The Patient Protection and Affordable Care Act of 2010 (the “ACA”) imposes significant information reporting responsibilities on certain employers starting with the 2015 calendar year. These employers must file annual information returns with the Internal Revenue Service (the “IRS”) and provide annual statements to their employees containing health plan coverage information. Failure to file the required information returns (or filing incomplete or incorrect forms) could result in reporting penalties and penalties under the ACA’s shared responsibility provisions.
IRS Form 1094-C and IRS Form 1095-C
Employers that employed an average of at least 50 full-time or full-time equivalent employees during the preceding calendar year (the so-called “applicable large employers”) will be required to file IRS Form 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns) and IRS Form 1095-C (Employer-Provided Health Insurance Offer and Coverage) for the 2015 calendar year. Determining if an employer is considered an applicable large employer requires confirming if it is a member of a controlled or affiliated group. Critically, even if an employer is part of a controlled or affiliated group that collectively constitutes an applicable large employer (i.e., one that has at least 50 full-time or full-time equivalent employees during the preceding calendar year), each member of that group with employees must separately file IRS Form1094-C and IRS Form 1095-C.
All applicable large employers and applicable large employer group members must complete parts I and II of IRS Form 1095-C for each of its full-time employees, regardless of whether that employer offers a fully-insured or self-funded health plan, or does not offer any group health plan. If an applicable large employer or applicable large employer group member only offers a fully insured health plan, it need not complete any other parts of IRS Form 1095-C. However, if an applicable large employer or applicable large employer group member offers an employer-sponsored, self-insured health plan into which an employee enrolls, that employer must also complete part III of IRS Form 1095-C.
An applicable large employer or applicable large employer group member will file IRS Form 1094-C to transmit its IRS Forms 1095-C to the IRS. This form will reflect the total number or IRS Forms 1095-C filed, employee counts, an employer certification regarding minimum essential health coverage, and certain additional information.
To complete IRS Form 1094-C and IRS Form 1095-C, the applicable large employer or applicable large employer group member will need to confirm whether its employees and their dependents were offered coverage, the cost of that coverage, and identifying information for its employees and their dependents. This information must be captured and reported for each month of the calendar year.
IRS Form 1094-B and IRS Form 1095-B
Although IRS Form 1094-B and IRS Form 1095-B will typically be filed by insurers, small employers that are not subject to the ACA’s shared responsibility provisions will use IRS Form 1094-B and IRS Form 1095-B to report health coverage information to the IRS. Small employers that sponsor only fully insured group health plans are not required to file these forms. However, small employers that sponsor self-insured group health plans will use these forms to report information about the employees enrolled in that self-insured plan.
IRS Forms 1095-C and IRS Forms 1095-B must be distributed to employees (in hard copy, or electronically if employee consent is obtained) by January 31, 2016. These forms, along with the IRS Form 1094-C and the IRS Form 1094-B transmittal forms, must be filed with the IRS by February 28, 2016, or March 31, 2016 if such forms are filed electronically. Electronic filing is required if an employer is required to file at least 250 IRS Forms 1095-C or IRS Forms 1095-B.
Given the complex and nuanced nature of these new information reporting requirements, employers should review the ownership structures of related companies and determine if they are or are deemed to be an applicable large employer. Employers should also develop procedures to document each employee’s full-time or non-full-time status by month, as well as develop procedures to collect information about health coverage offers and enrollment. Such systems should be in place during 2015. Furthermore, employers should address these new reporting rules with their health plan insurer or third-party administrator, as well as the employer’s payroll vendor, to determine who will be responsible for collecting the requisite data and preparing the required forms.
For further information, please contact Len Sprishen at MSPC’s Cranford office, or your MSPC advisor, to ensure your compliance with these new IRS information reporting requirements.