In 2016, the Internal Revenue Service will require large employers with 50 or more full-time employees, including full-time equivalents, to annually report monthly data concerning the health coverage offered to full-time employees. These reporting requirements are set forth in Internal Revenue Code (“IRC”) section 6056 (for large employers) and section 6055 (for insurers and sponsors of self-insured plans). Large employers will also need to provide a written statement to each employee it identified in the reporting specifying the information reported. The annual reporting will be based on data from the prior year. Therefore, it is important for employers to plan ahead now to meet these reporting requirements. Large employers must provide the written statements to employees by January 31 and submit reports to the IRS by February 28 (or by March 31 if e-filed).
Self-Insured Plans: The final regulations allow employers that sponsor self-insured plans to combine the reporting required under IRC section 6055 and IRC section 6056 into a single, consolidated form, Form 1095-C. The combined form will have two sections: the top half includes the information needed for IRC section 6056 reporting, while the bottom half includes the information needed for IRC section 6055. Large employers that self-insure health benefits should complete both sections of Form 1095-C.
Fully-Insured Plans: Large employers that are subject to the ACA’s employer shared responsibility provisions because they employee 50 full-time (or full-time equivalent) employees but are not self-insured will complete only one section of the combined Form 1095-C in order to fulfill their reporting requirements under IRC section 6056.
Information Reported: Employers must report on each employee who was full-time for one month or more during the year. The report will contain the following information:
- The name, address, and EIN of the employer;
- The name and telephone number of the employer’s contact person;
- The calendar year being reported;
- A month by month certification of whether the employer made an offer of coverage to each full-time employee (and dependent children up to age 26);
- The months during which coverage was available;
- The employee’s required contribution to the lowest cost, self-only monthly premium, by month;
- The number of full-time employees in each month;
- The name, address, and tax identification number of the full-time employee and the months during which the employee was covered.
Simplified Option: If employers make a “qualifying offer” (an offer of minimum value coverage at a self-only cost to the employee of no more than 9.5 percent of the Federal Poverty Level (about $1,100 in 2015) as well as an offer of minimum essential coverage to the employee’s spouse and dependents) for all 12 months of the year, they do not have to report month-by-month information for those employees. They will still report the following information:
- Names, addresses, and taxpayer identification numbers (TINs); and
- Confirmation that the employees received a full-year qualifying offer.
If employers make a qualifying offer, as defined above, for fewer than all 12 months of the year, (for example, when an employee starts or is terminated partway through the year) employers must still report the month-by-month information required under the general method.
Employee Statements: By January 31st of each year, large employers must also provide full-time employees identified on the IRS return with written statements containing:
- Employer information (EIN, contact details, etc.); and
- All information required to be shown on the IRS reporting with respect to that employee.
Optional 2015 Phase-In: Reporting is voluntary in 2015 (regarding 2014 data). Solely for 2015, an employer may certify that it made a qualifying offer, as defined above, to at least 95% of full-time employees and their families. Employers electing to use this alternative reporting will file IRS Form 1095-C and provide the employee’s name, tax ID number, and address, and may include employees who did not receive a qualifying offer for the full year, without providing month-by-month details. The employer must also provide a simplified statement to employees in a format designated by the IRS.
Employers That Offer Coverage to Virtually All Employees: Employers that certify that they offered affordable, minimum value coverage to at least 98 percent of employees and their dependent children may use the simplified reporting method but will not be required to identify or specify the number of full-time employees.
Penalties for Non-Compliance: The penalty for failure to timely file a correct return to the IRS is $100 per return (up to $1,500,000 per year), and the penalty for failure to timely provide a correct written statement to an employee is $100 per statement (up to $1,500,000 per year). For 2016 reporting only (regarding 2015 data), the IRS has indicated that it will not impose penalties for incorrect or incomplete information if an employer makes a good faith effort to comply with the reporting requirements.
The final regulations are available at http://www.gpo.gov/fdsys/pkg/FR-2014-03-10/pdf/2014-05051.pdf and http://www.gpo.gov/fdsys/pkg/FR-2014-03-10/pdf/2014-05050.pdf.