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IRS summarizes Affordable Care Act employer information reporting requirements

On August 14, IRS conducted a webinar in which it summarized many of the employer reporting requirements under the Affordable Care Act.

The webinar was entitled “The Affordable Care Act: How Applicable Large Employers Should Report Health Care Coverage under IRC Section 6056.” Speakers on the webinar were Stephen Tackney, IRS Deputy Division Counsel, and Ligeia Donis, Senior Technician Reviewer, IRS Employment Tax Branch. Both Tackney and Donis work in the IRS Office of Chief Counsel.

Background. Code Sec. 6056 requires applicable large employers (ALEs)—generally, employers with at least 50 full-time employees—to report to IRS information about the health care coverage, if any, they offered to full-time employees (i.e., an employee who is employed on average for at least 30 hours of service per week). The ALE determination is made each calendar year based on hours of service in the previous calendar year. IRS instituted this information reporting requirement in order to administer the employer shared responsibility provisions in Code Sec. 4980H, and to assist in determining eligibility for the premium tax credit.

For months beginning after Dec. 31, 2014, many ALEs are liable for an annual assessable payment (penalty) if any of their full-time employees buys health insurance through a state exchange with respect to which a tax credit or cost-sharing reduction is allowed or paid to the employee, and certain other requirements are met.

Generally, a Code Sec. 6056 information return must be filed for and furnished to each full-time employee of the ALE member. This requirement applies if an employee was a full-time employee for any month during the calendar year.

Information reporting under Code Sec. 6056. Code Sec. 6056 information will be reported on (1) Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns; and (2) Form 1095-C, Employer-Provided Health Insurance Offer and Coverage. Some substantive information must be reported on Form 1094-C even though Form 1094-C is the transmittal form for employee information reported on Form 1095-C. Each ALE must have its own employer identification number (EIN). An ALE may only file one Form 1095-C for each employee. If an employee works in multiple divisions for the ALE, the information for both divisions must be combined onto a single form. An ALE with multiple divisions can file more than one Form 1094-C, but it must also file a single “authoritative” Form 1094-C that covers the entire company. On a draft version of Form 1094-C, issued on July 24, 2014, the authoritative transmittal is indicated by checking off the “Yes” box on Part II, line 19.

The first Form 1095-C will be furnished to employees on Feb. 1, 2016. Forms 1094-C and 1095-C will first be filed with IRS on Feb. 28, 2016 (Mar. 31, 2016, if filing electronically). ALEs filing 250 or more Forms 1095-C must file Forms 1094-C and 1095-C electronically.

In February 2014, IRS issued final regs on the employer shared responsibility provisions that delayed implementation of the employer shared responsibility provisions from 2015 until 2016 for employers with at least 50 but fewer than 100 full-time employees, if the employer provides an appropriate certification described in the regs. See Weekly Alert ¶  4  02/13/2014. Employers eligible for this relief must still file Code Sec. 6056 information returns beginning in 2016 for the 2015 reporting year.

IRS will be issuing draft instructions for Forms 1094-C and 1095-C in the near future.

Other information reporting requirements. There are also information reporting requirements under Code Sec. 6055. These information requirements apply to anyone that provides minimum essential health insurance coverage during a calendar year. The Code Sec. 6055 information reporting requirements apply to employees who actually enroll in a health insurance plan, whereas the Code Sec. 6056 information reporting requirements apply to offers of health insurance coverage to full-time employees. The webinar primarily focused on the Code Sec. 6056 information reporting requirements. There will be another webinar on the Code Sec. 6055 information reporting requirements soon.

ALE members that are subject to both the Code Sec. 6055 and Code Sec. 6056 information reporting requirements may report all of the information on Form 1095-C. Non-ALE members subject to only the Code Sec. 6055 information reporting requirements file Forms 1094-B, Transmittal of Health Coverage Information Returns, and 1095-B, Health Coverage.