The IRS recently released draft forms to be used by large employers, health insurers and sponsors of self-insured health plans to report information required by the Affordable Care Act (ACA), effective for calendar year 2015. Although 2015 may seem distant, planning now to determine the requirements that you will need to have in place in 2015 is prudent.
The purpose of the new forms
The purpose of Form 1095-C is for applicable large employers to provide the IRS with the information required to determine (1) whether an employer is in compliance with the requirement for Minimum Essential Coverage that is affordable and provides minimum value to substantially all full-time employees (pay or play mandate), and (2) whether an employee is eligible for premium tax credits if they purchase coverage through the Health Insurance Marketplace.
*An applicable large employer is generally defined as an employer that employed on average at least 50 full-time equivalent employees during the previous calendar year. The determination of full-time equivalent employees is a less than simple calculation that requires the accumulation of data and several specific calculations
The purpose of Form 1095-B, filed by health insurers, including sponsors of self-insured health plans, is two-fold: (1) to provide employees with the information they need to demonstrate compliance with the individual mandate on their individual income tax returns and (2) to provide IRS with the information they need to determine if individuals have the minimum essential coverage to comply with the ACA individual mandate.
Filing requirements
Beginning with calendar year 2015, applicable large employers that provide health insurance coverage through an employer-sponsored plan, whether insured or self-insured, must provide health insurance coverage information statements to covered employees on new Form 1095-C. Forms 1095-C, along with transmittal Form 1094-C, will also be provided to the IRS by the employer. Large employers that sponsor self-insured plans will complete Sections I, II and III of Form1095-C, while employers that sponsor a fully insured plan will only complete Sections I and II.
Health insurers, including sponsors of self-insured health plans, will use Form 1095-B to provide required information to covered employees and will also provide a copy of Form 1095-B, along with transmittal Form 1094-B, to the IRS.
See reporting deadlines below. This process is similar to how Forms W-2 are provided to employees and to the government.
Links to drafts of the new forms
At the time of this article, draft instructions for the forms have not been released by the IRS, but are expected to be released shortly. The forms listed below most likely will be finalized by the IRS before year-end. Below are links to the draft forms.
Failure to file the required forms
Applicable large employers and health insurers who fail to file these returns and provide statements to employees will be subject to penalties for failure to file correct returns and failure to furnish correct statements to employees starting for calendar year 2015.
Our recommendation
Note that 2014 reporting is optional, but recommended by the IRS, to ease the transition to when the reporting becomes required for the 2015 tax year.
We recommend that you review the IRS draft forms listed above and proactively work with your IT and payroll departments and/or third party payroll vendors to determine the requirements that you will need to have in place in 2015 for operations and IT resources in order to meet the information reporting mandates of the ACA. Please contact us if you have any questions regarding ACA employer reporting requirements.
