ACA Reporting Requirements: Are You Ready?

The IRS has released the final regulations regarding how employers and insurance companies will report information that the IRS needs to enforce both the Individual and Employer Mandates of the Affordable Care Act (“ACA”).

The time to prepare is now! If you have 50 or more employees (including full-time equivalents) you must start tracking information on a MONTHLY basis during 2015 for reporting by January 31, 2016.

Key points:

1. ACA added two reporting requirements to the IRS code:

  • Section 6055 reporting, intended to support IRS enforcement of the individual mandate; and,
  • Section 6056 reporting, which will support IRS enforcement of the employers shared responsibility provisions (“employer mandate” and the low-income subsidies for coverage purchased on the public marketplace.

2. Both reporting requirements are effective for medical coverage provided on or after January 1, 2015, with the first information returns to be filed to the IRS by February 29, 2016 (March 31, 2016 if filed electronically) and provided to individuals by February 1, 2016.

  • Applicable large employers – those with 50 or more full-time employees, including full-time equivalent employees – are required to report and should start preparing now.

The basics of Section 6055 Reporting

  • Applies to insurers, sponsors of self-insured plans, governmental entities and other parties (Form 1094-B and Form 1095-B).
  • Insurers complete on behalf of fully-insured plans;
  • Plan sponsors (employers) complete on behalf of self-funded plans;
  • Reports information on each individual to whom the entity provided minimum essential coverage.
  • Form 1095-B is provided to individual who are enrolled in coverage
  • Due to the recipient (e.g., employee or covered individual) on or before January 31 of the following year.
  • Information return due on or before March 31 if filed electronically (or February 28 if filed otherwise) of the following year.

The basics of Section 6056 Reporting

  • Applies to all large employers (50 or more full-time equivalent employees) (Form 1094-C and Form 1095-C);
  • Employers complete both Form 1094-C and 1095-C (further details below);
  • Reports information on employer-sponsored coverage;
  • Due to the recipient (e.g., employee or covered individual) on or before January 31 of the following year;
  • Information return due on or before March 31 if filed electronically (or February 28 if filed otherwise) of the following year.
  • The 6056 Return will also include “indicator codes” for employer to report additional information.

What to do:

1. Review the IRS brochure “Understanding employer reporting requirements of the health care law”.
2. Understand your company’s obligations to complete Form 1094-C and 1095-C.
3. Start tracking the information you will need NOW! You will need to report information for each month of the year including:

  • A certification as to whether the large employer offered its full-time employees and their dependents the opportunity to enroll in Minimum Essential Coverage (“MEC”) under an employer sponsored plan, by calendar month;
  • The months in which MEC was available
  • Name, address and Social Security number of each full-time employee during the calendar year and months, if any, during which each employee was covered under the employer’s plan.
  • Each full-time employee’s share of the lowest cost monthly premium (self-only) for coverage provided minimum value by calendar month
  • The number of full-time employees by calendar month

4. If you currently use a payroll provider, contact your representative and ask what resources or updates may be available to assist you in tracking the required information as well as the ability of the payroll system to possibly produce the required forms.

What is the “additional statement” that must accompany a 6056 return (Form 1095-C)?

  • Applicable large employers must also provide a statement to each of their employees including name, address, EIN of the employer and the information included in the 6056 return (Form 1095-C) with respect to that employee.
  • The statement can use a truncated Social Security number.
  • The statement will either be a copy of the completed Form 1095-C or a substitute statement created by the employer that includes all required information.
  • The additional statement can be mailed together with the employee’s W-2.
  • The statement must be provided by January 31 of each year following a covered year unless the IRS approves an extension.
  • The statement must be sent to the employee’s last known address. It can also be distributed electronically with consent.
  • Note for employers with 50-99 full-time equivalent employees in 2015 with a fully insured health plan:
  • Even though the regulations provide transitional relief from the Employer Mandate penalties in 2015 for most midsize employers, these employers are still required to perform certain reporting tasks under Section 6056. Mid-sized employers must file Form 1094-C and Form 1095-C for 2015, but they will indicate on the form that they are not subject to the mandate.

Additional information on the ACA Reporting Requirements including alternative reporting methods can be found on the IRS website.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

If you have questions regarding the Affordable Care Act and how it impacts you or your business, please contact your CPA form more information.