The Patient Protection and Affordable Care Act (ACA) requires self-funded employers to satisfy two reporting obligations under Sections 6055 and 6056 of the Internal Revenue Code, relating to health coverage offered to employees and about those employees who are covered under the plan.
The purpose of the reporting obligations is to allow the IRS access to data needed to monitor compliance with both the employer and individual mandates. The reporting also may be used by affected employees in assessing their own compliance with the individual mandate and/or in seeking subsidized coverage on the federal and state exchanges established under the ACA (as described in this blog post).
Section 6055 Reporting Compliance
Under Section 6055 of the Internal Revenue Code, all self-funded employers must annually report information to the IRS and to any individual who is covered under a health plan offered by the employer.
Currently, many employers do not have access to Social Security numbers for non-employed dependents, creating a fairly significant compliance burden to collect that data. The regulations require that employers exercise “reasonable collection efforts” to obtain that information. (Typically, an employer will satisfy that standard by documenting at least two efforts to request the data from those individuals). This same information must be reported to employees, along with basic contact information for the employer.
Section 6056 Reporting Compliance
The second reporting obligation, under Code Section 6056, applies only to “Applicable Large Employers.” Applicable Large Employers are those employers with at least 50 full-time equivalent employees and to whom the ACA’s employer mandate applies.
Unlike Section 6055 reporting, all of this information also must be provided separately to each employee, full-time, part-time, or otherwise. You can read helpful IRS guidance about 6056 reporting here.
IRS Forms 1094 and 1095
The compliance obligations are complex, and the IRS has developed forms (Forms 1094-B, 1095-B, 1094-C, and 1095-C) to provide consistency in reporting and to help simplify the process for employers.
Applicable Large Employers (ALEs) who offer coverage under a self-funded health plan may use Form 1095-C, which combines the reporting obligations of Sections 6055 and 6056 in a single form for reporting to both the IRS and individuals. When the forms are provided to the IRS, the Applicable Large Employer also must submit a transmittal form, Form 1094-C. Forms 1095-C and 1094-C, along with instructions, can be accessed here.
Small employers with fewer than 50 full-time equivalent employees are only required to meet one of the reporting obligations, the Minimum Essential Coverage reporting under Section 6055. Small employers may use Form 1095-B, with transmittal Form 1094-B. These forms, along with instructions, can be accessed onthe IRS web site here.
Changes from reporting year 2015 to 2016 for forms 1094-C and 1095-C can be found here.
Changes from reporting year 2015 to 2016 for forms 1094-B and 1095-B can be found here.
Filings will begin in early 2017 for the 2016 calendar year.
Note: Employers filing more than 250 information returns (Form 1095-C) must do so electronically
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