The Affordable Care Act (ACA) added new employer reporting requirements under Internal Revenue Code (Code) Sections 6055 and 6056. These new requirements apply to employers that sponsor self-insured plans that provide minimum essential coverage (which includes employer sponsored coverage, COBRA coverage and retiree coverage) regardless of size, and applicable larger employers (ALEs).
An ALE is an employer that employed an average of at least 50 full-time employees (at least 30 hours per week), including full-time equivalents, during the preceding calendar year. The IRS will use the information reported to administer the premium tax credit and the employer shared responsibility provisions of the ACA.
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Under Code Section 6055, employers that sponsor self-insured plans that provide minimum essential coverage must report to the IRS information about the health coverage actually provided to enrollees (including enrollees who do not work full time), even if they are not subject to the employer shared responsibility provisions or the information reporting requirements for ALEs under Code Section 6056.
The information to be reported includes:
- The name, address and employer identification number of the provider;
- The name, address and tax identification number (TIN) (or date of birth if a TIN is not available) of the individual who enrolls one or more individuals in the plan (typically the employee) (referred to herein as the responsible individual);
- The name and TIN (or date of birth if TIN is not available) of each individual covered under the plan, and the months for which the individual was enrolled; and
- Any other information specified in forms, instructions or published guidance.
Employers have a limited ongoing obligation to periodically solicit unknown TINs.
Employers to whom Code Section 6055 applies must furnish to the responsible individual a statement that includes the same information provided to the IRS and a phone number for the providers designated contact person.
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Under Code Section 6056, ALEs must report to the IRS information about the healthcare coverage, if any, they offered to full-time employees. Information to be reported includes:
- The ALEs name, address and EIN;
- The name and telephone number of the ALEs contact person;
- The calendar year for which the information is reported;
- A certification as to whether the ALE offered to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under the plan, by calendar month;
- The months during the calendar year for which minimum essential coverage under the plan was available;
- Each full-time employees share of the lowest cost monthly premium (self-only) for coverage providing minimum value offered to the employee under the plan, by calendar month;
- The number of full-time employees for each month during the calendar year;
- The name, address and TIN of each full-time employee during the calendar year, and the months, if any, during which the employee was covered under the plan; and
- Any other information specified in forms, instructions or published guidance.
ALEs also must furnish to each full-time employee a statement that includes the same information provided to the IRS with respect to that employee. All information must be reported and provided regardless of whether the ALE offers coverage or whether the employee enrolls in any coverage offered.
Non-ALEs should use Form 1095-B, Health Coverage, and the transmittal Form 1094-B, Transmittal of Health Coverage Information Returns, to meet the information reporting requirements. ALEs should file using Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, and Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns. A self-insured ALE must complete Part III of Form 1095-C for each employee who enrolls in the self-insured coverage or who enrolls a family member in such coverage, regardless of whether the employee is a full-time employee.
Alternatively, an employer can meet the return and reporting requirements by using substitute forms. An employer may also be eligible to use one of two simplified reporting mechanisms as provided in the applicable regulations.
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The timing for the new information reporting is similar to W-2 reporting. Thus, the first statements to employees must be furnished by February 1, 2016 (January 31, 2016 is a Sunday), and the first information returns to the IRS must be filed by February 28, 2016 or March 31, 2016, if filed electronically. ALEs that file 250 or more information returns during the calendar year must file the returns electronically.
An employer that fails to comply with the information reporting requirements may be subject to the general reporting penalty provisions under Code Section 6721 (failure to file correct information returns) and Code Section 6722 (failure to furnish correct payee statement). Generally, the penalty under each of these Sections separately is $100 for each return for which such failure occurs, with the total penalty under each Section not to exceed $1,500,000 for a calendar year.
The IRS has stated that it will not impose penalties for 2015 returns and statements on entities that can show that they have made a good faith effort to comply with the information reporting requirements. However, no relief is available for entities that cannot show such good faith effort or those that fail to timely file an information return or furnish a statement.
Gladys C. Zolna is a partner in the corporate practice group at Freeborn & Peters in Chicago. She has in-depth experience with and knowledge of qualified retirement plans, health and welfare benefits, and executive compensation. She advises small and mid-sized businesses, as well as Fortune 500 companies, in the design, implementation and administration of plans and individual arrangements, as well as drafting of plan documents and forms.
