IRS reporting updates following form and instruction release

IRS reporting updates following form and instruction release

Bulletin Type: 
Health Care Reform

Employer health plans must meet new IRS reporting guidelines for 2015

Large employers, those with 50 or more full-time equivalents (FTEs), and sponsors of self-insured plans are required to file information returns to share with employees and the IRS. The reports are effective for coverage offered in 2015 and must be given to employees by January 31 of the year following the coverage year (2016) and must be filed with the IRS by February 28 (March 31 if filed electronically).

The final versions of the forms with instructions (1095-B, 1095-C) were released earlier this month. The forms will be used to determine compliance with the ACA’s individual and employer mandates. Reporting is based on a calendar year, even if the employer has a non-calendar year plan.

Bukaty Companies has partnered with Employee Navigator, our online enrollment platform vendor, to develop a single-system data warehouse that contains the information needed to complete forms 1094-C and 1095-C. Self-insured groups (under 50 FTEs) also will be required to complete 1094-B and 1095-B. Additional information on our reporting solution and pricing will be released in coming weeks.

 Below is a summary of the required reports and their purpose.

Fully Insured Plans

Employees offered coverage through a fully insured employer plan will receive two forms annually (by January 31).

  • Health insurers will provide Form 1095-B to all employees enrolled in fully insured group coverage. The information, which will be shared with the IRS, will confirm if an employee and his or her dependents on the group plan satisfied the individual mandate required for each calendar month of 2015.
  • Fully insured employers with 50 or more full-time equivalents will provide Form 1095-C to all full-time employees, whether or not they enrolled in the employer’s health plan. The forms are required to be mailed, unless the recipient consents to receive the statement in an electronic format. Fully insured employers will complete Parts I and II of Form 1095-C. The information will be used by the IRS to determine if the employer satisfies the employer mandate required for each calendar month of 2015. The form is also used to determine employee eligibility for premium tax credits. A transmittal form, 1094-C, must be attached to any Forms 1095-C filed by an employer.

The IRS instruction booklet implies there is need for a fully insured employer to provide Form 1095-C to an employee who is part-time and receives fully insured coverage. A part-time employee does not generate any employer mandate penalties. However, the employee would receive Form 1095-B from the health insurance issuer to demonstrate compliance with the individual mandate.

Self-Insured Plans

Employees offered coverage though a self-insured plan will generally receive one form annually (by January 31).

  • An employer subject to the employer mandate that offers health coverage through an employer-sponsored, self-insured health plan must complete Form 1095-C, Parts I, II and III, for any employee who enrolls in the health coverage, whether or not the employee is a full-time employee for any calendar-year month. Part III requires self-funded employers to provide Social Security Numbers (SSNs) of employees and family members enrolled in coverage. Steps should be taken early in the year to obtain SSNs for all covered family members.

Employers that offer employer-sponsored self-insured health coverage to non-employees (directors, COBRA beneficiaries, retirees) who enroll in the coverage may use Forms 1094-B and 1095-B or Form 1095-C, Part I, III, to report coverage for those individuals and other family members.

  • Employers with fewer than 50 FTEs who provide self-insured coverage complete Form 1094-B and 1095-B.

Preparing for IRS reporting

A variety of demographic and plan information will be needed to complete the IRS forms required by the Affordable Care Act. Employers should be sure to maintain this data for each month of the year. Below is an overview of the required forms and data needed to determine compliance with the employer mandate.

Please look for more information in the coming weeks. In the meantime, if you have questions, please contact your Bukaty Companies benefits consultant, 913.345.0440.