Affordable Care Act Reporting of Health Coverage
Basics of Employer Reporting
1. What are the information reporting requirements for employers relating to offers of health insurance coverage under employer-sponsored plans?
The ACA added Code Section 6056, which requires ALEs to file information returns with the IRS and provide statements to their full-time employees about the health insurance coverage the employer offered.
Under the Section 6056 final regulations, an ALE may be a single entity or may consist of a group of related entities (such as parent and subsidiary or other affiliated entities). In either case, these reporting requirements apply to each separate entity and each separate entity is referred to as an applicable large employer member (ALE member).
2. When do the information reporting requirements go into effect?
The information reporting requirements under Section 6056 are first effective for coverage offered (or not offered) in 2015. An ALE must file information returns with the IRS and furnish statements to employees beginning in 2016, to report information about its offers of health coverage to its full-time employees for calendar year 2015.
Notice 2013-45 provides transition relief for 2014 from the Section 6056 and Section 6055 reporting requirements for health coverage providers and, thus, the ACA’s employer shared responsibility rules as well. Accordingly, neither the reporting requirements nor the employer shared responsibility rules apply for 2014.
3. Is relief available from penalties for incomplete or incorrect returns filed or statements furnished to employees in 2016 for coverage offered (or not offered) in calendar year 2015?
4. Where is more detailed information available about these reporting requirements?
The Section 6056 final regulations provide further guidance on the information reporting requirements for ALEs, and the Section 6055 final regulations provide guidance on the information reporting requirements for insurers and other health coverage providers.
Who is Required to Report?
5. Who is required to report under Section 6056?
All ALEs that are subject to the ACA’s employer shared responsibility rules are required to report under Section 6056. An ALE is an employer that employed an average of at least 50 full-time employees on business days during the preceding calendar year. A full-time employee generally includes:
- Any employee who was employed, on average, at least 30 hours
of service per week; and
- Any full-time equivalents, or FTEs (for example, 40 full-time
employees employed 30 or more hours per week plus 20 employees
employed 15 hours per week are equivalent to 50 full-time
6. Are non-profit and government entities required to report under Section 6056?
7. If two or more related companies together are an ALE under the employer shared responsibility rules, how do they comply with the information reporting requirements?
For purposes of the information reporting requirements under Section 6056, each ALE member must file an information return with the IRS and furnish a statement to its full-time employees, using its own employer identification number (EIN). All persons treated as a single employer under Code Section 414(b), (c), (m) or (o) are treated as one employer for purposes of determining ALE status under the employer shared responsibility rules.
8. Who is not required to report under Section 6056?
Methods of Reporting
9. Are different methods available to ALEs for reporting required information to the IRS and furnishing statements to employees?
10. What is the general method of reporting?
The final regulations provide that, as a general method, each ALE may satisfy the requirement to file a Section 6056 return by filing a Form 1094-C (transmittal) and, for each full-time employee, a Form 1095-C (employee statement), or other forms the IRS designates. An ALE that maintains a self-insured plan also uses Form 1095-C to satisfy the reporting requirements under Section 6055.
11. What are the alternative methods of reporting?
The final regulations contain two alternative methods of reporting under Section 6056 that are intended to minimize the cost and administrative tasks for employers, consistent with the statutory requirements to file an information return with the IRS and furnish an employee statement to each full-time employee.
12. For the methods of reporting, including reporting facilitated by a third party, may an ALE member file more than one Form 1094-C?
13. May an ALE satisfy its reporting requirements for an employee by filing and furnishing more than one employee statement that, together, provide the necessary information?
What Information Applicable Large Employers Must Report
14. What information must an ALE report to the IRS to satisfy Section 6056?
The final regulations provide, under the general method of reporting, that an ALE must file a separate Form 1095-C (or other form the IRS designates, or a substitute form) for each of its full-time employees, and a transmittal on Form 1094-C.
15. What information must an ALE furnish to its full-time employees to satisfy Section 6056?
The regulations provide that, under the general method, an ALE generally must furnish to each full-time employee a written statement showing the ALE’s name, address and EIN.
16. May an employer combine reporting under Sections 6055 and 6056?
How and When to Report the Required Information
17. When must an ALE file the required information return with the IRS?
ALEs must file the return for each employee (Form 1095-C or another form that IRS designates, or a substitute form) and a transmittal form (Form 1094-C or another form that IRS designates, or a substitute form) with the IRS on or before Feb. 28 (March 31, if filed
electronically) of the year immediately following the calendar year for which the offer of coverage information is reported.
18. When must an ALE furnish the statements to full-time employees?
ALEs must furnish the statement to each full-time employee on or before Jan. 31 of the year immediately following the calendar year to which the information relates.
19. Must an ALE file the return with the IRS electronically?
The final regulations require electronic filing with the IRS of Section 6056 information returns, except for an ALE filing fewer than 250 Section 6056 returns (employee statements) during the calendar year.
20. Must an ALE furnish the employee statements to full-time employees electronically?
The final regulations permit, but do not require, employers to furnish the Section 6056 employee statements electronically to full-time employees.
21. Are ALEs required to report information with respect to a full-time employee who is not offered coverage during the year?
22. May an employer that is a governmental unit designate a third party to file the return and furnish the statements under Section 6056 on its behalf?
23. May an employer hire a third-party administrator or other third-party service provider to file the return with the IRS and furnish the statements to employees required under Section 6056?
24. May an administrator of a multiemployer plan prepare the return and furnish the statements under Section 6056 for an ALE member that is a participating employer under the multi-employer plan?
25. For information returns filed and furnished in 2017 for coverage offered (or not offered) in 2016 and later years, what penalties may apply if an ALE member fails to comply with the Section 6056 information reporting requirements?
Plenty – but we won’t go into detail at this time.
Submitted by Darwin Allen
Haylor, Freyer & Coon, Inc.