EMPLOYER ACA REPORTING REQUIREMENTS
Employers with 50 or more employees*, as well as companies who provide employer-sponsored self-insured health coverage, need to understand the new employer reporting requirements under the ACA (Affordability Care Act), so they can start recording the required information now that will need to be reported in January 2016. This information is required by the IRS to determine if an employee will receive fines for not offering coverage to at least 95% of eligible employees.
This information also helps determine if individuals are eligible for subsidies. Compliance with these requirements is necessary to avoid fines and penalties. Below, we provide a breakdown for employers of what needs to be done to meet these reporting requirements.
*ALE (applicable large employers) are those with 50 or more FTE on business days in the preceding calendar year.
Organizations falling within the common ownership rules (two or more companies with a common owner) are considered applicable large employers under section 4980H. Each ALE member must file an information return with the IRS and furnish a statement to its full-time employees, using its own EIN.
Who is Exempt?
Employers who provide health coverage through an insured health plan (fully insured), but have fewer than 50 FTEs, are exempt from reporting requirements at this time.
Fewer Than 50 FTEs
Not all employers with fewer than 50 FTEs are exempt from the filing requirements. An employer with fewer than 50 FTEs who provide employer-sponsored self-insured health
coverage are held to the same reporting requirements as ALEs.
Start Tracking Now
The information reporting requirements under section 6055/6056 of the Internal Revenue Code, enacted by the ACA, took effect in 2014, but transitional relief made 2014 reporting voluntary. However, 2015 data for 2016 reporting for all ALEs is mandatory. This includes non-profit organizations and government entities (including federal, state, local, and Indian tribal governments). Employers shouldn’t let the 2016 date lull them into believing they have the rest of the year to get processes in place; they don’t. Employers need to act now, putting in place processes to track and gather the information needed to meet the IRS and employee reporting requirement deadlines early in 2016.
IRS Information required
Under section 6055/6056 returns must be filed with the IRS containing the following information:
- The name, address, and employer identification number of the ALE member, and the calendar year for which the information is reported;
- The name and telephone number of the ALE member’s contact person;
- A certification as to whether the ALE member offered to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan, by calendar month;
- The number of full-time employees for each calendar month during the calendar year, by calendar month;
- For each full-time employee, the months during the calendar year for which minimum essential coverage under the plan was available;
- For each full-time employee, the employee’s share of the lowest cost monthly premium for self-only coverage, providing minimum value offered to that full-time employee under an eligible employer-sponsored plan, by calendar month; and
- The name, address, and taxpayer identification number of each full-time employee during the calendar year and the months, if any, during which the employee was covered under an eligible employer- sponsored
Information reported to full-time employees must include:
- The name, address, and EIN of the ALE member.
- The information required to be shown on the section 6056 return, form 1095-C with respect to the full-time employee (and his or her spouse and dependents).
The employee reporting can be accomplished using the same forms used for reporting to the IRS as explained below. The entire process is similar to current reporting of W-2s where the employer provides a copy to employees on January 31 of each year, then sends in a report to the IRS.
Reported How, by Who and When Employers with 50+ employees will use form 1095-C to report both fully-insured and self-
insured plans with minor reporting differences as the following explains. Once completed for each employee, they submit to the IRS using submittal form 1094-C.
- Employers providing health coverage through an insured health plan or multi- employer plan need only complete sections I and II of form 1095-C. The issuer or sponsor of the insurance plan is responsible for providing section III data to the
- Employers that provide employer- sponsored self-insured health coverage are responsible for completing all three sections of the 1095-C
- Employers must provide a completed form 1095-C to each full-time employee by January 31 of each
If using a paper method of filing (printed, faxed or mailed), all forms must be filed with the IRS by Feb 28 of each year. If filing electronically, all information must be filed by March 31 of each year. Employers with 250 or more employees must file electronically.
Employers with fewer than 50 employees who provide employer-sponsored self-insured health coverage will need to use form 1094/1095-B rather than form 1094/1095-C if using the IRS- provided form for reporting.
The forms 1094-B and 1094-C are transmittal forms used when sending to the IRS the 6055/6056 data captured on forms 1095-B and/or 1095-C. Although these forms are not yet finalized, the draft version will give employers a sound understanding of the types of data that will likely need to be tracked throughout the year in order to fulfill the reporting requirements.
Alternative Filing Methods
The regulations currently contain two alternative methods of reporting under section 6056, which may allow employers to provide less detailed information than under the general method for reporting because in some circumstances, only some of the information required under the general method is necessary.
The alternative reporting methods identify specific groups of employees for whom simplified alternative reporting would provide sufficient
information. Additional information can be found in Subsections A through D of the preamble to the section 6056 regulations.
Relief from Penalties
Relief from penalties may be available under sections 6721 and 6722 to ALE members that can show they are actively seeking to meet the reporting requirements. This usually applies to returns and statements filed and furnished in 2016 to report offers of coverage in 2015 with incorrect or incomplete information reported on the return or statement. As a general rule, no relief is provided in the case of ALE members who cannot show a good-faith effort to comply with the information reporting requirements.
Businesses should act now and review processes to ensure they have procedures in place to comply with the ACA reporting requirements, including regular review of their processes to verify all forms and documents being used are current and capturing all necessary data, review of ACA legislation to ensure any changes to requirements have been taken into consideration and added to their procedures.
The following steps are recommended to help setup your reporting process:
- Know what information needs to be tracked by reviewing form 1095-C.
- Develop procedures for determining and documenting each employee’s full-time or part-time status by
- Develop procedures to collect information about offers of health coverage and health plan enrollment by
- Review ownership structures of related companies to determine if they are controlled
- Discuss the reporting requirements with the health plan’s insurer, third-party administrators and the company’s payroll vendor to determine responsibility for data collection and form
- Ensure that systems are in place to collect the needed data for the
By Deborah Siddoway, HR Coach, HR Service, Inc.