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ACA Reporting Requirements

Quick Facts:

The Affordable Care Act (ACA) added two employer reporting requirements to the Internal Revenue Code (Code):

  • Code § 6056 requires applicable large employers (ALEs) to provide an annual statement to each full-time employee detailing the employer’s health coverage offer.
  • Code § 6055 requires employers that provide minimum essential coverage under a self-funded (self-insured) plan to provide an annual statement to covered persons.

Details:

What is the purpose of the new employer reporting requirements?

The reporting requirements are intended to help the IRS administer several provisions under the Affordable Care Act. Specifically, the IRS will use information reported by employers to determine:

  • Employees that are (or are not) eligible for subsidies if they purchase health insurance in the individual Health Insurance Exchange (Marketplace);
  • ALEs that fail to offer affordable minimum value coverage to full-time employees and whether the employer may be subject to potential penalties; and
  • Individuals that are enrolled in minimum essential coverage that satisfies the ACA’s individual mandate.

General Terms

An applicable large employer (ALE) is an employer that employed an average of 50 or more full-time employees, including full-time-equivalent employees, in the prior calendar year.

Full-time employee generally means a common-law employee that averages 30 or more hours of service per week, (or 130 hours per month), as determined under one of two specific measurement methods. An hour of service is each hour for which payment is made or due (e.g., performance of duties, vacation, holidays, paid absence, or leave).

Minimum essential coverage means any employer-sponsored group health plan, other than “excepted benefits.” Most flexible spending accounts (FSAs) or stand-alone dental or vision plans are excepted benefits; that is, they are not minimum essential coverage.

Minimum value coverage means the minimum essential coverage plan’s share of total allowed cost of benefits is at least 60 percent of such costs. For 2015, the minimum value coverage is affordable if the employee’s required contribution for self-only coverage does not exceed 9.56 percent of the employee’s income from the employer. For 2016, the percentage is 9.66 due to inflation adjustment.

Official Guidance:

The Internal Revenue Service (IRS) released final forms and instructions to be used for Internal Revenue Code § 6055 and § 6056 reporting:

For 2016 reporting (forms due in early 2017):

  • 2016 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage.
  • 2016 Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns.
  • Instructions for 2016 Forms 1094-C and 1095-C.

ACA Reporting Requirements FAQs

Are all employers subject to the reporting requirement?

No. Employers with fewer than 50 full-time and full-time equivalent (FTE) employees (non-ALE members) that do not offer health coverage, are not subject to the reporting requirements. Additionally, non-ALE members that offer fully insured health coverage are not subject to the reporting requirements; their insurance carrier is responsible for reporting. Employers with 50 or more full-time and FTE employees must complete and file Forms 1095-C and 1094-C, regardless of the type of coverage they provide.

Is this the first year these reports are required? When are they due?

The 2015 calendar year is the first year for which these reports are required. Originally, employers were required to provide the forms to their employees by February 1, 2016 and file them with the IRS by February 29, 2016 (or March 31, 2016 if filing electronically). However, in December 2015, the IRS extended these deadlines. For the 2015 calendar year only, employers have until March 31, 2016 to provide the forms to their employees and until May 31, 2016 (or June 30, 2016, if filed electronically) to file the forms with the IRS. In subsequent years, the forms must be filed with the IRS by February 28 (or March 31 if filed electronically) and provided to your employees by January 31.

Where do I go for help with filing these forms?

Employers are encouraged to seek assistance through legal counsel, tax professionals, or insurance brokers when filing these forms. For more information, see the FAQs provided by the IRS.