1095-C effect of midyear change to self-insured?

Question:

If an organization that is an Applicable Large Employer (ALE) was fully insured for the first few months of Tax Year 2016, and then becomes self-funded in July, how should they approach their 1095 obligations?

Answer:

In their tax-year reporting on Form 1095-C (the statement to employees that breaks down details of an employer’s offer of health benefits), this organization does not need to fill out Part III for the months they were fully insured.

For the months in which they are self-funded, this organization will need to fill out Part III of Form 1095-C, listing each individual covered under the self-insured plan and a check mark for each month they were covered during the self-funded time-frame.

The following is an example of a Form 1095-C for a company that was fully insured in January, February and March, and then went self-funded in April.

1095-c-reporting-for-midyear-change-from-fully-insured-to-self-insured_acainsights-org

You see that for the months they were fully funded, no checks appear in boxes for the respective months in Part III of the 1095-C. But then, when they became self-insured, boxes for those months show check marks.

For the months that the organization was fully insured, the insurance carrier will be providing the covered individuals with Form 1095-B, the statement to recipients of health benefits that breaks down proof of their coverage.

For the organization mentioned in this question, the Part III reporting illustrated above would begin in July.

A version of this Q&A was first published by ACA Insights' Helen Karakoudas on September 28, 2016 in a LinkedIn Pulse article titled "In the world of ACA compliance, every day should be Ask a Stupid Question Day."