Reporting Health Insurance Coverage by Employers

Are you a large employer with 50 or more employees? The Affordable Care Act (ACA) may have some new reporting requirements for you. Beginning with the tax year of 2015, Applicable Large Employers (ALE) will be required to file health insurance coverage information with the IRS in addition to informing employees of the specific health insurance coverage the employer offers.

In order to be considered an ALE, the company must have employed an average of 50 full-time employees or more during the previous year.  Any employee who worked an average of at least 30 hours a week during the month is considered to be full-time. To stop employers from transitioning full-time employees to part-time status, the regulation also requires reporting for full-time equivalents (e.g. 40 full-time employees along with 20 part-time employees who work on average of at least 15 hours per week meet the 50 full-time employee rule). The actual calculation for equivalents can be found on the IRS websiteNon-profit and government organizations don't get a break from reporting either. They are subject to the same requirements as any other employer defined by the new regulation.

Rules for multiple entities are also addressed. If a group of entities are treated as a single employer under section 414(b), (c), (m), or (o), they are considered a single entity for ALE calculations (called an ALE group). This is to dissuade companies from dividing into sub-sections in an effort to remain below minimum requirements. If a group meets the threshold, it is subject to the requirements to file information returns with the IRS as well as inform employees of health insurance coverage offered. Even if an ALE member does not independently meet the ALE threshold,  it is still subject to the employer shared responsibility provisions. The only exception would be if a member entity did not have any full-time employees during the year.

Most employers will use the general reporting method to satisfy the requirement. This method uses the IRS forms to both notify the IRS (form 1094-C) and  the individual employee (form 1095-C). There are additional reporting methods to help minimize the expense and administrative tasks if specific requirements are met. The IRS website has specific information on the alternate reporting methods. In most cases, the insurance provider handles filing the Form 1094-C with the IRS, however, the ALE should ensure compliance.

Reporting dates for this year have been extended. By March 31st an ALE must provide each full-time employee with a Form 1095-C statement (note that the deadline for the 2015 tax year had been February 1, 2016). Paper forms don't need to be sent to the IRS until May 31, 2016, and electronic filing by June 30, 2016 (previously published dates were February 29th and March 31st respectively).

For more detailed information regarding reporting health care coverage by employers, visit: https://www.irs.gov/Affordable-Care-Act/Employers/Questions-and-Answers-on-Reporting-of-Offers-of-Health-Insurance-Coverage-by-Employers-Section-6056