As the New Year draws nearer, so are the deadlines for filing the newly enforced Affordable Care Act (ACA) reporting responsibilities for Applicable Large Employers (ALE). Under Section 6056 of the ACA law, all ALEs are required to report to the Internal Revenue System (IRS) and their full-time employees about the health care coverage they offered for the calendar year of 2015. These reports’ purpose is to ensure compliance with the employer shared responsibility provision, also known as “the pay or play provisions” or “employer mandate”, of the ACA.
Who is required to participate in these reporting requirements?
ALEs are employers with 50 or more full-time employees and full-time equivalents. Full-time employees are described as workers who work at least 30 hours per week. Full-time equivalents are calculated using the hours worked by part-time employees in a given month, capped at 120 hours per employee, divided by 120. The sum of the full-time employees and the full-time equivalent of the part-time employees is the number used to determine whether a company is an ALE.
Employers with less than 50 full-time and full-time equivalent employees with fully-insured health plans are not subject to reporting, however, small employers who are self-insured need to meet Section 6055 reporting requirements. For more information on Section 6055, go here.
What reports need to be filed?
ALEs need to file Forms 1094-C and 1095-C. Form 1095-C is used to report on healthcare coverage that was offered for each full-time employee, the lowest-cost premium available and the months of the year when the coverage was available. 1095-C will determine if an individual is eligible for premium tax credit. This form is to be submitted to the IRS and all employees who worked full time, including those who declined coverage. The only exceptions are those employees who worked full-time but never became eligible because they did not go past the waiting period for enrollment.
Form 1094-C acts as a “cover sheet” to Form 1095-C. This form summarizes the employers’ identification information and lists the number of employees for each month of calendar year 2015.
ALEs must provide a copy of 1095-C to employees before February 1, 2016. Deadline to submit both 1094-B and 1095-C to the IRS is on February 29, 2016.
How to ensure proper reporting?
Full-time equivalent employees should be taken into consideration when identifying the number of full-time employees. This will determine if your organization is an ALE.
Review if eligible full-time employees were offered and have retained health care coverage for each month of 2015. Also, see if the current health care plans your company is providing meet the ACA employer mandate requirements.
For more information on the ACA reporting requirements, go to https://www.irs.gov/Affordable-Care-Act.