can know the exact month
where the ALEM joined the ALE.
191

Section (e):
This section goes hand-in-hand with
Line 22(c).
Recall that I told you that Certification
of Eligibility C has two parts. The IRS
wants to know what part you are using.
So in section (e) (shown to the right,
here), you either put (a) or (b)
depending on whether you are under
100 full-time employees or their
equivalent (“a”), or whether you are
over, and want to take advantage of the
80-employee discount rule (b).
192

If you answered “No” to Line 21, you are done. Congrats!
193

If you answered “Yes” to Line 21, you have one more part to go,
Part IV.
194

Part IV is relatively straight-forward once you know what an ALE
is, what an ALEM is, and how they are different. If you have gotten
this far, this should be a breeze.
196

You want to list the 30 biggest ALEMs that are sister-ALEMs to the
particular ALEM for which you are filling out this authoritative
Form 1094-C.
197

By biggest, I mean, which sister-ALEMs had the largest monthly
average of Full-Time employees.
198

What if my company has more than 30 ALEMs?
199

You only have to report the 30 biggest ones.
200

Mario, I am freaking out right now because I do not know what is going on
with these reports!
201

Just keep reviewing the slides, shoot me an email, and remember that this
year the IRS will waive penalties for screwing up the reports if you make a
good-faith effort to comply.
203

When people make seemingly outrageous claims (like I just did in the last
slide), you should always ask for citations. Here is the one that backs up
what I just claimed in the last slide (page 61). And this is of course is in
addition to the other document I linked to in the opening slides.
204

I have another set of slides that go with a webinar. Some of these slides
are on that deck, but that deck has many slides / visuals that are easier to
explain orally than via text. Consider sitting through my webinar. It’s 100
bucks for 2.5 hours of 1094-C line-by-line conversation that you can binge
watch over and over until your heart is content. And although it’s mainly
a 1094-C webinar, I crossed into 1095-C-land several times to answer
some timeless riddles like:
206

What is the difference between 1E / 1A?
Do I have to leave Line 16 blank if I put 1A in Line 14?
What is the difference between 1A and 1i?
And many more riddles that presently escape me.
207

You can sign up for that webinar here. Note, that it’s prerecorded, so you
can watch whenever it fits your schedule.
208

Note: I tried my best to ensure that these slides are as accurate
and informative as possible. If I made a mistake, please send
corrections to my email address which appears on the last slide.
210

Extra credit for those folks that send corrections with supporting
authority.
211

Thanks for sitting through this slide deck.
212

These slides have received thousands of views. I have also
received many emails from folks thanking me for putting them up
online (you’re welcome!).
These slides are supplementary materials to the third edition of
my book, The Employer Mandate Handbook. If you benefited
from these slides, please consider purchasing the book (or
signing up for a webinar) that led to their creation while helping
me pay off these massive student loans in the process.
213

Comments and GENERAL questions should be sent to me via email
at the following email address: theACAguy@gmail.com
Please do not send me angry emails complaining about the ACA
itself. I can’t much do anything about that one. Also, please note
that sending me an email does not create an attorney-client
relationship nor is anything you send me privileged. I reserve the
right to quote your questions and my answers on my website,
slides, etc.
These slides are also copyrighted. © 2015-2016. All Rights
Reserved (please don’t steal my stuff).
214

Finally, I do not email these slides out to anyone. I provide these
for free, and I want to keep it that way. I once went to a paid-for
seminar where someone had “borrowed” my slides and was
charging people for the privilege. Not cool and that’s why we can’t
have nice things.
I also update these slides as people send in questions so you are
better off just coming back here. Please do not email asking for
copies of the slides to be sent to you. If you want to get on my
mailing list (I give discounts for my various wares) email me at
theACAguy@gmail.com and I will email you when the slides are
updated or I release a new webinar.
215

ABOUT MARIO. Mario K. Castillo is the General Counsel of the Lone Star College System in Houston, Texas and
Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization. Prior to joining the
System, he was a labor, employment, and benefits partner at the law firm of Monty & Ramirez LLP in Houston, Texas,
where he helped employers avoid or minimize liability and defended them when litigation was necessary. Mario also
completed a four-year term as briefing attorney to the Honorable Felix Recio of the Southern District of Texas prior
to joining Monty & Ramirez. Mario received a Juris Doctorate from the Maurer School of Law at Indiana University—
Bloomington. Prior to attending law school, Mario received a Bachelor of Arts in Government from the University of
Texas in Austin.
DISCLAIMER. This presentation is for informational purposes only and provides general information concerning
the Affordable Care Act to help you identify when you may need additional advice. It is not an exhaustive treatment of
the statutes, case law or regulations that are involved with the subject. Please recognize that the law is developing
rapidly in this area and you will want to obtain current legal advice on your specific situation before taking action.
216

1094-C: Reporting Requirements: A Step-by-Step Guide

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1094-C: Reporting Requirements: A Step-by-Step Guide