Understanding the Affordable Care Act reporting requirements is a daunting task for many employers. In an effort to help employers who are subject to these reporting requirements to meet their obligations, the IRS has extended two important deadlines, giving employers an additional two months to provide employees with Form 1095-B (“Health Coverage”) and an additional three months to report the information to the IRS using Form 1094-C and 1095-C (“Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns” and “Employer-Provided Health Insurance Offer and Coverage,” respectively).
Affordable Care Act Reporting Requirements Affecting Large Employers
The Affordable Care Act enacted Section 6056 of the Internal Revenue Code (IRC), which requires all applicable large employers (ALEs) — generally those with at least 50 full-time employees or the equivalent — to report to the IRS information about what health care coverage, if any, they offered to full-time employees. Employers generally must report this information no later than February 28 (or March 31 if filed electronically) of the year following the calendar year to which the reporting relates.
Sec. 6056 also requires ALEs to furnish statements to employees that the employees can use to determine whether, for each month of the calendar year, they can claim a premium tax credit. The statements generally must be provided by January 31 of the calendar year following the calendar year to which the Sec. 6056 reporting relates.
Because of the deadline extension, however, an exception was made for the 2015 calendar year. ALEs now have until May 31, 2016, to file these information returns with the IRS (or June 30, 2016, if filing electronically). Additionally, they have until March 31, 2016, to furnish the employee statements.
It’s important to note that this reporting is required even if you don’t offer health insurance coverage. Employers with at least 50, but fewer than 100, full-time employees or the equivalent who are eligible for the transitional relief from the employer shared-responsibility provision for 2015 must still comply with the information reporting requirements.
Affordable Care Act Reporting Requirements for Self-insured and Smaller Employers
Sec. 6055 of the IRC requires health care insurers, including self-insured employers, to report to the IRS about the type and period of coverage provided and to furnish this information to covered employees in statements. The IRS’s extensions also apply to these deadlines:
- The 2015 calendar year information now must be reported by May 31, 2016 (or, if filed electronically, June 30, 2016); and
- Employee statements must be provided by March 31, 2016.
Under the reporting requirement for insurers, every self-insured employer must report information about all employees, their spouses, and dependents who enroll in coverage. This reporting is required even for self-insureds not subject to the Affordable Care Act employer shared-responsibility provisions or the ALE reporting requirements. Self-insured ALEs must comply with the insurer requirements in addition to the Sec. 6056 requirements.
Additionally, non-ALE employers must comply with the Sec. 6056 requirements if they’re members of a controlled group or treated as one employer for purposes of determining ALE status. The employers that comprise such a controlled-group ALE are referred to as “ALE members,” and the reporting requirements apply separately to each member.
Penalties for Non-compliance
Failure to comply with the information reporting requirements may subject you to the general reporting penalty provisions. Penalties for information returns and payee (employee) statements filed after December 31, 2015, are as follows:
- The penalty for failure to file an information return generally will be $250 for each return (up from $100), not to exceed a calendar-year total of $3 million (up from $1.5 million).
- The penalty for failure to provide a correct payee statement will be $250 for each statement (up from $100), with a calendar-year maximum of $3 million (up from $1.5 million).
Special rules apply to increase the per-statement and total penalties in the case of intentional disregard of the requirement to furnish a payee statement. Also, taxpayers with average annual gross receipts of no more than $5 million for the three preceding tax years are subject to lower maximum penalty amounts.
Even with the extensions provided by the IRS, it’s important that you start gathering the necessary information for Forms 1094 and 1095 together now. The compliance obligation will likely require a joint effort by the payroll, HR, and benefits departments to collect the relevant data.
If you have questions about complying with the Affordable Care Act reporting requirements, don’t hesitate to contact your Untracht Early advisor for more information.