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Affordable Care Act Update: Employers Get First Look at Health Insurance Information Reporting

October 22, 2014

 

Monica Motta, CPA
Partner

Since passage of the Affordable Care Act, several key requirements for employers have been delayed, including reporting of health coverage offered to employees, known as Code Sec. 6056 reporting. However, as 2015 nears, and the prospects of further delay appear unlikely, employers and the IRS are preparing for the filing of these new information returns. While the reporting requirement is not mandatory until 2015, employers must start planning now for how the required information will be acquired and reported, and by whom it will be reported.

Three Related Provisions

The three provisions included in the Affordable Care Act that are closely related are: 

  1. The employer mandate for applicable large employers (ALEs)
  2. 36B premium assistance tax credits
  3. Code Section 6056 reporting

In order to administer the employer mandate and the Code Section 36B credit, the IRS must first receive information from the ALEs, such as the type of health coverage offered, if any, by the ALE, the number of employees and the cost of the coverage.

Does This Apply to your Business?

Not all employers must report under Code Section 6056.  

  • Small Employers:  If, as an employer, you have fewer than 50 full-time employees, including full-time equivalent employees, you are exempt from this provision at all times under Code Section 6056 reporting and the employer mandate. 
     
  • Transition Exemption: For 2015, some ALEs are temporarily exempt from the employer mandate only. If, as an employer, you employ at least 50 full-time employees, including full-time equivalents, but fewer than 100 employees including full-time equivalents during 2014, you are considered a mid-sized employer. As such, you are exempt from the employer mandate only for 2015. However, mid-sized employers must still file Code Section 6056 information for 2015. All other ALEs are still subject to the employer mandate as well as Code Section 6056. 

Additional Information Required

Code Section 6056 reporting forms have been issued in draft form dated October 1, 2014 on the IRS website. Based upon these draft forms, information will generally be reported by ALEs as follows: 

  • The employer's name, address and employer identification number
  • Contact information for the individual responsible for answering questions
  • A certification of eligibility (the response by the employer on Form 1094-C will control information required on Form 1095-C)
  • A certification as to whether the employer offered the opportunity to enroll in minimum essential coverage under an employer-sponsored plan to its full-time employees and their dependents
  • The number, address and Social Security/taxpayer identification number of all full-time employees
  • The number of full-time employees eligible for coverage under the employer's plan
  • The employee's share of the lowest cost monthly premium for self-only coverage providing minimum value offered to that full-time employee 

To report the information above, we have attached a link to the IRS draft forms as follows: 

  • Draft Form 1094-C– Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns
     
  • Draft Form 1095-C– Employer-Provided Health Insurance Offer and Coverage 

The draft instructions for these forms offer valuable insights that employers should understand to develop their recordkeeping and reporting systems after 2014. Under IRS regulations, Code Section 6056 reporting is optional for 2014; however, reporting for 2015 is required. Information returns must be filed no later than March 1, 2016 (since February 28, 2016 is Sunday), or March 31, 2016, if filed electronically. 

To view the draft instructions from the IRS, use the following links: 

http://www.irs.gov/pub/irs-dft/i109495c--dft.pdf

http://www.irs.gov/pub/irs-dft/f1095c--dft.pdf

Are you a Member of a Group?

If so, an Authoritative Transmittal is required. ALE Members that are subject to Section 6056 reporting may file more than one form 1094-C to transmit Forms 1095-C for certain employees separately. For example, an employer with two divisions may file Forms 1095-C for each division’s employees separately. Each submission of forms 1095-C must have a Form 1094-C transmittal. However, one of the Forms 1094-C must be designated at the Authoritative Transmittal. This is a single Form 1094-C on which the employer reports aggregate employer-level data for all full-time employees of the employer, including all employees of both divisions for the above example. 

Are You Self-Insured for Health Insurance?

The Affordable Care Act also requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs and other entities that provide minimum essential coverage to file information returns. This is known as Code Section 6055 reporting. 

Simplified Methods

The IRS has provided ALEs with simplified methods of reporting. Under a certification of eligibility, an employer can get relief for reporting under the following methods: 

  1. Qualifying Offer Method
  2. Qualifying Offer Method Transition Relief
  3. Section 4980H Transition Relief
  4. 98% Offer Method

Some of the methods of relief above do not simplify reporting on Form 1094-C, Employer Transmittal, but simplifies some of the information required on Form 1095-C. More information regarding the methods above will be furnished upon request. 

Please contact Monica Motta at mmotta@blumshapiro.com or 401.330.2714 for more information.

As a partner and head of BlumShapiro’s Rhode Island Healthcare Department, Monica works with both for-profit and non-profit healthcare organizations, including skilled nursing facilities, home health agencies and long-term care facilities. BlumShapiro is the largest regional accounting, tax and business consulting firm based in New England, with offices in Connecticut, Massachusetts and Rhode Island. In addition, BlumShapiro provides a variety of specialized consulting services such as succession and estate planning, business technology services, employee benefit plan audits, litigation support and valuation, and financial staffing. The firm serves a wide range of privately held companies, government and non-profit organizations and provides non-audit services for publicly traded companies.

Disclaimer: Any written tax content, comments, or advice contained in this article is limited to the matters specifically set forth herein. Such content, comments, or advice may be based on tax statues, regulations, and administrative and judicial interpretations thereof and we have no obligation to update any content, comments or advice for retroactive or prospective changes to such authorities. This communication is not intended to address the potential application of penalties and interest, for which the taxpayer is responsible, that may be imposed for non-compliance with tax law.

 

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