Under the Affordable Care Act (“ACA”), in order to obtain the information necessary for the IRS to administer the employer shared responsibility mandate (often referred to as the “play or pay” rule) and premium tax credit, “applicable large employers” (“ALEs”) must report information to the IRS about health coverage offered to full-time employees and their dependents (“ALE Reporting”). In addition, in order to administer the ACA’s individual mandate, employers that maintain self-insured plans must report to the IRS and provide statements to employees about the “minimum essential coverage” (“MEC”) provided by the plan (“MEC Reporting”). The due date for these reporting requirements is just around the corner. Are you prepared?
Who must report?
- ALE Reporting: This information reporting requirement applies to ALEs. ALEs are employers with 50 or more full-time employees (including full-time equivalent employees) during the prior calendar year. All employers that are treated as a single employer under the Internal Revenue Code’s controlled group or affiliated service group rules are aggregated for purposes of determining ALE status. Each ALE member of an aggregated group is required to report, even if a particular ALE member has fewer than 50 full-time employees. ALEs with 50 to 99 full-time employees, who were not required to comply with the “play or pay” mandate in 2015 due to transition relief granted by the IRS, must nevertheless complete this reporting obligation.
- MEC Reporting: The requirement to report MEC applies to the plan sponsor of a self-insured health plan that provides MEC (regardless of whether the employer is an ALE). An employer-sponsored group health plan is considered MEC, unless the benefits offered under the plan consist solely of excepted benefits (such as a stand-alone dental or vision plan).
What must be reported?
- ALE Reporting: ALEs are required to report to the IRS information about whether they offered health plan coverage to their full-time employees and dependents in the preceding calendar year, including the months during which coverage was offered, whether the coverage was affordable, and whether the coverage offered “minimum value” as defined by the ACA. ALEs that chose not to offer health coverage to full-time employees and their dependents must also report. In addition to the report to the IRS, an ALE must provide each full-time employee with a statement containing the information reported to the IRS about the employee.
- MEC Reporting: The plan sponsor of a self-insured health plan that provides MEC must report to the IRS information about the coverage provided to individuals during the preceding calendar year. The plan sponsor must also provide each employee enrolled in the plan with a statement containing the information reported to the IRS about the coverage provided to the employee and his or her family members.
How must the information be reported?
- ALE Reporting: The information reporting to the IRS by ALEs is done separately for each full-time employee on Form 1095-C. An ALE files the Forms 1095-C with the IRS using a Form 1094-C transmittal. The employee statements are provided by distributing a copy of the Form 1095‑C to each full-time employee.
- MEC Reporting: Employers that are not ALEs must file a Form 1094-B transmittal with the IRS to submit Forms 1095-B, reporting MEC provided by the self-insured plan to each covered individual. A copy of Form 1095-B must also be provided to the employee listed on the form. If the employer maintaining the self-insured plan is an ALE, the Form 1095-C and Form 1094-C transmittal will satisfy the MEC reporting requirement in addition to the ALE’s information reporting requirement. A copy of Form 1095-C must be provided to each full-time employee and to each enrolled part-time employee.
- Electronic Filing: Employers that file 250 or more Forms 1095-C or 1095-B information returns with the IRS during the calendar year must file the applicable returns electronically using the ACA Information Returns Program.
When must reporting occur?
Reporting is first required in 2016 to report coverage information from 2015. The employee statements on Form 1095-C and Form 1095-B must be delivered by January 31 of the year following the year to which the statements relate. (For employee statements relating to 2015 coverage, the IRS has extended the due date to March 31, 2016.) The forms filed with the IRS must be filed by February 28 of the year following the year to which the report relates. (The IRS has extended the filing due date for reporting 2015 coverage to May 31, 2016.) For electronic filers, the deadline for filing forms with the IRS is March 31 of the year following the year to which the report relates. (Electronic filers have until June 30, 2016, to file these forms with the IRS to report 2015 coverage information.)
Please contact a member of our Employee Benefits team for assistance.