Human Resources

This continues our review of the ACA reporting requirements. In our previous blog Employee Benefit Advisors mentioned we decided to do a little review because we’re getting questions from employers about their reporting requirements.

Who files Form 1095-C? Sponsors of both self-insured plans and insured plans must file Form 1095-C.  Payroll providers should have the capability to report the required information.

What does Form 1095-C report? The number of full time employees for each calendar month and lists coverage information for each full time employee.

What will the IRS do with the information reported on Form 1095-C? In 2015 employers with 100 or more (50 or more beginning in 2016) full time employees (including FTEs) must provide affordable coverage that provides MEC or be subject to penalty taxes for employees who receive subsidized coverage.  The information will be used to determine whether a penalty tax is to be assessed.

Are companies with fewer than 50 full time employees required to file Form 1095-C? No, only companies with 50 or more full time employees* are required to file. However only companies with 100 full time employees* are subject to the “play or pay” penalty for 2015. In 2016 companies with more than 50 full time employees* will be subject to the “play or pay” penalty. (*Including FTEs)

What Form 1095-C filing requirements apply to FSAs, HSAs or HRAs? Some employer contributions to an FSA, HSA or HRA can count toward the calculation of minimum value and therefore may affect 1095-C filing.

Note: Our previous blog discussed 1095-B reporting. If a plan sponsor of a self-insured plan is also required to file Form 1095-C, the Form 1095-B and Form 1095-C information can be combined onto one Form 1095-C filing.

Employee Benefit Advisors provides employee benefits. We are a broker helping companies with their Health & Welfare Benefits. We also help companies revaluate PEO Services, deciding if a PEO is a good choice and if so selecting and implementing the PEO.

Employee Benefit Advisors decided to do a little review because we’re getting questions from small employers about their reporting requirements.

Who files Form 1095-B? The insurance company is required to file Form 1095-B if your company sponsors an insured plan. If self-insured, the plan sponsor is required to file Form 1095-B.

What information does Form 1095-B report? 1095-B reports the name, address and social security number of all individuals (employees, spouses, dependents and others) who are covered under an employer’s medical plan and the number of months during which the individual had at least one day of coverage.

What will the IRS do with the information reported on Form 1095-B? The IRS will use the information to verify which individuals have MEC through an employer and are therefore not subject to the individual mandate penalty tax.

Are companies with less than 50 full time employees (including FTEs) required to file Form 1095-B? Yes, the filing requirement applies to all employers who provide health coverage to their employees.

Are there 1095-B filing requirements for FSAs, HSAs or HRAs? No because by themselves they do not provide MEC.

What is the date that these forms must be filed? The forms must be filed with the IRS by February 28 (March 31 if reporting electronically) and copies of the forms must be provided to individuals by January 31.

Employee Benefit Advisors provides employee benefits. We are a broker helping companies with their Health & Welfare Benefits. We also help companies revaluate PEO Services, deciding if a PEO is a good choice and if so selecting and implementing the PEO.

To be fully compliant employers face 8 key requirements.

1. All “applicable large employers” are subject – The trick here is properly counting part-time and variable hour employees.
2. January 1, 2015 was the “effective date” for the new requirements. – Even if employers qualify for temporary relief they must report 2015 calendar year data to the IRS.
3. Employers must be able to identify their “full-time employees”. – The rules include look-back and stability periods to determine whether variable hour employees need to be offered coverage.
4. IRS Form 1095-C is used to report employee-level data to the IRS. – This reporting uses a complicated set of codes and must be provided directly to employees and filed with the IRS. The form reports on a monthly basis whether the employer offered medical coverage to the employee, whether the coverage provided minimum value and was affordable.
5. Self-Insured Plans need to report coverage data for employees and any covered dependents. – Regardless of the number of employees employers are required to complete Part III of Form 1095-C
6. IRS Form 1094-C is used to report employer-level data to the IRS. – 1094-C is the “transmittal letter” to the IRS with employer-level demographic data including exemptions to the employer mandate.
7. Employers must disclose their “controlled group” on the Form 1094-C. – The names and EINs of other ALE members must be listed. (This is the first time the IRS has required this disclosure.)
8. Employers filing 205 or more Form 1095-C must file electronically. – The IRS required filers to use its electronic submission system. The complexity of this system will make it extremely difficult for large employers to file on their own behalf.

Employee Benefit Advisors provides employee benefits, tax-advantaged healthcare, compliance guidance for ACA and Health & Welfare DOL Audits, and PEO Advisory & Consulting Services.

The Trade Preferences Extension Act of 2015 will increase the penalties employers are subject to under the Affordable Care Act’s information reporting provisions.

Information Reporting Penalties

Self-insuring employers that provide minimum essential health coverage (regardless of size) and large employers with 50 or more full-time employees (including full-time equivalents) that fail to comply with the information reporting requirements may be subject to the general reporting penalty provisions under Internal Revenue Code (IRC) sections 6721 (failure to file correct information returns) and 6722 (failure to furnish correct payee statements).

The penalty for failure to file an information return and the penalty for failure to provide a correct payee statement is increased from $100 to $250 for each return which such failure. The total penalty imposed for all failures during a calendar year cannot exceed $3,000,000, increased from $1,500,000.

Employers are required to report for the first time in early 2016 for calendar year 2015. The law will apply to returns and statements required to be filed after December 31, 2015.

Question: What does the Trade Preferences Extension Act of 2015 have to do with the Affordable Care Act?

Employee Benefit Advisors provides employee benefits, tax-advantaged healthcare, compliance guidance for ACA and Health & Welfare DOL Audits, and PEO Advisory & Consulting Services.

At the center of the challenge is the Appropriations Clause of the Constitution.  Article I, Section 9, Clause 7 says, “No money shall be drawn from the Treasury, but in consequence of appropriations made by law.”

The lawsuit filed argues the administration is spending billions of dollars without the necessary appropriations from Congress.

The suit filed involves the fundamental question of executive power and Congress’s power of the purse. The issue is a provision of the health care law that requires insurance companies to reduce co-payments, deductibles and other out-of-pocket costs. The federal government reimburses insurers for the “cost-sharing reductions.” This type of assistance is different from the subsidies upheld by the Supreme Court last week. The subsidies, tax credits, help people pay insurance premiums.

The lawsuit challenges the Obama administration saying they did not receive, but needed, an appropriation to make these payments to insurance companies. Thus, President Obama requested the money as part of the budget he sent to Congress in April 2013, but Congress did approve the request. The administration began making the payments in early 2014, using money from a separate account established for tax refunds and tax credits.

In their lawsuit, House Republicans say, “Congress has not, and never has, appropriated any funds” for the cost-sharing reductions. The Obama administration argues that the House does not have standing to sue because its members have not suffered a concrete injury or specific harm. The case is “a generalized institutional dispute between the executive branch and one chamber of the legislative branch,” the Justice Department said.

Employee Benefit Advisors provides employee benefits, tax-advantaged healthcare, compliance guidance for ACA and Health & Welfare DOL Audits, and PEO Advisory & Consulting Services.

UnitedhealthCare has provided two videos covering the basics of IRS section 6055 and section 6056 reporting to help give a better understanding of what the reporting is and what is required of employers, both fully insured and self-funded.

Section 6055 reporting supports the individual mandate.  It is the required reporting to the Internal Revenue Service of information relating to covered individuals that have been provided minimum essential coverage by health insurance issuers, certain employers and other entities that provide minimum essential coverage.

Section 6056 reporting supports the employer mandate. It is the required reporting to the IRS of information relating to offers of health insurance coverage by employers that sponsor group health plans.

Specifically, the videos cover:

• What are sections 6055 and 6056 reporting (click to view videos)
• When the provision becomes effective
• When reporting needs to be done
• Who is responsible to report
• UnitedHealthcare’s approach to supporting fully insured and self-funded groups

All content for this Blog was provided by UnitedhealthCare.

Employee Benefit Advisors provides employee benefits, tax-advantaged healthcare, compliance guidance for ACA and Health & Welfare DOL Audits, and PEO Advisory & Consulting Services.