On August 6, 2015, the IRS released new draft instructions to accompany the new draft Forms 1094 and 1095, which were released earlier this year. Once final, the 2015 forms will be used for mandatory filings first required in early 2016 to enforce IRC Section 4980H employer penalties.

The new draft instructions generally follow the instructions issued in February 2015, but contain some important clarifications and additions. One potential significant change is the reporting requirement for full-time employees covered by collected bargaining agreements under the multiemployer arrangement interim guidance.

The new draft instructions include the following language:

“For reporting offers of coverage for 2015, an employer relying on the multiemployer arrangement interim guidance should enter code 1H on line 14 for any month for which the employer enters code 2E on line 16 (indicating that the employer was required to contribute to a multiemployer plan on behalf of the employee for that month and therefore is eligible for multiemployer interim rule relief). For reporting for 2015, Code 1H may be entered without regard to whether the employee was eligible to enroll in coverage under the multiemployer plan. For 2016 and future years, reporting for offers of coverage made through a multiemployer plan may be reported in a different manner.”

However, the instructions also say:

“An employer enters the applicable Code Series 2 indicator code, if any, on Line 16 to report for one or more months of the calendar year that one of the following situations applied to the employee: the employee was not employed or was not a full-time employee; the employee enrolled in the minimum essential coverage offered; the employee was in a Limited Non-Assessment Period with respect to section 4980H(b); non-calendar year transition relief applied to the employee; the employer met one of the section 4980H affordability safe harbors with respect to this employee; or the employer was eligible for multiemployer interim rule relief for this employee. In some circumstances more than one situation could apply to the same employee in the same month. For example, an employee could be enrolled in health coverage for a particular month during which he or she is not a full-time employee. However, only one code may be used for a particular calendar month. For any month in which an employee enrolled in minimum essential coverage, indicator code 2C reporting enrollment is used instead of any other indicator code that could also apply. For an employee who did not enroll in health coverage, there are some specific ordering rules for which code to use. See the descriptions of the codes.”

The open question under the new instructions is whether employers will have to obtain insurance coverage information from multiemployer plans (for example DGA, WGA, SAG-AFTRA, Motion Picture, etc.) and enter Code 2C instead of 2E where union employees have enrolled in coverage. EP believes the IRS made a drafting oversight and sought to allow employers to enter code 2E for union employees irrespective of whether they actually enrolled in plan coverage.

EP will post an update once the new instructions are finalized to provide further clarification.