By Christopher Snowbeck

Minneapolis Star Tribune

Just what American taxpayers were waiting for: another form.

Large employers and insurers in Minnesota are distributing for the first time this winter more than a million tax documents that show who had health insurance last year, a seemingly straightforward task that has nonetheless created some clerical headaches.

The notices are part of how the IRS will check to make sure individuals and employers complied with coverage mandates in the federal Affordable Care Act.

For employers, it’s been a big job figuring out how to accurately fill out the forms. For health insurers, the printing presses have been running overtime.

Just this month, the state of Minnesota is sending about 959,000 forms to people in public health insurance programs.

“We’ve never before gotten a job that’s this big all at once,” said Lane Gerber, manager of the print shop at the state’s Department of Human Services, which administers the Medical Assistance and MinnesotaCare programs.

The forms are called 1095-B and 1095-C. They’re meant to assist individuals as they file their taxes by documenting whether someone had health insurance coverage for all 12 months the previous year. (Yes, there’s 1095-A, but that’s distributed by the MNsure health exchange and isn’t new this year.)

Late last year, the IRS extended the deadline until March 31 for health insurers and large employers to distribute the 1095-B and C forms, so not all have arrived yet.

“You can file your return without it,” said Chris Wittich, an accountant with Boyum & Barenscheer PLLP in Bloomington. (The 1095-A forms are required for tax filing.)

Starting in 2014, the Affordable Care Act required almost all Americans to have health insurance or pay a tax penalty. At that point, IRS based penalties on whether someone said they lacked coverage in thweir tax filing.

Enforcement will change with the new forms, since the information also goes directly to the IRS. For 2016, individuals who lack coverage must pay a tax penalty that’s the larger of either 2.5 percent of income or $695 per uninsured adult.

“The forms make it possible for the IRS to eventually, one day, match the evidence of coverage that comes from employers [and] insurers … with someone’s contention about their coverage,” said Tara Straw, senior policy analyst with the Center on Budget and Policy Priorities in Washington, D.C.

“Theoretically, if there’s a mismatch where someone says they had coverage all year, but there’s no insurer that submits a form that says that, the IRS could go to that taxpayer and ask for more information to figure out whether they really did have coverage,” Straw said.

First tax season

The current tax season is the first time that large employers are facing the health law’s “employer shared responsibility” requirements, which threaten penalties for large firms that didn’t offer affordable coverage in 2015.

Large employers that did not offer health insurance — or offered it to too few workers and dependents — may face a penalty of $2,000 per full-time employee. That would happen if one such worker got a tax credit for coverage through a government-run health insurance exchange.

The 1095-B form comes from a health insurance company or the government, and lists who in a household got coverage throughout the year. The information also is listed on 1095-C forms from large employers, although companies also must explain through a series of codes whether employees each month were offered affordable coverage as defined by the health law.

“It’s hugely confusing for some employers and other providers of health insurance, because the forms are new to them,” Straw said. “They’re also new to the people receiving them. So, we can expect some confusion, and we can expect that not everyone who had health insurance in 2015 will get a form — just because some providers of coverage are not ready to send them.”

Large employers have been working overtime on the forms for several months, said Bob Seng, a partner in the benefits and compensation group at Dorsey & Whitney LLP.

Lots of confusion

Forms can be complicated for workers who’ve moved between full-time and part-time status during the year, or for those who retired or left employment. There’s also been confusion among employers about how exactly to use codes that describe the coverage offered to workers.

“This isn’t rocket science, but some things are just unclear,” Seng said. “The novelty is part of what is making this so hard.”

General Mills already has distributed 19,000 forms to employees and retirees, but it took work inside the company and through an external vendor. Internally, a team of 10 employees collectively spent about 100 hours learning requirements for the forms, preparing data and communicating with employees, said Angela Mahoney, the company’s senior manager for benefits.