Large employers subject to new IRS reporting requirements

Large employers subject to new IRS reporting requirements

Bulletin Type: 
Health Care Reform

IRS releases draft forms

Two new IRS reporting requirements will be used by the Internal Revenue Service to determine if individuals and employers are in compliance with Affordable Care Act (ACA) provisions.

Finals rules on the employer reporting requirements identified in IRC sections 6055 and 6056 were released in the spring. This past week, the IRS released draft forms intended for employers and issuers to provide the required information. While the drafts will be replaced with final forms, employers may want to review the initial forms to understand what information has to be provided.

Specifically, the reports will allow the IRS to identify individuals who are subject to the individual mandate penalty for failure to enroll in minimum essential coverage. Additionally, the IRS can assess whether penalties should be levied against applicable large employers who are responsible for providing affordable, minimum value health insurance coverage to eligible employees.

An applicable large employer is one who employs, on average, 50 or more full-time equivalents during the preceding calendar year. Employers with fewer than 50 full-time employees are exempt from the reporting requirements.

Mandatory reporting was scheduled to begin for the 2014 plan year, but was delayed when the IRS issued Notice 2013-45. Employers must have the 2015 reports filed with the IRS no later than February 28, 2016, (March 31 if filed electronically) of the year following the year to which the return relates.

Section 6055

Employers of self-funded plans and health insurance issuers are responsible for providing information that will be used by the IRS to enforce the individual mandate.

Form 1094-B Self-funded plan sponsors and issuers will file this transmittal form along with all completed Forms 1095-B.*

Form 1095-B Self-funded plan sponsors and issuers will provide a copy of the completed form to each enrollee by January 31 of the calendar year following the calendar year for which the return must be filed. The IRS will receive a copy of all completed forms along with the appropriate transmittal form.

*Final regulations allow applicable large employers that sponsored self-insured plans to file a combined return and statement for all reporting required under Section 6055 and 6056. These employers will complete all parts of Form 1095-C. Applicable large employers with fully insured plans can omit information under Part III.

Section 6056

Applicable large group employers (those with 50 or more full-time equivalents) are responsible for providing information that will assist the IRS in the enforcement of the shared responsibility penalty. While the shared responsiblitiy penalty doesn’t apply to employers with 50-99 employees until 2016, the final regulations require information returns for 2015.

Form 1094-C Applicable large employers will file this transmittal form along with all completed Forms 1095-C.

Form 1095-C Applicable large employers will provide a copy of the completed form to each enrollee by January 31 of the calendar year following the calendar year for which the return must be filed. The IRS will receive a copy of all completed forms along with the appropriate transmittal form.

For non-calendar-year plans, an employer must include the months of the 2015 plan year that fall within 2015 on the 2016 filing. Months of the 2015 plan year that roll into 2016 will be reported on the 2017 filing.

Proposed regulations provide that applicable large employers are permitted to contract with third parties to facilitate the filing of returns and the furnishing of employee statements to comply with Section 6056. However, the proposed regulations make clear that “such contractual arrangements would not transfer the potential liability” of the employer for the failure to report and furnish the reports.

Bukaty Companies anticipates it can fulfill most of the reporting requirements on behalf of clients. We will continue to monitor the issue and communicate IRS updates as they become available.

If you have questions, please contact your Bukaty Companies Benefits Consultant at 913.345.0440. As always, we appreciate your business.