HR Alert: ACA Employer Reporting of Health Coverage
By Philip Dickey, MPH, PHR | October 27, 2014
Delayed until 2015 (just right around the corner!)
Who is covered?
- Employers with 50 or more employees (including full-time equivalent employees, or FTEs), also referred to as Applicable Large Employer Member (ALE Member).
- Employers with self-insured health plans
The shared responsibility provision of the ACA (4980H) created new reporting requirements under Internal Revenue Code Sections 6055 and 6056. Section 6055 addresses employers with self-insured health plans. Section 6056 addresses all employers with at least 50 full-time employees. Under these new reporting rules, certain employers will be required to provide information to the IRS about the health plan coverage they offer (or do not offer) to their employees (such as information on the design and cost of their plans, as well as employees covered by the plan). Related statements must also be provided to employees. The IRS will use the information on the reports to administer the employer shared responsibility provisions of the ACA. The IRS and the employee both can use the information to determine if the employee is eligible for a premium tax credit.
What is the general method of reporting?
The regulations provide that, as a general method, each employer may satisfy the requirement to file a Section 6056 return by filing Form 1094-C (transmittal page) and, for each full-time employee, a Form 1095-C (employee statement).
An employer that maintains a self-insured plan also uses Form 1095-C to satisfy the reporting requirements under Section 6055. Form 1095-C will have separate sections to allow employers that sponsor self-insured group health plans to combine reporting to satisfy both Section 6055 and 6056 on a single return.
For example, an employer that sponsors a self-insured plan will complete the transmittal Form 1094-C and both sections of Form 1095-C to report information under Section 6055 about health coverage provided and information under Section 6056 about offers of health coverage. An employer that sponsors an insured plan will complete the transmittal Form 1094-C and the section of Form 1095-C addressing the information under Section 6056.
Small employers (meaning employers not subject to the employer shared responsibility provisions under Section 4980H and therefore not subject to the information reporting requirements under Section 6056) that sponsor self-insured plans will file Forms 1094-B and 1095-B to satisfy the reporting requirements under Section 6055.
The regulations contain two alternative methods of reporting under Section 6056 that were developed to minimize the cost and administrative tasks for employers. These alternative reporting methods are available on the IRS website.
The first employer returns (1094-C & 1095-C) to the IRS will be due by February 29, 2016, for coverage provided in 2015 (March 31, if filing electronically). Reporting will be on a calendar year basis regardless of the employer’s plan year. The first corresponding employee statements (1095-C) must be provided by February 1, 2016 (January 31, 2016, is a Sunday). Short-term relief from the penalties is available in 2015 for reporting entities that make good faith efforts to comply with the information reporting requirements in 2016.
In preparation for the employer mandate provisions beginning in 2015, the IRS is encouraging employers to voluntarily report for 2014 (filing in early 2015) to confirm processes and systems. Those that wish to voluntarily comply should do so in accordance with the final regulations. This means that reporting entities should provide Section 6056 and Section 6055 information, if applicable, on a single form. No employer shared responsibility payments under Section 4980H will apply for 2014 for any employer, regardless of whether they voluntarily file for 2014.
The employer shared responsibility final rules include relief-delaying compliance for medium-sized employers for one year, until 2016; however, the ACA reporting requirements are not delayed. Medium-sized employers are those with at least 50 full-time equivalent employees, but fewer than 100 full-time equivalent employees. A medium-sized employer eligible for this relief will certify on its 1094-C transmittal form (line 22) for 2015 (filed in 2016) that it meets certain eligibility criteria.
May an employer hire a third party to file the return with the IRS and furnish employee statements?
Yes, reporting arrangements between employers and other parties are not prohibited. However, a reporting arrangement does not transfer the employers’ potential liability under Section 4980H.
- Determine whether your organization is a sponsor of a self-insured health plan or an employer with at least 50 full-time equivalent employees.
- When reporting requirements become effective, provide required information regarding plan coverage and participation in accordance with information return requirements.
- Begin working with you insurance broker and CPA
The draft IRS Forms and Instructions (HRAlert_2014InstructionsForms1094C_1095C) are for informational purposes only; the final versions for filing are not yet available.
Have questions or concerns? Email us or call us at 800-635-4040.