Employer Reporting of Health Coverage
With the change in administration and current initiative to either abolish, replace or possibly rewrite the Affordable Care Act commonly known as Obamacare, there is much uncertainty regarding the healthcare mandate and how employers are affected by the Act.
Basic Reporting Requirements
Currently, certain employers are required to report information related to their employee’s health coverage.
Employers with 50 or more full-time employees also referred to as applicable large employers (ALEs) must use Forms 1094-C and 1095-C to report the information about offers of health coverage and enrollment in health coverage for their employees. Form 1094-C reports summary information for each employee and Form 1095-C is filed with the IRS. Forms 1094-C and 1095-C are also used in determining whether an employer owes payments under the employer shared responsibility provisions, also known as the “employer mandate”. Under the employer mandate, an employer can be subject to a penalty if it does not offer affordable minimum essential coverage that provides minimum value to substantially all full-time employees and dependents. Form 1095-C is also used in determining eligibility of employees for premium tax credits.
Part II of Form 1095-C reports the following information for each employee who was an ALE’s full-time employee for any month of the calendar year:
Employee’s name, social security number (SSN), and address,
Employer contact and Employer Identification Number (EIN), including the contact person’s name and phone number,
Description of the offer of coverage (using one of the codes provided in the instructions) and the months of coverage,
Each full-time employee’s share of the cost for coverage under the lowest-cost, minimum-value plan offered by the employer, by calendar month, and
Applicable safe harbor (using one of the codes provided in the instructions) under the employer shared responsibility or employer mandate penalty.
Employer-Sponsored Self-Insurance Plans
When an ALE offers health coverage through an employer-sponsored self-insured plan, the ALE is required complete Part III of Form 1095-C. Keep in mind that a self-insured plan also includes a plan that offers some enrollment options as insured arrangements and other options are under self-insured options. Part III reporting includes the name, SSN, and coverage information about each individual employee and dependents covered under the employer’s health plan. ALEs also indicate the months for which these individuals were covered in Part III.
Group and Multiemployer Health Plans
When coverage is offered through an insured health plan or a multi-employer health plan, the issuer of the insurance or the sponsor of the plan providing the coverage provides the information about the health coverage to any enrolled employees, and the employer should not complete Form 1095-C, Part III, for those employees.
Employers Not Subject to the Employer Mandate
Employers providing employer-sponsored self-insured health coverage that are not subject to the employer mandate, are not required to file Forms 1094-C and 1095-C and reports instead on Forms 1094-B and 1095-B for employees who enrolled in the employer-sponsored self-insured health coverage. On Form 1094-C, an employer can also indicate whether any certifications of eligibility for relief from the employer mandate apply.
Employers should be aware of the reporting requirements under ACA and monitor any legislative changes that may change or eliminate current requirements. ALEs have been through two complete reporting cycles at the time of this writing and should understand how ACA affects their business. This is a fairly complex area for even large employers. It is advisable for employers to obtain specific training on the topic and engage a qualified consultant to assist them in the reporting process when necessary. Since this area is a rather complicated and stretches outside of the normal area of taxation, consultation may come from specialists including tax professionals.