Q&A with Barbara Klepper
Employers soon to rework their benefit reporting for Obamacare
Q: The Affordable Care Act’s complex “play or pay” rules kick in next year, but that’s not the only compliance issue for which employers should be preparing. What do employers need to know about the ACA’s reporting requirement?
A: In March, the IRS issued final regulations to enforce the shared responsibility and individual mandate provisions under the ACA. Certain employers providing minimum essential coverage to individuals during the calendar year must report certain health insurance coverage information to the IRS and must also provide a written statement to the covered employee or former employee. This information helps the IRS to determine which individuals will be subject to the tax penalty for violation of the individual mandate. Additionally, an applicable large employer – that is, an employer with 50 or more full-time employees or equivalents – must certify that it offers its full-time employees and their dependents the opportunity to enroll in minimum essential coverage on a month-by-month basis. Applicable large employers also must provide a qualifying employee statement to each full-time employee.
Q: What is “minimum essential coverage?”
A: “Minimum essential coverage” means health coverage offered under, for example, a government-sponsored program (i.e., Medicare, Medicaid, etc.), an eligible employer-sponsored health insurance plan, a health insurance plan offered in the individual market, or other certain types of government-approved health coverage options. If an individual doesn’t enroll in minimum essential coverage either through the health insurance marketplace (also known as the “Exchange”) or through one of these other types of programs, he or she will face a tax penalty.
Q: Do the reporting requirements apply to all employers?
A: No. Employers offering fully-insured health plans don’t have to report on minimum essential coverage for purposes of the individual mandate. Only employer plan sponsors of self-funded group health plans must report regarding offers of minimum essential coverage – this is true regardless of the employer’s size. With respect to the shared responsibility requirements, only applicable large employers must report.
Q: What’s the deadline for reporting?
A: Reporting originally was set to apply to coverage provided in 2014, but the IRS delayed reporting for one year. Now, reporting is required for coverage provided during the 2015 calendar year. Importantly, reporting is based on the calendar year regardless of whether an employer-sponsored plan operates on a non-calendar year basis. Returns must be provided to the IRS by March 31 of the following year (or Feb. 28 if filing by paper). Employee statements must be provided by Jan. 31 of the following year.
Q: How does a company report?
A: For minimum essential coverage information, returns may be filed using IRS Form 1095-B for each employee along with a single transmittal form, IRS Form 1094-B. For applicable large employers, the shared responsibility information may be filed using IRS Form 1095-C for each employee along with a single transmittal form, IRS Form 1094-C. Electronic filing is required if the company is required to file at least 250 of the Form 1095-B or 1095-C. Employers required to report health insurance coverage information to the IRS also must furnish a written statement to each individual whose name must be included on the return. To streamline this process, the Form 1095-B or Form 1095-C used to report to the IRS also may serve as the employee statement.
Q: Do companies that provide minimum essential coverage and have 50 or more full-time employees need to report using two separate forms?
A: No. Large employers that provide minimum essential coverage on a self-insured basis are subject to both the minimum essential coverage reporting and the shared responsibility reporting requirements. These employers should file Form 1095-C only (along with the transmittal form) and should complete both applicable reporting sections on the form.
PAULA BURKES, BUSINESS WRITER