The IRS released final regulations governing reporting requirements for employers and insurers under health care reform. Beginning in 2015, two new reporting requirements become effective.
First, large employers with 50 or more full-time employees must report both to the IRS and to employees information about the coverage offered. These reports are intended to assist the government and employees in determining if the employer’s coverage is affordable.
Second, any employer that sponsors a self-funded health plan must report if the plan provides minimum essential coverage.
Affordability (Pay or Play) Reporting (Code Section 6056 Reporting)
A large employer may be subject to a penalty if the coverage it offers to employees is not affordable and if an employee receives a subsidy to purchase coverage through the Exchange. Coverage is affordable if the employee’s contribution for the lowest-cost self-only coverage does not exceed 9.5% of the employee’s household income.
Standard Reporting
Large employers must report information to employees on a new Form 1095-C and to the IRS on a new Form 1094-C.
The following information must be included in the reports:
- Name, address and employer identification number of the employer, along with the calendar year for which the information is being reported;
- Name and telephone number of the employer’s contact person;
- A certification as to whether the employer offered to its full time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an employer-sponsored plan, by calendar month;
- Number of full-time employees for each calendar month during the calendar year, by calendar month;
- For each full-time employee, the months during the calendar year for which minimum essential coverage under the plan was available;
- For each full-time employee, the employee’s share of the lowest cost monthly premium for self-only coverage providing minimum value offered to that full-time employee by calendar month; and
- Name, address and taxpayer identification number of each full-time employee during the calendar year and the months, if any, during which the employee was covered under an eligible plan.
In addition, indicator codes will be used to report the following:
- Information as to whether the coverage offered to FTEs and dependents provides minimum value and whether the employee had opportunity to enroll a spouse in coverage;
- The total number of employees by calendar month;
- Whether the employee’s effective date of coverage was affected by a waiting period;
- Whether the employer had no employees or credited back any hours of service during any particular month;
- Whether the employer is part of an aggregated group, and if yes, the name and EIN of each employer;
- The Name, address and ID number of the designated reporter;
- If the employer is contributing to a multiemployer plan, whether the employer is subject to any assessable payments
Special rules will apply to multiemployer plans.
Alternative Reporting
The final regulations offer alternative methods that an employer may use to report coverage.
- Qualifying Order Certification. A large employer may certify that it offered coverage to one or more full-time employees and file a simplified return if for all months during the year the employer (1) offered minimum essential coverage providing minimum value where the employee cost for self-only coverage did not exceed 9.5% of the federal poverty line; and (2) offered minimum essential coverage to the employee’s spouse and dependents.
- Qualifying Order Certification- 2015. For 2015, only, a large employer may certify that it made a qualifying offer to at least 95% of its full-time employees, spouses and dependents, and provide the employee statement.
- 98 Percent Offer. A large employer does not have to list the number of full-time employees if the employer certifies that it offered minimum essential coverage providing minimum value to at least 98%of employees and dependents.
Minimum Essential Coverage Reporting (Code Section 6055 Reporting)
An employer offering a self-funded group health plan must file an informational return with the IRS and provide a statement to employees confirming that the plan provides minimum essential coverage. This reporting is intended to help the IRS enforce the individual mandate under health care reform. The reports include individually identifying information for individuals for the months in which an employee was covered by minimum essential coverage for at least one day.
The report is required for medical coverage that is minimum essential coverage, but is not required for supplemental coverage or coverage such as on-site medical clinics.
Reporting Requirement
The reporting may be made as part of the new Form 1094-C and Form 1095-C, described above. For entities that are not large employers and are therefore not filing the Form 1094-C and 1095-C, the reporting will be made on a new Form 1094-B and new Form 1095-B.
The following information must be included in the reports:
- Taxpayer identification numbers for individuals covered by minimum essential coverage for at least one day (birthdates may be used if the employer cannot obtain a TIN after reasonable effort, and a shortened TIN may be used on the employee statement rather than listing the full number);
- Name, address and EIN of the plan sponsor;
- Months for which an individual is enrolled in and entitled to at least one day to receive benefits;
Timing and Method of Filing
The returns must be filed electronically if the employer has to file 250 or more returns of any type. A combined form will be available to report both Code section 6055 and Code section 6056 reporting requirements together.
Reporting to the IRS must be made by February 28 (March 31, if filed electronically) of the year following the calendar year in which coverage is provided. The employee statement must be issued by January 31 of the year following the calendar year in which coverage is provided. Employee statements may not be provided electronically unless the employee affirmatively agrees to receive the statement electronically.
Transition relief is provided for 2014 and 2015. For coverage provided during 2015 (regardless of plan year), a large employer must file with the IRS by March 1, 2016 if filing by paper, or by March 31, 2016 if filing electronically. Statements must be provided to employees by February 1, 2016.
