What has changed – Applicable Large Employers (ALE) will be required to report on health care coverage given to employees over the calendar year 2015. Filing with the IRS will be due in early 2016.
In a previous blog post, it was announced that these recording and filing rules had been drafted and would have more clarification in the coming months. The IRS has released draft instructions and forms, but final instructions are not expected until later this year. No reports or filing will be required for 2014.
Who Must File – According to the IRS, applicable large employers (ALE) are members who employ an average of 50 or more full-time equivalents (FTEs) over the past calendar year will have to file Form 1095-C for their full-time employees. The purpose is for employers to demonstrate which of their full time employees were offered minimum value health insurance.
What must be Filed – For each full time employees, ALE will need to submit a 1095-C to the IRS, as well as providing a copy to the employee. A 1094-C transmittal form must also be submitted to the IRS accompanying the 1095-C forms.
When is the filing due – These forms need to be filed with the IRS on or before February 28 if filing by paper for the year immediately preceding, while forms must be provided to employees by January 31. For the 2015 calendar year, the forms will need to be filed with the IRS no later than February 29, 2016 and given to employees by February 1, 2016. Filers of 250 or more 1095-C forms are required to file electronically. Electronic filers have until March 31st to file their 1094-C / 1095-C reporting.
What is the penalty if I don’t File – ALEs who fail to file these returns and provide statements to employees will be subject to penalties for failure to file correct returns and failure to furnish correct statements, similar to the penalties for not filing Forms W-2.
Are there any exceptions – Because of the new mandates surrounding filing, additional time to collect information and file may be granted if ALE members can show that they made legitimate efforts to comply in whole. However, if a member cannot show a “good faith” attempt to comply with the information reporting requirements or fails to file altogether, relief will not be extended and penalties will be filed.
What to do now – Although the final forms are not published by the IRS, Keystone Benefit Group is recommending that affected employers become familiar with and take steps to ensure that all necessary data is collected for calendar year 2015. Now is a good time to evaluate reporting systems and that a plan to comply with the ACA Sections 6055 Coverage Reporting and 6056 Employer Plan Reporting obligations is in place.
Additionally, it is recommended for employers become familiar with the typical codes that will be used for the various employment situations used to populate the 1095-C under Part II of the form. The majority of time will be spent by an employer and HR in Line 14 – 16 area of the form. This is where an employer will enter indicator codes as to whether an offer of minimum essential coverage was made to the employee for all twelve months or only for a certain months during the year (Line 14). Line 15 requires that an employer indicated what the employee contribution rate is for the lowest cost monthly premium option. Line 16 requires that the employer enter what the instructions refer to as “Series 2 codes.” Here, we have a series of codes to choose from which map to applicable safe harbors and other information.
Although, this can initially seem daunting for most employers the reporting will be fairly straight forward once you evaluate how it applies to employees in your company. Keystone Benefit Group is ready to support our clients to evaluate, develop and implement solutions to meet this new reporting requirement.
–Keystone Benefit Group