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Employer Reporting Requirements of the Affordable Care Act

June 11, 2015

Beginning in early 2016, employer reporting provisions of the Affordable Care Act kick in.  If you are not working with your clients now to make certain they are up to speed and compiling the data required to be reported, both you and your clients will be in trouble later this year and early 2016.  

Why?  Because compliance is mandatory.  The ACA requires applicable large employers and all self-insured companies to file annual information returns with the IRS and also to provide annual statements to employees containing health plan coverage information. If your client fails to file the required information, files late or files inaccurate or incomplete returns they could be faced with both reporting penalties and penalties under the ACA’s shared responsibility/employer mandate provisions.

Small Employer Requirements – Forms 1094-B and 1095-B
Small employers that offer fully insured group health plans are not subject to the reporting requirements, and their insurance carriers are responsible for the completion of the Forms 1094-B and 1095-B. However, small employers that offer a self-funded health plan still have reporting requirements.  These businesses are required to file the returns and they will use Forms 1094-B and 1095-B to report health coverage information to the IRS. 

Applicable Large Employer Requirements – Forms 1094-C and 1095-C
First, applicable large employers are those that employed an average of at least 50 full-time or full-time equivalent employees during the preceding calendar year.  These businesses are required to prepare Forms 1094-C and 1095-C. When determining if your client is a small employer or large employer, don’t forget about Common Control Group Rules.  If your client is part of a “controlled group” that builds to a large employer, each member (think business) of the controlled group must prepare its own Forms 1094-C and 1095-C. 

Whether they offer a fully-insured health plan, or a self-funded health plan, all large employers must complete Form 1095-C, parts I and II, for each of its full-time employees.  If a large employer offers a fully-insured health plan, it must complete Form 1095-C, parts I and II, for each of its full-time employees, and the insurance carrier will prepare separate Forms 1095-B to report coverage for those same full-time employees.  If your client is a large employer and offers a self-insured plan they must complete Form 1095-C parts I, II and III. 

What information is included on the form?

  • Identifying information.  Remember this is for not only for the employee, but also for his or her dependents (Social Security number, or date of birth if the dependents’ Social Security number cannot be obtained). 
  • Whether the employee and dependents were offered coverage, and
  • Cost of coverage

The above information must be reported for each month of the calendar year.
When are the reports due to the IRS?
The short answer – sooner than you may think.  

  • Forms 1095-C or 1095-B must be provided to employees by February 1, 2016. 
  • All forms must be filed with the IRS on or before February 29, 2016 (March 31, 2016, if filing electronically). Also, electronic filing to the IRS is required if an employer is will file 250 or more Forms 1095-C or 1095-B.

Don’t blow it!
Although the information reports covering 2015 do not have to be prepared and filed until the first part of 2016, gathering the information at a later date will be a nightmare and you should advise your clients to start gathering and recording the information now. 

Please advise your clients to:

  • Review the Forms they will be required to complete, to identify the information required,
  • Start gathering the demographic information on their employees and dependents,
  • Work with their payroll vendor to determine if the vendor has the capacity to gather and report the necessary information,
  • Review record keeping systems to ensure that the necessary information (number of hours worked, cost of coverage, etc.) is able to be captured;

Please know that SBAM can help.  While we cannot prepare the reports on your client’s behalf, we can help make sure they fully understand their reporting requirements and other ERISA and ACA related compliance requirements.  Our new ERISA and ACA Compliance service will help you help your client for a very affordable (when compared with the potential fines) fee.  

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