Welcome to MSEC’s weekly ACA FAQ on reporting. For detailed information on form completion, contact your broker, tax advisor, payroll company, or insurance carrier. The information provided herein is general in nature. These materials are not to be construed as the rendering of legal or management advice. If the reader has a specific need or problem, please consult with a member of our professional staff in either the Human Resource Services or Employment Law Services departments of MSEC. If you have a general ACA reporting question, email it to firstname.lastname@example.org. The most commonly asked questions will be answered in this forum. In addition, the Health Care Reform Learning Zone, found on the MSEC website (msec.org), is a rich source of information about the Affordable Care Act (ACA).
I’m completing the 1094-C form to send to the IRS and believe my organization is eligible for 4980H transition relief. How do I claim the relief?
You must claim it on the 1094-C form. The IRS won’t automatically apply transition relief for you.
While there are several kinds of transition relief, two common ones are 1) “50-99 Transition Relief” for Applicable Large Employers (ALEs) with fewer than 100 full-time plus full-time-equivalent employees and 2) “100 or More Transition Relief” for ALEs with 100 or more full-time plus full-time-equivalent employees.
- 50-99 Transition Relief
- How to claim: Check Box C in Line 22, and report code “A” in Part III, Column e.
- What this is: This relief provides that no assessment payment under 4980H(a) or (b) applies for any month of the calendar year.
- How to qualify: The employer must be an ALE (or part of an Aggregated ALE) that averaged between 50-99 full-time/full-time-equivalent employees in 2014 (based on the ALE determination methodology); and during the period of Feb 9, 2014 through December 31, 2014, the ALE or Aggregated ALE group did not reduce its workforce size or employees’ hours of service in order to qualify for relief; and during the period of February 9, 2014 through December 31, 2015, the ALE or Aggregated ALE group did not eliminate or materially reduce the health coverage it offered as of February 9, 2014.
- 100 or More Transition Relief
- How to claim: Check Box C in Line 22, and report code “B” in Part III, Column e.
- What this is: If an ALE (or Aggregated ALE group member) is subject to penalty under 4980H(a). This relief reduces the penalty calculation by subtracting 80 employees (rather than the standard 30). Members of an Aggregated ALE group share the 80-employee reduction.
For more information about these and the other types of transition relief, like relief for non-calendar-year plans, see the Form 1094-C IRS instructions here. For more information on the 4980H penalties, see the MSEC Healthcare Reform Learning Zone, Employer Mandate 2, on the MSEC website (msec.org).