If your company is subject to the Affordable Care Act’s Employer Mandate, or if your company offers employees a self-insured group medical plan, listen up. The ACA added Code 6055 and 6056 to the Internal Revenue Code, requiring employers to report information the Internal Revenue Service (IRS) about their medical plans. The IRS will use this information to determine individual eligibility for premium tax credits for health insurance purchased through an Exchange. The reporting also enables the IRS to enforce the Employer Mandate.
Who is required to report?
Code 6055 requires health insurers and plan sponsors of self-insured group health plans to report to the IRS and to provide a statement about the group health plan to covered individuals and dependents.
Code 6056 requires all Applicable Large Employers (ALEs) to report information to the IRS and to provide a statement to all full-time employees. An ALE is an employer who employed an average of fifty full-time equivalent employees during the prior calendar year. When determining size, an employer must count all employees within its controlled group of corporations under Code 414. If your company is a subsidiary, has subsidiaries of its own, or if the owners of your company have ownership in other companies, consider having your controlled group status evaluated by legal counsel.
What forms must be filed?
Code 6056 requires health insurers and sponsors of self-insured group health plans to file Form 1094-B and Form 1095-B. Form 1094-B is the information return that must be filed with the IRS. Form 1095-B is the statement that will be provided to each covered participant. A copy of each Form 1095-B is also filed with the IRS. The instructions may be found on the IRS website. Important: Employers with self-insured group health plans that are also subject to the Employer Mandate may satisfy the reporting requirements under both Code 6055 and Code 6056 by using the C series forms, described below. However, sponsors of self-insured group health plans may need to issue B series forms to individuals covered under the plan who are not employees, such as retirees or COBRA participants. More guidance from the IRS is anticipated.
Code 6056 requires ALEs to file Form 1094-C and Form 1095-C. Form 1094-C is the information return that must be filed with the IRS. Form 1095-C is the statement that will be provided to the employee. Each full-time employee must receive a Form 1095-C. A copy of each Form 1095-C is then filed with the IRS, similar to the W-2. The instructions may be found on the IRS website. Final forms and instructions for both the B series forms and C series forms were published on February 4, 2015. Note that these forms and instructions are for the 2014 tax year. Reporting is voluntary for the 2014 tax year. Additional revisions to the forms and instructions may occur prior to the 2015 filing deadlines.
When must the forms be filed and distributed?
Form 1094-B and Form 1095-B must be filed by February 28 (March 31, if filing electronically).
Form 1094-C, the information return, must be filed by February 28 (March 31, if filing electronically). Form 1095-C, the employee statement, must be distributed by January 31 of each year.
TIP: 2016 Filing Deadlines
In 2016, the filing deadlines fall on Sundays. As a result, the Form 1094-C is due by March 1, 2016 (unless filed electronically). The Form 1095-C is due by February 1, 2016.
What should employers do now?
This new requirement may take some employers by surprise. Although the forms are not filed until 2016, the forms require information for each month of the 2015 tax year. For ALEs, the forms require a significant amount of data, including the total number of full-time employees for each month, the monthly cost for employee-only coverage, and other information.
Employers should begin by reviewing the forms and instructions. Understanding the information required by the forms will allow employers to assess the capabilities of their current payroll systems. Many employers may need to upgrade their systems or consider whether additional resources are needed. Payroll vendors and other technology companies are marketing new tools designed to help employers comply with this requirement.
Employers with self-insured group health plans should consult their third-party administrator to determine if the administrator will provide any data reporting to assist the employer. Expect additional communications from these vendors when the forms and instructions become final.
Finally, employers and sponsors of self-insured group health plans should consult with their tax advisor or legal counsel. While these forms contain information related to benefits, the forms are used to enforce provisions of the Internal Revenue Code. The IRS has indicated it will work with employers and sponsors of self-insured group health plans to become compliant in the first year of implementation. After 2015, existing tax penalties for failure to file, late filing, or incorrect filing may apply.
Lindsey Surratt, JD, is a compliance officer for Hill, Chesson & Woody Employee Benefit Services, CAI’s employee benefits partner.
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