The IRS recently released revised forms and instructions on completing the necessary Affordable Care Act reporting requirements.
Q 1. Why is the Federal Government requiring additional reporting from employers?
The government needs to collect data from both insurance companies and employers to administer several key provisions of the Affordable Care Act:
- The Employer Mandate – penalty assessment of employers who fail to offer appropriate coverage. (Also known as the “Pay or Play” provision.)
- The Individual Mandate – taxes imposed on individuals who fail to obtain or maintain the required coverage in 2015.
- The Federal Premium Tax Credit – verification that individuals who claimed financial assistance in purchasing health care through a State or Federal Exchange were not offered employer sponsored coverage that eliminates eligibility to qualify during 2015.
Q 2. What types of reporting is required?
There are two separate types of reporting that are required. These are found in IRS Code 6055 and Code 6056.
Code 6055 – Minimum Essential Coverage Data
Purpose: Enforcement of the individual mandate
Applies to: Insurance companies providing fully insured coverage, Self-Insured Plan Sponsors and governmental entities
Forms: Form 1094-B and 1095-B
Data Required: Data by person, by month for all individuals covered by “Minimum Essential Coverage”
Who receives: IRS and each employee covered
Code 6056– Employer Mandate Data
Purpose: Enforcement of the employer mandate
Applies to: All Applicable Large Employers with 50 or more Full Time or Full Time Equivalent employees. (ALEs) The employer is responsible for completion regardless of fully insured or self funded status of the plan.
Forms: 1094-C and 1095-C
Data Required: Employer and employee data, cost of coverage data, months provided. Data also required for full time employees who were offered coverage but declined to enroll.
Q 3. Can self-insured employers combine reporting requirements under 6055 and 6056?
Yes. Self-insured plan sponsors can satisfy their requirements by completing Form 1094-C and filling out all three sections of Form 1095-C.
Q 4. If I am in the 50-99 employer size, do I need to report for 2015?
Yes. All employers subject to the employer mandate must report or face potential penalties for failure to do so. Employers in this size range may qualify for transition relief of the Employer Mandate Penalty, but do still need to furnish the reporting required by the deadlines in early 2016 or risk steep penalties for failure to report.
Q 5. Are Non-Profit entities required to produce the reports?
Yes. All employers with 50 or more FTEs / FT Equivalents are required to provide the reports.
Q 6. When is the reporting due?
Form 1095-C must be provided to employees by January 31st. However, January 31st 2016 falls on a Sunday, so it must be provided no later than Monday, February 1, 2016 for coverage provided in the 2015 tax year.
Employers must also submit Form1094-C and copies of 1095-C to the IRS by February 28 (if using paper) or by March 31 if filing electronically.
Employers who generate more than 250 Form 1095-Cs must file electronically or face additional penalties.
Q 7. Are there any other alternative ways to comply?
Yes. If your organization meets certain requirements, it may qualify for certain types of reporting relief. This relief does not mean employers can neglect to report data – however, it may change the eligible methods of completion and how data is permitted to be provided to employees.
Qualifying Offer Method
98% Offer Method
Section 4980H Transition Relief
The IRS has provided significant information on each of the Alternatives and strict requirements on how to qualify.
Q 8. What are the potential reporting penalties?
Employers can be penalized $250 per form for failure to file. For 2015 tax data, employers may be exempt from penalties if they make a “good faith effort” to provide the necessary data.
The IRS FAQ’s indicate that “No relief is provided in the case of ALE members that cannot show a good faith effort to comply with the information reporting requirements or that fail to timely file an information return or furnish a statement.”
To learn more about the IRS FAQ’s on the reporting and tax provisions of the Affordable Care Act
Please note: This communication is designed for introductory informational purposes. The contents are summaries and are not intended to cover every aspect of the topic, law or regulation being discussed. The information contained in this post and website does not constitute legal or tax advice. To ensure full compliance based on your unique organizational requirements, discussion with your attorney or tax professional is recommended.