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:
In addition, indicator codes will be used to report the following:
Special rules will apply to multiemployer plans.
Alternative Reporting
The final regulations offer alternative methods that an employer may use to report coverage.
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:
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.