What are the Changes to ACA Forms 1095-C for the 2022 Tax Year?

Will this affect your TY 2022 ACA reporting?

Stephanie Glanville | November 3, 2022 | Read time: 5 minute(s) | ACA Forms, IRS Updates | No Comments

The IRS has recently finalized the drafts of Form 1095-B and 1095-C for the 2022 tax year. There aren’t any changes to the forms compared to the versions filed for the 2021 tax year, which is good news for employers that are required to complete Affordable Care Act reporting.

If your organization is required to comply with the Affordable Care Act (ACA) reporting requirements, you know that it is time to get started on your Forms 1095-B/C if you haven’t already.

This article is an overview of information to help you get started on your ACA reporting for the 2022 tax year!

Updates to Form 1095-C from 2021

While there aren’t any notable changes to the Tax Year 2022 versions of the ACA Form 1095-B and 1095-C, here is a recap of the updates from 2021 that may still impact your ACA reporting:

The main changes to Form 1095-C for the 2021 tax year are centered around Line 14, Offer of Coverage. Line 14 of Form 1095-C is where filers must enter a code from Series 1. These codes are used to describe the status of the offer of coverage that the employer made to their employees.

For example, Code 1B is used to indicate that an offer of coverage was made to the employee but not their spouse or dependents. Last year, codes 1L-1S were added in response to the inclusion of ICHRAs.

Now the IRS has added two more new codes, these are also in regard to ICHRA.

Code 1T represents the Individual coverage HRA offered to the employee and spouse (no dependents) and affordability was determined using the employee’s primary residence location ZIP code.
Code 1U represents the Individual coverage HRA offered to the employee and spouse (no dependents) and affordability was determined using the employee’s primary employment site ZIP code affordability safe harbor.

A Brief Overview of the ICHRA

An ICHRA is an Individual Coverage Health Reimbursement Arrangement. This is a type of HRA that employers can offer as an alternative to a traditional group health insurance plan. With an ICHRA, employers can provide reimbursements to their employees to use towards the costs of their monthly health insurance premiums and other costs.

With this type of plan, the employee chooses their own health insurance plan. The employer selects the amount which they will contribute to their employees, but they must use the IRS guidelines to ensure that this qualifies as “affordable” for each employee.

There is a Possibility the E-filing Threshold could be Reduced

There is another IRS proposal that could affect your 2021 IRS filing requirements.

The current e-file threshold for businesses is 250 forms. This number currently applies to individual tax forms, for example, you can e-file 249 1099 Forms and 249 W-2s with the IRS.

According to this IRS Proposal, that will be changing. Going forward, the IRS would limit businesses to paper-filing a total of 250 forms during a tax year.

This means that a business filing 249 1099 Forms and 249 W-2s, would file a total of 498 forms. Because this crosses the 250 thresholds, e-filing would be required for at least half of them.

It is still not clear whether or not this IRS proposal will be finalized and applied to 2022 tax returns filed in the 2023 calendar year, however, TaxBandits will continue to monitor the situation and provide updates.

E-file your ACA Forms with TaxBandits

E-filing your ACA Forms with TaxBandits has so many benefits! Our e-filing process is easy and convenient. The IRS business rules are built-in to help you avoid many common errors that could result in an IRS rejection.

TaxBandits also offers solutions for your recipient copies. You can mail copies to your recipients and/or grant them access to view and download their forms online.

Ready to get started? Create your free TaxBandits account today to begin filing!