Starting in 2016, Section 6055 of the Internal Revenue Code, which was added by the Health Care Reform Act, requires all entities providing “minimum essential coverage” (MEC) to submit information to the IRS concerning each covered individual, with respect to the 2015 calendar year. Section 6055 also requires these entities to provide statements containing similar information to certain covered individuals. Employers should start gearing up now for this reporting because the 2016 reporting is based on 2015 data.
MEC is broadly defined to include any group health plan or group health insurance that is not an excepted benefit (e.g., stand-alone dental or vision plans). Reporting is not required for health reimbursement arrangements, health savings accounts, wellness programs and other supplemental or additional benefits.
As noted, all entities providing MEC must comply with Section 6055. This includes, for example, health insurers and employers sponsoring self-insured group health plans. Employers sponsoring insured plans are not required to comply; however, these employers may need to collect and provide employee information to the insurer so the insurer can meet its Section 6055 obligations.
Section 6055 requires all self-insured employers to comply, regardless of the employer size. This can be confusing because the employer shared responsibility provisions in the Health Care Reform Act apply only to “large employers” (generally those employers with at least 50 full-time employees and full-time equivalents). Large employers are subject to additional reporting obligations, pursuant to Section 6056 of the Internal Revenue Code. A separate newsletter explaining Section 6056 reporting will be posted on the publications section of our website in the near future. Small self-insured employers, however, are only required to comply with Section 6055 reporting.
The IRS recently released draft forms and instructions (available online) for Section 6055 reporting. The transmittal form, Form 1094-B, requires the reporting entity to provide basic contact information and aggregate data. Reporting entities will only need to submit one Form 1094-B. Form 1094-B will be accompanied by Form 1095-B, which need to be submitted for each “responsible individual.” A responsible individual is, generally, a person who enrolls himself or herself and others in MEC. This would include, for example, a primary insured or an employee covered under an employer-sponsored plan. Form 1095-B also requires the reporting entity to provide information, on the same Form 1095-B, concerning the responsible individual’s spouse and dependent(s), if any, being provided with MEC. For example, a self-insured employer that provides health coverage to an employee will be required to submit one Form 1095-B for that employee and the employee’s covered family members, designating the employee as the responsible individual and listing all covered family members.
Reporting entities must provide copies of Form 1095-B (or substitute statements) to all responsible individuals by January 31 of the following year. Form 1094-B and Form 1095-B must then be submitted to the IRS by February 28 (or March 31, if filed electronically) each year concerning coverage provided the prior year. A reporting entity must file electronically if it is required to file at least 250 returns concerning Section 6055 in any given year. Employers should mark their calendars for these new requirements.