Starting January 1, 2015, the ACA’s Employer Shared Responsibility provision takes effect. There are two parts:
- Employer Reporting Requirements:
- Under IRC § 6056, large employers must report information about health coverage offered to full-time employees. To comply with the reporting requirement, prepare and distribute Form 1095-C to the employee and file copies, along with transmittal Form 1094-C, with the IRS.
- Under IRC § 6055, large employers with self-funded plans must report information about the coverage provided to each individual. To comply with this reporting requirement, prepare and distribute Form 1095-B to plan enrollees and file copies, along with transmittal Form 1094-B, with the IRS. If also subject to § 6056, Forms 1095-C and 1094-C may be used to satisfy both the § 6055 and § 6056 requirements.
For calendar year 2015, the first reports are due in early 2016.
- Employer Coverage Offer (often called “the Employer Mandate” and “Play or Pay”): Employers may be assessed a penalty for failure to offer health coverage to full-time employees if at least one employee receives a government subsidy to buy individual coverage through an Exchange (Marketplace).
Applicable Large Employer: Employers with 50 or more full-time-equivalent (FTE) employees are subject to the Employer Shared Responsibility provision for 2015. Small employers are exempt. The employer must determine its FTE count for 2014 in order to confirm its responsibilities for 2015. Related employers in a controlled group are counted together to determine the number of FTEs. Generally, each full-time employee (i.e., 120 hours of service or more per month) counts as one FTE. Each part-time employee counts as a fraction of one FTE (i.e., divide the employee’s hours of service per month by 120). Employers with seasonal workers, usually in the agricultural or retail industries, may be able to take advantage of a special rule to subtract the seasonal workers from the employer’s FTE count.
Employers that are subject to the Employer Shared Responsibility provision for 2015 (based on their 2014 FTE count) may qualify for one of several available transition relief provisions to delay compliance under the Play or Pay portion for several months or into 2016. For example, transition relief is available for certain employers with 50 – 99 FTEs and/or for certain employers with non-calendar year health plans.