Press-Enterprise - March 22, 2015

Compliance with reporting obligations is always important for any employer, but the employer reporting requirements under the Affordable Care Act pack a significant penalty that makes compliance particularly important.

In fact, employers could be subject to penalties of up to $100 per return and $200 per employee for failing to timely file the required returns or furnish specified statements to employees.

Thus employers, whether private or governmental, will need to ensure that they have systems in place to collect certain data pertaining to health coverage provided in 2015 and later that will need to be reported to the IRS beginning in 2016.

The reports provide the IRS with information used to determine if employers are subject to penalties under the “play-or-pay” rule or whether individuals are subject to penalties under the individual mandate.

The reporting procedures will be similar to those used in connection with the W-2 Form used to report annual wages. Consistent with the requirements, Form 1095-B or 1095-C will need to be prepared for each employee covered by the reporting obligations and filed with the IRS using a transmittal Form 1094-B or 1094-C.

Certain small employers will need to use the “B series” forms to report minimum essential coverage, while the “C series” forms will be used by employers subject to the play-or-pay rule to provide the IRS with information to determine whether penalties are applicable.

Minimum Essential Coverage (Forms 1094-B and 1095-B)

Generally, “minimum essential coverage” includes an insured plan or coverage offered in the small or large group market or a self-insured group health plan. The good news for most small employers, generally those that are not subject to the play-or-pay rule, is that they will not be required to submit any of the returns discussed here. This is because the obligation to report data connected to minimum essential coverage falls on the insurance carrier rather than the employer, unless the coverage is provided on a self-insured basis.

Small employers that provide minimum essential coverage on a self-insured basis will be required to use the B-series forms to report certain employee information, including names, addresses and other key information.

In contrast, the insurance carrier is responsible for reporting insurance coverage provided by small employers on an insured basis. Thus, employers providing minimum essential coverage through an insurance carrier that assumes the risk of providing health coverage for insured events will have no filing obligation. Most small employers provide minimum essential coverage on an insured basis and, therefore, will not be subject to this filing requirement.

Reporting by Applicable Large Employers (Forms 1094-C and 1095-C)

All applicable large employers will be required to make an annual report to the IRS with respect to each full-time employee. The returns must contain various items of information including:

• Whether the employer offers coverage to the employee
• The employee’s share of the cost for self-only coverage
• Number of full-time employees for each month
• Name, address and Social Security number of each full-time employee

Applicable large employers with 50 to 99 full-time and full-time equivalent employees are required to file annual returns even if they are eligible for transition relief and exempt from the play-or-pay rule until 2016.

Filing Deadlines

Statements must be furnished to employees on or before Jan. 31 of the filing year. Copies of the information return filed with the IRS can be used for this purpose. The returns must be filed with the IRS on or before Feb. 28, or March 31 if filing electronically.

The information reporting requirements are lengthy and complex. Although reporting will not occur until early 2016, it is important for employers that will be responsible for these reporting obligations to take proactive action in 2015 to facilitate the reporting obligation. Therefore, it is important for employers to do the following:

• Review and understand the reporting requirements.
• Obtain copies of the reporting forms and identify the information that will need to be gathered and reported.
• Identify the employees for whom reports will need to be submitted.
• Designate a responsible person to gather the necessary information.
• Calendar applicable deadlines to ensure that statements and returns are submitted timely.

*This article first appeared in The Press-Enterprise on March 22, 2015. Republished with permission.