Q: Which employers are subject to the IRS reporting requirements?
A: All “Applicable Large Employers” (ALE’s) have ACA annual reporting responsibilities. An ALE is generally one with 50 or more full-time employees, including full-time equivalent employees. All ALE’s will need to provide the IRS and their full-time employees information returns concerning whether and what health insurance was offered to their full-time employees. Remember that regardless of size, all employers that provide self-insured health coverage to their employees must file an annual return reporting certain information for each employee they cover.
Q: What are the reporting requirements for a fully-insured employer?
A: ALEs that are fully-insured must file Form 1094-C to the IRS and must provide Form 1095-C to all full-time employees. Only the first two sections of Form 1095-C must be completed. Form 1095-B will be sent to those employees of the fully-insured ALE from the insurance carrier providing coverage.
Q: What are the reporting requirements for a self- insured employer?
A: ALEs that are self- insured must file Form 1094-C to the IRS and must provide Form 1095-C to all full-time employees. All three sections of Form 1095-C must be completed. Employees working for a self-insured ALE will not receive Form 1095-B from the insurance carrier.
Q: What happens if an employer switched from a fully-insured contract to a self-insured contract mid-year?
A: Only one (1) Form 1095-C will need to be distributed to each full-time employee. Section 3 will only need to be filled out for the months in the calendar year in which you were self-insured.
Q: What needs to be entered on Form 1095-C for those employees that are in their waiting period?
A: Code 1H will be entered on line 14 because there was no offer of coverage. On line 16, code 2D would apply because the employee is in their initial measurement period.
Q: Which code gets used on line 14 of Form 1095-C for folks that were offered coverage but declined?
A: Line 14 in Part II of Form 1095-C only tracks what the employer offers and does not reflect acceptance of coverage or not. So, whatever the appropriate offer code is for each employee is what should be used, regardless of whether or not they actually enrolled in coverage. Line 14 cannot be left blank. Line 16 is the place that would reflect whether the employee enrolled in coverage or not.
Q: What are the reporting responsibilities for a level-funded contract?
A: ALEs that are level-funded will be treated like self-funded employers. All three sections of Form 1095-C will need to be completed.
Q: What are the reporting responsibilities for a minimum premium contract?
A: ALEs that are written with minimum premium contracts will be treated like fully-insured employers. Only the first two sections of Form 1095-C will need to be completed.
Q: Does line 15 of Form 1095-C have to be completed?
A: Line 15 is only required to be completed if an employer offered coverage that was both minimum essential coverage (MEC) and was minimum value (MV), (this means that code 1B through 1E was entered on line 14). This line reflects the employee cost of the lowest cost self-only MEC and MV coverage offered to the employee. Therefore, if an employee is in their waiting period, then coverage was not offered and line 15 should be left blank. Make sure to enter the exact amount in dollars and cents (for example: $455.57).
Q: Do ALEs have to provide Form 1095-C to those employees that waive coverage?
A: Yes, all full-time employees need to receive Form 1095-C. If they waive coverage, that will be noted on line 16 of the form. Remember, the purpose of this form is to prove that coverage was offered to the employee.
Q: For line 14 of Form 1095-C, if an employee is only employed for a partial month, would the employer use a code indicating “no offer” for that month?
A: Yes. For line 14, an employer is only considered to have offered health coverage for a month if that employee would have been covered for every day of the month. It is important to note that there is an exception for terminated employees. If an employee terminates before the end of a month, but the employee would have had coverage for the entire month if he or she had not terminated, the employer can treat the employee as having been offered coverage for the entire month.
Stay tuned for an employer reporting FAQ part 2 coming soon!