With the passage of the Affordable Care Act (“ACA”) comes the imposition of mandatory reporting for certain medical plans maintained by employers. Specifically, the ACA added new sections 6055 and 6056 to the Internal Revenue Code. In February 2015 the IRS issued final forms to be used for reporting, which is required beginning in 2016 for the 2015 plan year. Although reporting is not required prior to that time, employers should pay close attention to the information required on the new forms to ensure that the employer is collecting the appropriate data and information necessary for reporting beginning in 2016. The forms are intended to demonstrate employer compliance with their “shared responsibility” obligations under the ACA. The only employers subject to the filing requirements are “applicable large employers,” meaning those employers with 50 or more full-time or full-time equivalent employees. Additionally, the IRS has issued mandatory reporting forms to be filed by insurers and self-insured employers to verify that taxpayers are compliant with the minimum essential coverage requirements imposed by the ACA. Forms required to be filed include:
Form 1095-B: Health Coverage. Form 1095-B is to be filed with the IRS by insurance carriers and self-insured employers who are not subject to the “shared responsibility” ACA mandate. Form 1095-B must also be provided to taxpayers. This form is intended to verify that the individuals have the minimum essential coverage compliant with ACA individual coverage requirements.
Form 1095-C: Employer-Provided Health Insurance Offer and Coverage. Form 1095-C must be filed by “applicable large employers” (those with 50 or more full-time or full-time equivalent employees) in order to verify the employer’s compliance with the “shared responsibility” ACA requirement. This form will also be utilized for purposes of establishing employee premium tax credit eligibility in the event the employer fails to offer affordable minimum essential coverage.
Transmittal Forms 1094-B and C. The IRS has also issued the appropriate transmittal forms for both applicable large employers and insurers to be utilized for transmittal of Forms 1095-B and 1095-C to the Internal Revenue Service. Not only must the forms be filed with the Internal Revenue Service, but insurers and applicable large employers must provide the appropriate forms to enrollees and members (for the insurers) and to each employee of the “applicable large employer.” Based upon a review of the forms as well as the instructions for completing the forms, it appears that the preferred filing method will be to complete a single form for each individual. For employers with 100 or more full-time/full-time equivalent employees, ACA coverage compliance is mandatory beginning in 2015, with a two-year phase in to meet the ACA’s 95% coverage requirement. Employers with 50 to 99 full-time/full-time equivalent employees utilizing a fully insured plan will not be subject to ACA coverage requirements until the 2016 plan year. However, midsize employers (50-99) utilizing self-insured plans will be subject to the reporting obligations. While the reporting forms appear to be relatively simple, the information must be collected for reporting on a monthly basis, rather than on a plan year basis. The required information will include:
- Social Security numbers of employees, spouses and dependents.
- Names and employer identification numbers (EINs) of other employers within the reporting employer’s controlled group of corporations for each month of the calendar year.
- Number of full-time employees for each calendar month.
- Total number of employees (full-time equivalents) for each calendar month.
- Section 4980H transition relief indicators for each calendar month.
- Employees’ share of the lowest-cost monthly premium for self-only, minimum value coverage for each calendar month.