ACA Filing Requirements

The Affordable Care Act (“ACA”) now requires certain employers to provide information to both the Internal Revenue Service (“IRS”) and their employees regarding the health insurance plans they offer. Businesses to which these changes will apply are referred to as applicable large employers (“ALE”) and consist of those with fifty (50) or more full-time employees. Full-time employees are defined as those employed an average of 30 hours or more per week. It is now imperative that you take extra care to keep monthly records of information pertaining to the health insurance you offer, including:

  • who your full-time employees are each month;
  • the months your full-time employees were enrolled in coverage;
  • the type of health plan(s) offered; and
  • whether you offer health insurance to certain non-employees.

Although ALEs will not be required to make such reports in 2015, for the 2014 calendar year; they will be required to do so in 2016, for the 2015 calendar year.

What Are the New Requirements?

Sections 6055 and 6066 were added to the Internal Revenue Code (“IRC”) and created new reporting requirements for employers. Section 6055 requires all providers of minimum essential coverage (“MEC”) to file an information return with the IRS and provide a copy statement to individuals. MEC is defined as any coverage that allows one to meet its individual responsibility requirement under the ACA. Although Section 6055 applies to health insurance issuers/carriers and government entities, it also applies to those sponsoring a self-insured health plan (one in which the employer pays the costs of its employee’s medical expenses rather than a health insurance issuer). Although it is not particularly common, some ALEs do decide to offer self-insured plans to their employees. If you are an ALE sponsoring such a plan, be aware that you will not file under Section 6055, but rather under Section 6056 using Part III of Form 1095-C.

Section 6056 is applicable to all ALEs and requires the filing information returns with the IRS and statements to the employer’s full-time employees about the health insurance coverage offered. Under this section, all ALEs are required to file Forms 1094-C and 1095-C for each full-time employee. Form 1094-C is used to report summary information for each employer to the IRS Form 1095-C is used to report information about each particular employee. These forms are meant to assist the IRS in determining whether the ALE will owe any penalties and whether the employees will be eligible for certain tax credits.

Changes were also made to Forms 1094-C and 1095-C to allow ALEs to satisfy their Section 6056 reporting by giving the employee a simplified statement of health coverage rather than a copy of the form 1095-C. The Qualifying Offer Method may be used if the employee was not enrolled in self-insured coverage and a statement is included that directs the employee to see IRS Publication 974, Premium Tax Credit (PTC), for information on eligibility for the PTC. The 98% Offer Method can be used if the ALE offered affordable MEC that provided minimum value to at least 98% of the employees to whom it reports in its Section 6056 return and the MEC was offered to the dependents of that employee (children included, but not spouses).

What if I Still Provide Health Insurance to Certain Non-Employees?

Changes were also made for certain employers providing health insurance to non-employees (e.g., a non-employee director, a retiree, a terminated employee receiving COBRA coverage who terminated employment during the previous year, or a nonemployee COBRA beneficiary). A nonemployee does not include someone who obtained coverage through the employee’s enrollment. This option only applies to ALEs offering self-insured coverage to an individual who was enrolled in the coverage for one or more calendar months of the year, but was not an employee for any months of the calendar year. Under the new option, ALEs may now report enrollment for these individuals under Forms 1094-B and 1095-B, or just Part III of Form 1095-C. If the latter option is used, Part II of Form 1095-C must also be complete. If the non-employee enrolled in a self-insured plan and added dependents, those dependents must be included on the Form 1095-B or Form 1095-C as the individual who was offered and enrolled in the plan.

How Does My Company Comply With the New Requirements?

Generally, all ALEs will file Form 1095-C with the IRS to satisfy both Section 6055 and 6056. ALEs sponsoring a self-insured plan will complete all sections of the form, while those offering insured coverage will only fill out those portions of the form pertaining to Section 6056. To comply with Section 6056, ALEs will also provide a single statement to each employee, with the Section 6056 information, and, with respect to employers with a self-insured group health plan, Section 6055 information.

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