The Affordable Care Act (ACA) has added employer reporting requirements to the IRS code for 2015. These reporting regulations are being imposed to assist the IRS with enforcing the Employer Shared Responsibility provisions of the ACA and the Individual Mandate, which requires everyone to have basic health insurance.
The IRS regulations fall under two sections of the Internal Revenue Service Code – sections 6055 and 6056. The breakdown of the requirements for each section of the code and the mandated timing for the reporting are as follows:
Section 6055 addresses the Individual Mandate requirement, which helps the IRS determine who has been enrolled with Minimum Essential Coverage (MEC). This information is provided on an annual report by health insurers providing fully insured coverage and by self-insured employers. The data is reported to both the IRS, and the employees on Forms 1095-B (carriers) and 1095-C (self-insured employers). The data elements of this report include:
- The names and addresses of the employees and dependents covered by the health plan
- The employee and dependents social security numbers, or birth date if social security numbers are unavailable
- A list of the specific months employees and dependents were covered for at least one day
Most of the information for this report will be generated by the health insurance carriers if the plan is fully insured. Employers with self-insured programs, as noted above, will be responsible for gathering and reporting this information. The deadlines for the reporting are January 31, 2016 (February 1st as the 31st is a Sunday) for employee reporting and February 28, 2016 (March 31st if filed electronically) for the IRS reporting.
Section 6056, applies to Applicable Large Employers (ALEs). An ALE is an employer that employed an average of at least 50 full-time employees during the preceding calendar year. Currently, 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. ALEs that are subject to the Employer Shared Responsibility provisions are also required to provide an annual report to both the IRS and the applicable employees. This annual report requires information about the affordability of the lowest cost plan offered and confirmation it meets minimum value requirements. The data elements of this report are:
- A certification of an offer to enroll in the employer’s plan
- The number of full-time employees by calendar month
- The number of months for which coverage was available for each full-time employee, and the employee only cost for the lowest cost medical option which provides minimum value
- The names, addresses, and social security numbers of each full-time employee
- The months each employee was covered under the employer’s group health plan
The reporting requirements are certainly daunting, and require meticulous record keeping. Fortunately, the final regulations allow for a simplified reporting process.
- For self-insured employers, the final regulations will require only one form which combines both reporting requirements of Sections 6055 and 6056. The top half of the report will include the information required for Section 6055 and the bottom half will have the information needed for Section 6056.
- For employers that provide a “qualifying offer” (defined below) to their full-time employees, the month-by-month reporting requirement will not be imposed. If an employee received a “qualifying offer” for all 12 months of a plan year, the employer will only need to report the names, addresses, and taxpayer identification numbers, along with an indicator code. For employees receiving a qualifying offer for fewer than all 12 months in a plan year, a different indicator code can be used to report to both the individual employee and the IRS. However, a listing of all the employees is still required.
- For employers that provide a “qualifying offer” to at least 98% of their full-time employees (spouses and dependents), a detailed list of full-time employees is not required, only a certification by the employer.
A “qualifying offer” is an offer of minimum value coverage which provides employee only coverage which is “affordable’ (at a cost of no more than 9.5% of the Federal Poverty Level, or other acceptable measurement method as defined).
In addition, the IRS is allowing transition relief for 2015. Specifically, if an employer has offered “qualifying coverage” to at least 95% of its full-time employees, the employer can use simplified reporting for all full-time employees including those that did not receive a “qualifying offer” for the entire 12 months.
Again, the first reports to the IRS will be required by February 28th (March 31, 2016 if filed electronically) for the 2015 calendar year. The first report to employees is due no later than January 31, 2016 (February 1, 2016 as the 31st is a Sunday) for the 2015 calendar year. As with many of these recent regulations, frequent changes may occur. The www.irs.gov website is a good source for updated information regarding ACA reporting requirements.