Since passage of the Affordable Care Act, several key requirements for employers have been delayed, including reporting of health coverage offered to employees, known as Internal Revenue Code (IRC) 6056 reporting. As 2015 nears, and the prospects of further delay appear unlikely, employers and the IRS are preparing for the filing of these new information returns. [Note: Under IRS regulations, IRC 6056 reporting is optional for 2014]
Three related provisions – Three provisions of the Affordable Care Act are closely related: the employer mandate for applicable large employers (ALEs), the IRC 36B premium assistance tax credit and IRC 6056 reporting. To administer the employer mandate and the IRC 36B credit, the IRS must receive information from ALEs, such as the type of health coverage offered, if any, by the ALE, the number of employees, and the cost of coverage.
Who must report – Not all employers must report under IRC 6056. The most important exception is for employers with fewer than 50 full-time employees, including full-time equivalent employees. These smaller employers are exempt—at all times—from IRC 6056 reporting and the employer mandate. For 2015, there is also a temporary exemption for some “mid-size’ ALEs from the employer mandate only. Mid-size ALEs are employers that employ on average at least 50 full-time employees, including full-time equivalents but fewer than 100 full-time employees including full-time equivalents. However, mid-size employers must file IRC 6056 information returns for 2015. All other ALEs are subject to the employer mandate for 2015 as well as IRC 6056.
What must be reported – The IRS has posted draft forms for IRC 6056 reporting on its website: Form 1094-C Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns and Form 1095-C, Employer-Provided Health Insurance Offer and Coverage. Draft instructions for these forms are expected to be released in the near future.
ALEs generally must report:
- The employer’s name, address, and employer identification number;
- The calendar year for which information is being reported;
- A certification as to whether the employer offered to its full-time employees and their dependents the opportunity to enroll in minimum essential coverage under an employer-sponsored plan;
- The number, address and social security/taxpayer identification number of all full-time employees;
- The number of full-time employees eligible for coverage under the employer’s plan; and
- The employee’s share of the lowest cost monthly premium for self-only coverage providing minimum value offered to that full-time employee.
Information returns must be filed no later than March 1, 2016 (February 28, 2016, being a Sunday), or March 31, 2016, if filed electronically.
Simplified method – The IRS has provided ALEs with simplified methods of reporting. Employers that provide a “qualifying offer” to any of their full-time employees may be eligible as are employers that offer coverage to a certain percentage of employees.
Employers that self-insure – The Affordable Care Act also requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs, and other entities that provide minimum essential coverage to file information returns. This is known as “IRC 6055 reporting.” The IRS has posted draft versions of Form 1094-B, Transmittal of Health Coverage Information Returns, and Form 1095-B, Health Coverage on its website. Employers that self-insure have a streamlined way to report for purposes of IRC 6055 reporting and IRC 6056 reporting. The top half of Form 1095-C includes information needed for IRC 6056 reporting; the bottom half includes information needed for IRC 6055 reporting.
(CMA encourages you to learn and understand your reporting requirements as an employer under the Affordable Care Act. CMA will continue to publish additional information on this subject as it becomes available, but you are urged to speak with your CPA and insurance providers to ensure you have the information needed to comply with the new regulations).