The Clock Is Ticking On ACA Compliance

Is your organization digging into your benefits data yet? We are only a few weeks away from the compliance deadlines imposed by the Affordable Care Act (ACA).

For the current 2015 tax year, Applicable Large Employers (ALEs) with 50 or more Full Time or Full Time Equivalent employees must file new forms with the IRS and provide them to employees to be in compliance with the ACA.

Form 1094 and 1095

Form 1094 is titled “Transmittal of Employer Provided Health Insurance Offer and Cover Information Returns.” While the title is long, it will likely prove to be the easier of the forms to complete. It provides data about the employer, the months where “Minimum Essential Coverage” was offered, the number of full time employees, and whether the employer qualifies for Transition Relief (50-99 lives).

Form 1095 titled “Employer-Provided Health Insurance Offer and Coverage Insurance” is far more onerous. This is the form that must be provided to each full time employee that was eligible for coverage, AND any part time employees (under 30 hours a week) who elected medical benefits. Coverage, cost, and appropriate codes must be detailed BY MONTH for each employee.

Below is an example of the data required for a Fully Insured Health Plan:

Employee Example:

Tina was a full time employee at XYZ Company during part of tax year 2015. She was enrolled in the Health Plan from January 1 through February 28, 2015 and when she terminated employment. Tina’s Form 1095-C would need to indicate she received an offer of coverage on line 14 for January and February. (XYZ Company might use Code 1C – coverage offered to Tina and all dependents.) The remaining 10 months on the form would require a different code be utilized to show no qualifying offer was made (Code 1H).

Self Insured Plans Require More Data

If your medical plan is self-insured, employers have an additional data reporting burden. Spousal and dependent data is required to be reported by month on form 1095, not just employee data.

Transmission to the IRS

Form 1094 and copies of every Form 1095 provided to employees must be transmitted to the IRS. If the employer produces 250 or more returns, you MUST file electronically through a special system the IRS has created called AIR (ACA Information Returns.) If you are required to file electronically and fail to do so, you can be penalized $250 per paper return in excess of the 250 threshold. These fines can add up quickly.

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.