While the new reporting forms required under the Affordable Care Act’s employer mandate rules are not due until January 31, 2016, employers should be collecting the data now.
The code requires applicable large employers (ALE), those with 50 or more employees, to complete Forms 1094-C and 1095-C that detail offers of health coverage to full-time employees (FTEs). It also requires self-insured employers to report information on everyone covered by their health plans. The IRS uses the forms to determine the following:
- Does an employer owe a penalty payment under the employer mandate?
- Is an employee eligible for subsidies to purchase coverage in the marketplace?
- If an individual has minimum essential coverage (MEC) in order to avoid a penalty tax under the individual mandate.
Starting in early 2015, the first required reporting period, employers should work to understand and track the data needed to complete the forms. They should keep in mind that any mid-calendar year changes that impact affordability or the nature of health plan coverage offering will affect the information they report on a monthly basis.
Even when an employer contracts with a payroll provider or other third party to prepare the forms, it remains responsible for the accuracy and timeliness of the filings. Also, it must produce the information that will be collected during the calendar year to satisfy the requirement.
The C- Forms
Employers will use Form 1095-C to detail offers of coverage on each of their FTEs.
They will use Form 1094-C to transmit employer-level data to the IRS.
By February 1, 2016, employers must provide a Form 1095-C to each employee who was a FTE for at least one month during the calendar year.
Self-insured employers must inform the IRS about employees who received health coverage through the self-insured plan for at least one month during the calendar year.
Employers may use Form 1095-C to report information about minimum essential coverage to both the IRS and covered individuals.
The IRS may assess penalties on an employer that fails to file the forms or files incorrect or incomplete forms. Penalties range from $30 per form (up to an annual maximum of $250,000) to $100 per form (up to an annual maximum of $1.5 million). For the 2015 calendar year, the IRS will not assess penalties on employers that acted in good faith to comply with the reporting requirements. However, it will not provide relief for failure to file or furnish the statements in a timely fashion. These penalties are apart from any assessments under the employer mandate. 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.
Important Things to Note
Here are some details employers should note as they work toward the deadline:
- For 2015 only, medium-sized employers (50-99 FTEs) eligible for relief from the employer mandate will need to complete the reporting requirements for calendar year 2015 and certify eligibility for relief.
- Regardless of an employer’s plan year, reporting is 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.
- Form 1095-C reports information about each full-time employee. It also provides information about employees and family members covered by the self-insured plan.
- Form 1094-C reports summary information on each employer. It’s also used to transmit all 1095-C forms.
Brian McLaughlin is vice president of USI Affinity’s Benefit Solutions Group.