ACA COMPLIANCE UPDATE: WHAT S NEXT? NEW IRS INFORMATION REPORTING REQUIREMENTS FOR EMPLOYERS Presented By: Nanci N. Rogers
Two New IRS Reporting Requirements For Employers and Health Insurers Designed to facilitate implementation and enforcement of the individual mandate and the employer mandate. New Code Section 6055 requires employers with self-insured health plans and health insurers to report detailed information about the individuals enrolled in the plans, and about the employer sponsoring the plan.
Two New IRS Reporting Requirements For Employers and Health Insurers New Code Section 6056 requires all applicable large employers to report information about all full-time employees, and any health plans the employer offers.
Two New IRS Reporting Requirements For Employers and Health Insurers Information required on a monthly basis. Effective for the period starting January 1, 2015, with the first reports due in early 2016. Significant penalties apply for failure to timely comply with the reporting requirements.
Tax Code Section 6055 Reporting (a.k.a. MEC Reporting ) Requires employers with self-insured plans providing MEC to file annual information returns with the IRS, and also to provide individual statements to employees. MEC includes basically any employer-sponsored group health plan that provides medical care.
Purpose of the 6055 Information Reporting Requirement Will be used by the IRS to determine whether individuals have qualifying health insurance coverage each month as required by the ACA. The information is necessary to implement and enforce the ACA individual mandate.
Required Information Name, address, and social security or other tax identification number (TIN) for each covered employee; Name, address and social security or other tax identification number (TIN) for any other covered individual (dependents, spouse, etc.); The months during which each individual was covered for at least one day during the month; Any additional elements specified in the IRS forms, instructions or other guidance yet to be issued.
Filing the IRS Information Returns Similar to Form W-2 reporting. IRS information returns due annually by February 28 (or by March 31 if filed electronically). A single transmittal form will be used to file all of the returns for a year. Employer will use IRS Forms 1094-C (transmittal) and Form 1095-C (return). Forms are being developed.
Providing Individual Statements to Employees Employer also required to provide an information statement to each covered individual by January 31 each year. Same information as on the IRS return plus phone number for employer s contact person. May be provided electronically subject to affirmative consent and disclosure rules.
Effective Date for Filing First IRS Information Returns Due in early 2016 for employees and coverage in calendar year 2015. Information reported for each month in the calendar year, even if the employer s plan is on a non-calendar year basis.
Tax Code Section 6056 Reporting for All Applicable Large Employers Requires all employers with at least 50 full-time equivalent employees to file an annual information return for each full-time employee, and provide a statement to each full-time employee. Applies regardless of whether the employer offers a self-insured plan, a fully-insured plan or no health plan.
Purpose of the 6056 Information Reporting Requirement The information will be used by the IRS to determine whether the employer should be assessed penalties under the ACA employer mandate, and in what amount. Also used to determine whether an individual is eligible for a premium tax credit when purchasing coverage through the government health exchange or marketplace.
Required Information about the Employer Employer s name, address and EIN number; Name and telephone number of the employer s contact person; Calendar year for which the return is being submitted; Whether the employer offered its full-time employees and their dependents coverage for each calendar month; The number of full-time employees each month;
Required Information about Each Full-Time Employee Employee s name, address and TIN; Months during which insurance was available to the employee; The employee s share of the lowest cost monthly premium for self-only coverage for each calendar month; The months, if any, when the employee was covered; Other information specified in the IRS forms yet to be issued.
Additional Information to Be Provided Through Indicator Codes on the IRS Returns Whether health plan offered each month met the minimum value standard under the ACA; Whether plan was offered for any month in which the employee was not full-time; Whether the employee met any permitted affordability safe harbor under the ACA, and if so which one; Whether the employee had the opportunity to enroll a spouse; Whether the employee was subject to a waiting period or other reason why the employee was not offered coverage; Other information as required by future IRS guidance.
Filing the IRS Information Returns and Sending Individual Statements The due date and transmittal rules are the same as for the 6055 information returns. Forms 1094-C and 1095-C designed as combined forms for both Section 6055 and 6056 reporting. Statement to employees may be a copy of the IRS return for that employee, or a substitute with the same information.
Effective Dates Same as for the Section 6055 information returns and individual statements.
Alternative Reporting Options for Section 6056 Information Reporting Alternative Reporting for Qualifying Offers Employer certifies that for every month during the year in which the employee was full-time, that the employee received a qualifying offer of coverage. Qualifying offer means an offer of coverage to the employee, spouse and dependents that meets minimum value and where the employee s share of the annual premium for self-only coverage did not exceed 9.5% of the federal single poverty level ($1,109 for 2014).
Alternative Reporting for 2015 Qualifying Offers For 2015 only, an employer who provides a qualifying offer to 95% or more of its full-time employees (and their spouses and dependents) will have reduced reporting obligations for all employees. Must also provide statement to employees who received a qualifying offer for all 12 months, informing them that they are not eligible for a premium tax credit.
Alternative Reporting for 98% Offering Employers certify that they made a qualifying offer to 98% of all employees (including full-time, parttime, and temporary employees) for the employee and dependents. Avoid the requirement to identify full-time employees and report monthly details about the health coverage offered.
Penalties for Failure to Timely File Correct Returns $100 per IRS return, subject to a maximum penalty of $1.5 million for the calendar year. $100 per individual statement, subject to a maximum penalty of $1.5 million for the calendar year. Higher penalties may be assessed for intentional disregard. For the 2015 calendar year only, penalties not assessed if the employer made a good faith effort to comply.
Compliance Challenges and Planning for the Reporting Requirements Data must be available and reportable for each calendar month even if the employer s health plan is based on a non-calendar year basis. Employers using a look-back safe harbor to determine employee full-time status will need to implement a strategy in 2014 to determine fulltime employee status for every month starting with January 2015. Technology systems and software may need to be adjusted or restructured to capture, integrate and report the required information.
Compliance Challenges and Planning for the Reporting Requirements Obtain all required taxpayer identification numbers, including for employees spouses or dependents who are covered under the employer s health plan. Consider whether one of the alternative reporting options would be applicable in order to simplify reporting. Note: The IRS is encouraging voluntary compliance for 2014 to test reporting systems and lead to a smoother transition to full implementation.
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