Treasury simplifies ACA reporting rules
Posted On: 3-21-2014 | Posted By: WK Staff
Recently issued final regulations on the employer and insurer reporting requirements under the Affordable Care Act (ACA) clarify and streamline the process for reporting information to the Internal Revenue Service and to covered individuals about the health plan coverage being offered (or not offered) to employees. These reporting requirements are intended to help the IRS enforce the individual and employer shared responsibility requirements under the ACA and to administer premium tax subsidies for exchange coverage.
The reporting requirements originally were intended to take effect on January 1, 2014, but employers received relief this past year when IRS Notice 2013-45 delayed the effective date and enforcement until January 1, 2015. Although the final regulations issued under Code Section 4980H provide transition relief until 2016 for employers with at least 50 but fewer than 100 employees, these final reporting requirement regulations provide that employers eligible for such relief must still file the information returns for 2015. The information returns must be filed with the IRS by February 28 (or March 31, if filed electronically) of the year following the calendar year coverage was offered. The first reporting returns will be due in 2016 for coverage provided in 2015. Reporting for the 2014 calendar year is voluntary.
More importantly, the final regulations permit an employer to satisfy its reporting obligations using a combined single form. The Treasury Department issued a new, consolidated Form 1095-C, and transmittal form, Form 1094-C, that streamlines the reporting requirements.
The top half of the form will require information needed for Section 6056 of the law such as:
- contact information for your company and the number of full-time employees; and
- an explanation of the coverage offered to each full-time employee, by month, including the lowest employee cost of self-only coverage.
The bottom half of the form will require information needed for Section 6055, such as:
- contact information for the insurer; and
- which individuals are were covered the months they had coverage.
If you are not a self-insured plan employer, you fill out only the top part and the insurer will send in a copy of the same form with the bottom half filled in.
If you make a qualifying offer of coverage to full-time employees, you report specific information. A qualifying offer is one that makes available a minimum value coverage that provides employee-only coverage at a cost of no more than $1,100 for an employee in 2015, combined with an offer of coverage for the employee’s family. A summary of required information is listed below.
- If the offer is for a full year of coverage (which it typically would be), you report the names, addresses and taxpayer I.D. numbers of employees who received the offer. You will also need to give employees a document spelling out your offer.
- If you offer coverage for less than 12 months, you can check on a form the months for which the offer was made.
- If you make your offer to at least 95 percent of your full-time employees and their families, you can use a simpler form that covers your entire workforce, including those that do not receive an offer of coverage.
- If you aren’t sure at the time the form is due whether an employee is full-time (e.g. full-time status hasn’t yet been decided), you can just list known full-timers and others who may be or become full-time. To have that flexibility, however, you will need to have made an offer of affordable coverage to at least 98 percent of the people identified on your list.
Some Information No Longer Required
The new regulations omit information that isn’t necessary to understand coverage that is provided and being offered, including, but not limited to:
- the length of any eligibility waiting period;
- your share of the total health benefit cost; and
- the amount of advance payments of the premium tax credit and cost-sharing reductions.
While these changes can result in some cost savings, they won’t likely cause you to begin offering coverage if you were not already doing so, or to offer coverage earlier than you would otherwise be required to avoid the “employer responsibility” payment. For employers with fewer than 50 full-time employees, you are exempt from the ACA employer shared responsibility provisions and therefore you are also exempt from the employer reporting requirements.
For additional information, consult with your WK employee benefits advisor at (573) 442-6171 or (573) 635-6196.
Click here for a printer-friendly pdf of Simplified ACA reporting rules.
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