The IRS has now issued final regulations defining the employer reporting requirements as a result of the Affordable Care Act (ACA). These clarifications do permit combined reporting for the multiple requirements and can simplify reporting where a large employer provides affordable group health coverage which is of minimum value to almost all of its employees.
Related to reporting, the ACA added two sections to the Internal Revenue Code. Section 6055 defines individual mandate reporting and requires health insurers and employers sponsoring self-funded group health plans to report on an annual basis to the IRS and to responsible individuals (the enrolled employees) whether the coverage provided constitutes minimum essential coverage under the ACA. Thus this reporting requirement will help the IRS determine if the business is compliant and will be used for enforcement of the individual mandate penalty. (The individual mandate is that requirement that, basically, states all individuals have health insurance. No or low income individuals will be provided with government assistance to meet the requirement.)
Section 6056 requires large employers with 50 or more full-time and full-time equivalent employees to report to the IRS and to full-time employees. One of the purposes of the Section is to assist full-time employees determine their eligibility for premium credit. Note that while employers with 50 to 99 employees are not subject to “pay or play” for 2015, these employers are still subject to Section 6056 reporting for the year. The other purpose of the form is to assist the IRS with enforcement on both employer and individual sides.
Prior to Mr. Obama extending compliance requirements, both reporting requirements were required under the ACA for the 2014 calendar year. Now, 2015 is the first year reporting is required, due during the first quarter of 2016.
It should be noted that small employers with less than 50 full-time employees are still not subject to “pay-or-play” reporting. Also, only small employers that offer self-funded group health plans are subject to individual mandate reporting. (Self funded plans are those plans where the business is paying health care costs up to a certain point at which point insurance kicks in.) For small employers that offer fully insured plans, it is the insurer that is responsible for the individual mandate reporting. It is usually large businesses that sponsor self funded plans.
As with small employers, if a large employer’s group health plan is fully insured, the insurer will be responsible for the individual mandate reporting. The large employer will only be responsible for “pay-or-play” reporting. If the large employer sponsors a self-funded group health plan, the employer will be responsible for both the individual mandate and pay-or-play reporting. Under the new regulations, a large employer can satisfy both reporting requirements on a combined basis by using IRS Form 1095–C (the employee statements), along with IRS Form 1094-C (the transmittal form). The IRS is planning to release a draft version of the reporting forms in the near future.
All of the following information must be reported for “pay or play” reporting for the employer’s full-time employees:
- The number of full-time employees for each calendar month. (A qualified ATA system will help significantly with this requirement.)
- The name, address and Social Security number of each full-time employee
- A certification as to whether the large employer offered its full-time employees and their dependents the opportunity to enroll in coverage (by calendar month).
- For each full-time employee, the months for which coverage was available and the employee-only premium for the lowest cost medical option providing minimum value and the months during which the employee was covered under the employer’s group health plan.
Reporting to the IRS re: the ACA is due annually (even though the reports must include information on a monthly basis) after the end of the calendar year to which the report relates. If the employer is required to file statements for 250 or more employees, the filing must be made electronically with the IRS. The deadline for filing those reports is no later than March 31 following the calendar year to which the reporting relates. If the employee population is less than this threshold of 250 employees, employers have the option to file electronically or by mail. The deadline for the electronic filing of statements with the IRS is March 31 and the deadline for filing by mail is by February 28.
Statements to employees consist of an IRS form (1095–C) similar to the W-2 and are generally required to be sent by mail by January 31 following the calendar year to which the reporting relates. These employee statements can be mailed along with their W-2s. Employers may want to provide an explanation cover letter since this will be new to all employees, but it is not required.
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