IRS Regulations Clarify Employer ACA Reporting Requirements



The IRS issued final regulations in March
designed to simplify the employer reporting requirements imposed by the Affordable
Care Act. Most importantly, the regulations permit combined reporting for the
multiple requirements and simplify reporting where a large employer provides
affordable group health coverage, which is of minimum value to almost all of
its employees. This Q&A explains the new regulations and how they impact
both small and large employers.


What are
the reporting requirements?


The ACA added two sections to the Internal Revenue Code related to
reporting. First, Section 6055 requires health insurers and employers
sponsoring self-funded group health plans to annually report to the IRS and to
responsible individuals (the enrolled employees), whether the coverage
constitutes minimum essential coverage under the ACA. This reporting
requirement will help the IRS to enforce the individual mandate penalty. We
refer to this as “individual mandate reporting.”


Second, Section 6056 requires large employers with 50 or more full-time and
full-time equivalent employees to report to the IRS and to full-time employees
for two purposes:



  • To assist the IRS with enforcing
    the employer pay-or-play penalty; and

  • To assist full-time employees with
    determining their eligibility for a premium credit. It should be noted
    that even though mid-size employers with 50 to 99 full-time employees are
    not subject to pay or play for 2015, these employers are still subject to
    Section 6056 reporting for 2015 (and later years).  We refer to this
    as “pay or play reporting.”


Both reporting requirements were initially required under the ACA with
respect to the 2014 calendar year. However, the effective date was delayed last
year. Now, the first year for which reporting is required is 2015, with the
reporting for 2015 due during the first quarter of 2016.


Are small employers subject to the reporting requirements?


Generally, no. Small employers with less than 50 full-time employees are
not subject to pay-or-play reporting. And only small employers that sponsor
self-funded group health plans are subject to individual mandate reporting. For
small employers that sponsor fully insured plans, it is the insurer that is
responsible for the individual mandate reporting.


What are the basic rules for large employers?


As with small employers, if a large employer’s group health plan is fully
insured, the insurer will be responsible for the individual mandate reporting.
The large employer will only be responsible for pay-or-play reporting. On the
other hand, if the large employer sponsors a self-funded group health plan, the
employer will be responsible for both the individual mandate and pay-or-play
reporting. Under the new regulations, a large employer can satisfy both
reporting requirements on a combined basis by using IRS Form 1095–C (the
employee statements), along with IRS Form 1094-C (the transmittal form). The
IRS is planning to release a draft version of the reporting forms in the near
future.


For individual mandate reporting, the reports must include the Social
Security number, or a shortened version of it, for the responsible individuals
(the enrolled employees) and their enrolled dependents. However, if, after
reasonable efforts, the Social Security number of an individual cannot be
obtained (for example, in the case of a dependent), the individual’s date of
birth may be used. The individual mandate reports must also include the months
for which the individual is enrolled for at least one day during the month.


Pay-or-play reporting focuses on the employer’s full-time employees. All of
the following information must be reported:



  • A certification as to whether the
    large employer offered its full-time employees and their dependents the
    opportunity to enroll in coverage (by calendar month).

  • The number of full-time employees
    for each calendar month.

  • For each full-time employee, the
    months for which coverage was available and the employee-only premium for
    the lowest cost medical option providing minimum value.

  • The name, address and Social
    Security number of each full-time employee.

  • The months during which the
    employee was covered under the employer’s group health plan.


Are any simplified reporting options available?


Yes.  The final regulations provide the following simplified
pay-or-play reporting options.  Need help understanding this new law or staying in compliance, call our benefits department at 800-362-2809.  We are here to help you.