The new reporting forms required under the Affordable Care Act’s employer mandate rules are not due until January 31, 2016, however, employers should be actively collecting the necessary data to fulfill this requirement.
Recently, the IRS issued draft forms for use in 2015, which are substantially similar to previously issued forms.
Under the Code, applicable large employers – those with 50 or more full-time employees – are required to complete Forms 1094-C and 1095-C detailing offers of health coverage to full-time employees. In addition, self-insured employers will need to report information on those covered under the self-insured health plan. The IRS uses the forms to help determine whether:
- An employer owes a penalty payment under the employer mandate;
- An employee is eligible for subsidies to purchase coverage in the marketplace;
- An individual has minimum essential coverage in order to avoid a penalty tax under the individual mandate;
Employers should be closely working with their partners (brokers, carriers, third-party administrators, and payroll vendors) in preparation for reporting specific information for calendar year 2015. There is a lot of data to identify and track in order to successfully complete these new requirements. Also, mid-calendar year changes in funding arrangements (fully insured to self-insured or vice versa) or changes that affect offers of coverage, affordability or family makeup may influence the information employers have to report on a monthly basis.
Employers are connecting with payroll providers and other third parties to aid in preparation of these forms. However, the employer remains responsible for the accuracy and timeliness of filings, and must be the one to produce the information that must be collected during the calendar year to satisfy this requirement.
How “C” forms work
Form 1094-C is a summary form used to transmit all Forms 1095-C to the IRS. It provides specific employer-level data. Form 1095-C is used to report information about offers of coverage to each FTE of the employer.
Each FTE who was a FTE for at least one month during the calendar year must receive a Form 1095-C by February 1, 2016.
Report self-insured plans to the IRS
Employers offering self-insured health plan coverage will need to report to the IRS members who have health plan coverage through the self-insured plan for at least one month during the calendar year. Employers may use Form 1095-C, specifically Part III, to report information regarding minimum essential coverage to the IRS and to covered individuals.
Know what the penalties are
Penalties may apply for failure to file these forms or furnishing incorrect or incomplete forms and range from $30 per form up to an annual maximum amount of $250,000, or $100 per form up to an annual maximum of $1.5 million.
For the 2015 calendar year, employers acting in good faith to comply with the reporting requirements will not be subject to penalties for errors. The penalties may be assessed if an employer fails to timely file or furnish the statements.
These penalties are separate from any assessments under the employer mandate. Beginning in 2015, applicable large employers may be subject to a penalty if any FTE receives a premium tax-credit or cost-sharing subsidy to purchase health insurance through the marketplace. The recent Supreme Court decision upholding the availability of subsidies in all marketplaces should further motivate employers to prepare for these new reporting requirements as the IRS uses this information to gauge whether an employer will be assessed a penalty under the employer mandate.
Important things to note
Following are three more details to note as employers work towards the deadline:
- For 2015 only, medium-sized employers (50-99 FTEs) eligible for relief from the employer mandate will need to complete these reporting requirements for CY 2015 and certify eligibility for the relief.
- Regardless of an employer’s plan year, reporting is done based on the calendar year (January–December).
- Required data is reported for each month of the calendar year, with some opportunities to report on a 12-month basis.
Understanding these compliance requirements and the tools necessary to track can be confusing and overwhelming. Make sure you are working with partners who can help you navigate these requirements and provide solutions that will reduce the burden on your organization. Change doesn’t have to be painful if you plan ahead and know your facts.