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Reporting Requirements for Employers

Code Sections 6055 & 6056

The Affordable Care Act (ACA) created new reporting requirements under Internal Revenue Code Sections 6055 and 6056. Under these reporting rules, certain employers must provide information to their employees and to the IRS about the health plan coverage they offer (or do not offer) to their employees. These reporting requirements were set to take effect in 2014, yet were delayed for one year by the Department of Treasury, and now become effective in 2015. The first returns will be due in 2016 for coverage provided and/or offered in 2015.

Section 6055 Reporting

Section 6055 requires every entity that provides minimum essential coverage (MEC) to file an annual return with the IRS reporting information for each individual who is provided with this coverage. Related statements must also be provided to individuals. The IRS will use the information from the returns to implement the ACA’s individual mandate (that is, the requirement that individuals obtain acceptable health insurance coverage or pay a penalty). In insured arrangements, the carrier is responsible for this reporting. However, an employer who sponsors a self-insured plan is considered the provider of coverage, and therefore, the entity that is subject to this reporting requirement.

Section 6056 Reporting

Section 6056 requires applicable large employers (ALEs) to file information returns with the IRS and provide statements to their full-time employees about the health plan coverage the employer offered (or did not offer). The IRS will use the information provided on the return to administer the ACA’s employer shared responsibility rules, which impose penalties on ALEs that do not offer affordable, minimum value coverage to their full-time employees and dependents.

Forms to be Used

Under Section 6055, reporting entities will generally file Forms 1094-B (a transmittal) and 1095-B (an information return). Under Section 6056, entities will file Forms 1094-C (a transmittal) and 1095-C (an information return). Combined reporting is available for employers that are subject to both reporting provisions (i.e., ALEs that sponsor self-insured group health plans). To allow these ALEs to satisfy both reporting requirements on a single return, Form 1095-C has separate sections for reporting under Section 6055 and for reporting under Section 6056.

On February 8, 2015, the IRS released final versions of Forms 1094-B, 1095-B, 1094-C and 1095-C. These are 2014 versions only, and are not required to be filed for 2014. However, reporting entities may voluntarily file them in 2015 for 2014 coverage. Forms and instructions for 2015 reporting have not yet been released, and may contain some changes from these 2014 versions.

Information Required to Be Reported

Section 6055 requires the reporting of several data elements that will be needed by taxpayers for preparing their tax returns or by the IRS for tax administration. For each primary covered individual, self-insured employers are required to file a return with the IRS and furnish a statement to the individual reporting:

  • The name, address and SSN of the primary insured;
  • The name and SSN of each other individual covered under the plan; and
  • For each covered individual, the months for which the individual was enrolled in coverage.

This information will be captured on Form 1095-B, or Form 1095-C Parts I and III for ALEs filing under the combined reporting method. Form 1094-B or Form 1094-C (a transmittal) will accompany the Forms in the submission to the IRS.

Section 6056 requires ALEs to report information about the health coverage, if any, offered to its full-time employees. For each full-time employee, the ALE is required to file a return with the IRS and furnish a statement to the employee reporting:

  • The name, address and SSN of the full-time employee;
  • Whether an offer of health coverage was or was not made to the employee (by month); and
  • Information about the offer (such as whether it met minimum value and was affordable).

This information will be captured on Form 1095-C Parts I and II. Form 1094-C (a transmittal) will accompany the Forms in the submission to the IRS and includes a certification of whether the ALE offered the opportunity to enroll in minimum essential coverage (MEC) to at least 95% of its full-time employees, by calendar month.

Deadlines

The employee statements, or Forms 1095-B or 1095-C, must be furnished to individuals on or before January 31 of the year following the calendar year to which the statements relate.

Additionally, the Forms must be filed with the IRS annually, along with a transmittal (Form 1094-B or 1094-C), no later than February 28 (March 31, if filed electronically) of the year following the calendar year to which the return relates. Electronic filing is required for entities filing 250 or more returns.

Penalties

A reporting entity that fails to comply with the Section 6055 or Section 6056 reporting requirements may be subject to the general reporting penalties for:

  • Failure to file correct information returns; and
  • Failure to furnish correct payee statements.

The penalty is generally $100 for each return, up to $1,500,000 per calendar year. However, penalties may be waived if the failure is due to reasonable cause and not to willful neglect.

However, failures due to intentional disregard of the filing requirement (or the correct information reporting requirement) will have no penalty reduction, and the penalty will be equal to $250 (or, if greater, 10 percent of the aggregate amount of the items required to be reported correctly).