Reporting COBRA Coverage

As an employer or any filer of ACA returns, it’s important that everything is reported correctly on your 1094 and 1095 forms. This isn’t too hard with full-time employees who worked all year under the same coverage. But what about when it comes to reporting COBRA Coverage?

What is COBRA Coverage?
COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, which was passed in 1986. The act amended existing laws by giving certain former employees, retirees, spouses, and dependents the right to temporary continuation of health coverage at group rates. COBRA coverage is offered when the employee loses access to coverage under a group plan, due to voluntary or involuntary termination or a reduction in their hours of employment.

Reporting COBRA Coverage on Part II of Form 1095-C
If you’ve offered COBRA coverage to a terminated employee (generally anyone whose employment didn’t end because of gross misconduct), you won’t report it as an offer of coverage on line 14 of Form 1095-C. Instead, use code 1H, no offer of coverage, for any month the continued coverage applies.

If you need to report COBRA coverage for an active employee, say, someone whose hours were reduced and is, therefore, ineligible for plan coverage, you’ll report it in the same manner as an offer of that type of coverage to any other active employee.

Self-Insured Plans and COBRA Coverage
Under self-insured COBRA plans, spouses and dependents can elect to receive the continued coverage independently of the employee (i.e., if the employee declines coverage or is deceased). Employers who sponsor these plans will still need to report coverage offered to each non-employee spouse and dependent on a separate Form 1095-B or 1095-C from the employee. If a spouse and dependents elect to receive COBRA coverage along with the employee, you can report them on the same form.

Whatever you have to report on your ACA forms, ExpressIRSForms can help. Create an account or log in today to get started e-filing your ACA returns! If you have any questions, don’t hesitate to give us a call (704-684-4751) or send us a live chat Monday through Friday, 9:00 a.m. to 6:00 p.m. EDT. We also provide after hours assistance at support@ExpressIRSForms.com.

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Unique ACA Challenges Employers with Multiemployer Plans Face

ALEs, or Applicable Large Employers, who contribute to a multiemployer health coverage plan will face some unique challenges when reporting their offers of coverage to the IRS on Forms 1094-C and 1095-C. Multiemployer plans - so we’re all on the same page here - are plans that cover employees of unrelated companies as settled upon in a collective bargaining agreement.

Internal Revenue Code Section 6056 indicates multiemployer plan administrators may prepare their return for employees eligible for the multiemployer plan, reporting information on the plan and the ALE member. However, when the Forms 1094-C and 1095-C were finalized and published by the IRS, the instructions didn’t appear to provide any way for a plan administrator to do this. In other words, it appears that ALE members must report full-time employees eligible for a multiemployer plan and that ALE member is responsible for any incorrect reporting and subsequent penalties incurred.

It is true that ALE members must file a Form 1095-C for each full-time employee and provide information regarding the offer of health coverage. However, in the case of multiemployer arrangements, ALEs typically don’t make the direct offer of coverage. This means you’ll need to get details of the offer(s) from your coverage provider.

As for reporting your data on Forms 1094-C and 1095-C, the Preamble to the Code Section 4980H has included interim guidelines for employers who contribute to a multiemployer plan:

• On Form 1094-C, Part III, column (a), treat all the employees you contribute to the multiemployer plan as if they have been offered minimum essential coverage (MEC), even if they haven’t, for the months you’re eligible to use interim guidance.
• On Form 1095-C, Part II, line 14, enter the code of health coverage that corresponds with the coverage actually offered to the employee, even if it contradicts what you included on Form 1094-C in Part III.
• On Form 1095-C, complete lines 15 and 16 as usual, including the premium amount (line 15) and any applicable Safe Harbor relief code (line 16).
• If you’re completing multiple 1094-C Forms for one ALE member, one of the forms must be marked as the authoritative transmittal copy. This copy must include aggregate employer-level data for all full-time employees.
• Sponsors or insurers of multiemployer plans are required to furnish information about health coverage to any enrolled employees on Forms 1094-B and 1095-B. ALE members should not complete Form 1095-C, Part III for these employees.

ExpressIRSForms works to make sure you’re reporting everything correctly the first time around. Create an account today to get started e-filing ACA forms for your multiemployer plans! And if you have any questions, we’re available by phone (704-684-4751) and live chat Monday through Friday, 9:00 a.m. to 6:00 p.m. EDT. Have questions after hours? Send us an email to support@ExpressIRSForms!



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