Form 1094 and Form 1095 Reporting for Expatriate Employees

Every IRS Form 1094/1095 filing season (roughly January and February of each year), we receive questions on reporting for expatriate employees. The most common questions: do we need to furnish a Form to expat employees working in the U.S. (sometimes called “inpats”) who are covered under a regular or expat plan, and if so which Form? The rule is fairly straightforward: in general any employee who works in the U.S. at least 30 hours per week or is covered by self-funded minimum essential coverage should receive a Form 1095-C, regardless of whether he or she is an expat or covered by an expat plan. But like any rule under the ACA, the general answer is complicated by exceptions and differences in employer size and plan type.

Filing Requirement for Applicable Large Employers

The ACA requires an applicable large employer (ALE) to furnish a Form 1095-C to each individual who averaged 30 or more hours of service per week for which he or she earned U.S.-source income during any month of the applicable year; such a person is a “full-time employee.” In general, compensation is U.S.-source income if the services for which it is provided are performed in the U.S., regardless of where the paycheck is issued. There is, however, an exception to this rule: if an employee was in a limited non-assessment period for all the months of the year during which he or she was a full-time employee, the employer would not have to furnish a Form 1095-C to the individual. A limited non-assessment period might apply if an individual was a new employee or had a change in status and the Instructions to Forms 1094-C and 1095-C describe limited non-assessment periods in detail.

The ACA also requires an ALE offering self-funded minimum essential coverage to furnish a Form 1095-C to any employee (regardless of full-time status or whether in a limited non-assessment period) enrolled in the plan.

Under these rules, an expat working in the U.S. for an applicable large employer must be provided with a Form 1095-C if he or she (a) is full-time employee or (b) is enrolled in a self-funded health plan that qualifies as minimum essential coverage. Of course, if the expat coverage is insured rather than self-funded, an expat enrolled in the plan will likely receive a Form 1095-B from the insurer in addition to any Form 1095-C that the employer might need to provide.

Employers That Are Not ALEs

An employer that is not an ALE generally need not provide Forms 1095-C to any of its employees, unlessthe employer offers self-funded minimum essential coverage. In that case, the employer will need to furnish a Form 1095-B to each employee (including expat employees) enrolled in the plan.

Furnishing the proper Form 1095 to employees is just one step in the process, of course—an employer also must file its Forms 1095, along with the proper Form 1094 transmittal, with the IRS.