The Employer Shared Responsibility Provisions of the Affordable Care Act (“ACA”) went into effect for tax year 2015. If you haven’t already started doing so, we wanted to provide you with some guidance on what information an applicable large employer should be tracking monthly and reporting annually to help you meet reporting requirements for 2015.
Overview of the Employer Shared Responsibility Provisions
Before going into too much new detail, it’s important to briefly review the employer mandate. Applicable large employers are required to comply with the Employer Shared Responsibility Provisions beginning in January 2015. For 2015, a company must employ 100 full-time and full-time equivalent employees to be considered an applicable large employer. That amount reduces for 2016 down to 50 full-time and full-time equivalent employees. Companies meeting these thresholds are required to offer minimum essential health coverage to at least 70% of full-time employees and their dependents to be compliant. In 2016 and thereafter, the percentage increases to 95% of full-time employees and their dependents.
For a more in-depth discussion of the Employer Shared Responsibility Provisions and a brief discussion of how to calculate full-time and full-time equivalent employees, please see our article published December 13, 2014, "Employer Shared Responsibility Provisions of the ACA are in Effect for 2015."
Information to Track Monthly
During 2015, applicable large employers need to track whether they offered full-time employees and their dependents minimum essential coverage that meets the minimum value requirements and is affordable. They also need to track whether their employees enroll in the minimum essential coverage that was offered by the employer. It is important to track this information because an employer could be subject to an employer shared responsibility payment if either:
- The employer offered coverage to fewer than 70% (95% for 2016 and later) of full-time employees and their dependents, and at least one full-time employee enrolled in coverage through the Health Insurance Marketplace and receives a premium tax credit; or
- The employer offered coverage to at least 70% (95% for 2016 and later) of full-time employees and their dependents, but at least one full-time employee receives a premium tax credit because the coverage offered was not affordable, did not provide minimum value, or the full-time employee was not offered coverage.
New Reporting Requirements
The ACA requires that applicable large employers file information returns with the IRS as well as provide statements on healthcare coverage to full-time employees. Reporting this information was voluntary for 2014, but in 2015, all applicable large employers are required to file the reporting forms. It is important to note that the reporting requirements apply to ALL applicable large employers starting in 2015. This means that if your business has 50-99 full-time employees in 2015, and therefore qualifies for transition relief from the employer mandate because you have less than 100 full-time employees, you will still be required to file the forms for 2015.
Form 1095-C: “Employer-Provided Health Insurance Offer and Coverage”
Applicable large employers must provide Form1095-C to full-time employees. In addition, a copy of the form is filed with the IRS as an information return. This form is used by the IRS to help determine whether full-time employees are eligible for the premium tax credit, and it also helps determine if a business may potentially owe an employer shared responsibility payment. The following information is required to complete Form 1095-C:
- List of who is a full-time employee for each month.
- Identifying information for each employee such as name, address, and social security number.
- Information about the health coverage offered by month.
- List of the months the employee was enrolled in the company’s health coverage.
- The employee’s share of the monthly premium for lowest-cost self-only minimum value coverage.
Form 1094-C: “Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns”
Form 1094-C is filed as a transmittal document for Forms 1095-C, serving as a summary of the totals from Form 1095-C much as a Form W-3 serves as a summary of the totals from Form W-2. This form is used by the IRS to help determine whether an employer is subject to a shared responsibility payment and the payment amount.
The Employer Shared Responsibility Provisions of the ACA contain many new requirements for filing. In order to be compliant with the reporting requirements, an employer must first determine whether it will be considered an applicable large employer subject to the ACA mandate. If determined to be an applicable large employer, the next step will be to track information monthly on the health coverage offered and the employees participating in the health plan. This information is critical for applicable large employers to be able to provide the required information to their employees and the IRS.
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