New Tax Reporting Requirements Implemented to Report Participation in the Affordable Care Act

Published on September 9, 2015

Tax Reporting

Beginning January 2016, the Affordable Care Act’s Employer Shared Responsibility Rule will require employers to file annual information returns with the IRS and deliver employee statements containing information about health plan coverage.This reporting requirement is in addition to reporting health care costs on Form W-2.

IRS Code Section 6055 requires health insurers and employers to provide enrolled employees and former employees with information that shows who has minimum essential coverage (MEC). Employees will use this information to complete their federal tax returns – and those who do not have MEC may receive a penalty on their federal tax returns. (MEC is a requirement under Obamacare in order for people to avoid the Shared Responsibility Tax.)

IRS Code Section 6056 requires health insurers and employers to provide the IRS a list of employees who were provided MEC during a calendar year. An Applicable Large Employer (ALE) can be penalized if they do not offer minimum essential coverage to full-time employees or the coverage is too expensive and the employee purchases coverage on the Exchange Marketplace. ALE is defined as a business with 50 or more full-time employees.

Who Must Report?

Insurers
Self-insured employers
Applicable large employers (ALEs)
A third party may complete reporting requirements but liability remains with the employer
Those that file 250 or more of Form 1095-C must file electronically

Who Must Send Recipient Copies?

Insurers
Self-insured employers
Applicable large employers (ALEs)
Electronic delivery is allowed if recipient gives consent

What Are the Fines for Failing to Report?

If an employer fails to file and issue statements to covered individuals, they may face penalties of $250 per filing up to $3 million.

The bottom line is that this is a significant change in reporting requirements. And new tax forms will be needed. We will manufacture all required forms: 1095-B, 1094-B, 1095-C and 1094-C and make them available in time for the 2015 tax season. However, there is still much uncertainty surrounding these changes so watch your inbox for updates from us.

What Are the Forms?

(If any date shown falls on a Saturday, Sunday or legal holiday, the due date is the next business day.)

Form	What’s Reported?	Who Issues?	Submit to IRS?	Recipient Copies?
1095-B	Which months the insured and his or her family was covered under the plan.	Insurance carrier, for employers with employer-sponsored group health plans.	Insurance carrier submits: Feb. 29 paper; Mar. 31 electronic*	*Yes, by Jan. 31. Insurance carrier sends to recipients.**
1095-B	Which months the insured and his or her family was covered under the plan.	Self-insured employers,with fewer than 50 full-time employees, that provide health plans.	Feb. 29 paper; Mar. 31 electronic*	Yes, by Jan 31*.
1094-B	Summary transmittal record of 1095-Bs.	Accompanies 1095-B forms when mailed to IRS.	Feb. 29 paper; Mar. 31 electronic*	No
1095-C	Whether or not the employer offered health coverage to employees.	Employers with 50 or more full-time employees*(Applicable Large Employers). Both insured and self-insured issue 1095-C.	Feb. 29 paper; Mar. 31 electronic*	Yes, by Jan 31*.
1094-C	Summary transmittal record of 1095-Cs	Accompanies 1095-C forms when mailed to IRS.	Feb. 29 paper; Mar. 31 electronic*	No

* FTEs that worked at least one month out of the year.

Please note that employers will need three copies of the 1095: One for each employee, one for the employer’s records and one for the IRS. Unlike the W-2, there are not assigned copies or “parts” for the employee and government agency.