There are new reporting requirements mandated by the Affordable Care Act for some employers for 2015. Beginning in 2016 (for health coverage offered on or after January 1, 2015), Internal Revenue Code Section 6056 requires Applicable Large Employers (ALEs) to file information returns with the Internal Revenue Service to report applicable healthcare information. An ALE must file Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, for each full-time employee, and the related Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns. In addition, employers of all sizes will have a reporting requirement under IRC Section 6055 if the employer self-insures. These reporting requirements help administer the employer shared-responsibility mandate and the individual mandate added as a part of the Patient Protection and Affordable Care Act.
Many businesses may be unaware of these new reporting requirements as this is the first time it is mandatory to file these forms. Although we are not experts with respect to the legal and regulatory aspects of the ACA, our firm wants to make you aware of some of the reporting requirements we believe could impact your company. Certain aspects of these new information-reporting requirements are highlighted below, based on information from the Internal Revenue Service. However, this article does not address everything you may need to know as an employer in order to comply with the ACA requirements.
Who Needs to File?
Employers with 50 or More Employees
For calendar year 2015, employers with 50 or more full-time employees (including full-time equivalent employees) and all self-insured employers, regardless of size (see below), must report healthcare coverage information both individually to their employees and to the IRS. Reporting is mandatory for 2015. Full-time employees are those who worked an average of 30 hours or more per week for more than 120 days in a year. Healthcare.gov has some tools, including a Full-Time Equivalent Employee (FTE) Calculator, to help determine an entity’s filing obligation as determined by the number of its FTEs.
Small Employers with Fewer Than 50 Employees That Are Members of a Controlled or Affiliated Service Group
Small employers with fewer than 50 full-time employees (including full-time equivalents) will be required to file Forms 1095-C and 1094-C if they are members of a controlled or affiliated service group that collectively has at least 50 full-time employees (including full-time equivalents). Companies could be in a controlled or affiliated service group if they have common owners, provide services for each other, or work together to provide services to third parties.
Employers with Employer-Sponsored Self-Insured Plans
Employers of all sizes that offer employer-sponsored self-insured coverage will also be required to report information to the IRS and to affected individual employees about individuals who have minimum essential coverage under the employer plan and therefore have met the individual shared-responsibility requirement for the months that they are covered under the plan. Small Self-Insured Employers would file Forms 1094-B and Forms 1095-B; Large Self-Insured Employers would file the necessary information using Part III of Forms 1094-C and 1095-C.
What Are the Filing Deadlines?
Due dates for the required forms are as follows: Form 1095-B or Form 1095-C, as applicable, must be provided to each employee by March 31, 2016; Form 1094-C (transmittal) and copies of each Form 1095-C are due to the IRS by May 31, 2016, or by June 30, 2016, if filing electronically. If your organization files 250 or more Forms 1095-C, you will be required to file electronically. These are extended due dates for 2016 only and may change in subsequent years.
You will meet the requirement to file if the form is properly addressed and mailed by the due date.
What Are the Fines and Penalties for Not Complying with the Reporting Requirements?
Employers who fail to report will be subject to fines. When determining whether to abate penalties for reasonable cause, the IRS will take into account whether the employers made reasonable attempts to comply with the requirements and the steps that have been taken to prepare for the 2016 reporting requirements.
Entities that intentionally disregard the reporting requirements face a penalty of $250 per violation this year and $500 per violation in 2016, with no cap on the potential liability.
What Actions Should an Employer Take to Prepare?
Given the complexity of information required to be reported and the potential size and impact of the penalties. Employers need to ensure that adequate procedures are in place for determining and documenting each employee’s full-time or part-time status month-by-month. As well as procedures to collect information about health coverage and enrollment month-by-month. Even what might seem a simple count of full-time employees is much more complex for employers that hire variable-hour or seasonal employees.
We strongly encourage you to take the extra time now to discuss your reporting requirements with all of your applicable service providers (plan administrator, payroll vendor, and/or a qualified legal representative, etc.) to help you determine your company’s readiness for complying with the new information-reporting requirements for employers under the ACA. Be certain to clearly designate responsible parties for the data collection and form preparation.
Where Should I Look for Additional Information If I Have Questions Regarding My Reporting Obligations?
Information and resources are available on the Internal Revenue Service website at www.irs.gov/Affordable-Care-Act/Employers. We suggest that you check this website regularly for further information and updates.