With less than 6 months to go until theAffordable Care Act (ACA) reporting deadline, employers must be prepared to comply with the new reporting requirements. 2016 will bring increased regulations and paperwork for employers as well as employees, all of which Applicable Large Employers (ALEs) should be familiar with at this point.
New forms to be filed
Under the ACA regulations, ALE’s are required to complete the following forms:
- Form 1094-B— Transmittal of Health Coverage Information Returns.
- Form 1094-C— Transmittal of Employer Health Insurance Offer and Health Coverage Returns.
- Form 1095-B— Health Coverage.
- Form 1095-C— Employer Provided Health Insurance Offer and Coverage Insurance.
These forms must be filed with the IRS in compliance with Section 6056 of the Internal Revenue Code no later than February 29, 2016 (or March 31, 2016 if filed electronically). Employers filing 250 or more returns are required to file electronically.
A copy of the applicable Form 1095 must be provided to employees no later than February 1, 2016 (since January 31, 2016 falls on a Sunday). This form may also be given to employees electronically with their consent.
The kicker? The required IRS forms must contain data tracked month-to-month in 2015. It must detail employees’ hours worked as well as employees’ access to employer provided health care and employee contributions to employer-provided health care. Companies failing to provide the required reporting will face costly penalties.
What is an Applicable Large Employer?
According to the IRS:
- Two provisions of the Affordable Care Act apply only to applicable large employers (ALEs):
- The employer shared responsibility provisions; and
- The employer information reporting provisions for offers of minimum essential coverage
- Whether an employer is an ALE is determined each calendar year, and generally depends on the average size of an employer’s workforce during the prior year. If an employer has fewer than 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is not an ALE for the current calendar year. Therefore, the employer is not subject to the employer shared responsibility provisions or the employer information reporting provisions for the current year. Employers who are not ALEs may be eligible for the Small Business Health Care Tax Credit.
- If an employer has at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is an ALE for the current calendar year, and is therefore subject to the employer shared responsibility provisions and the employer information reporting provisions.
- To determine its workforce size for a year an employer adds its total number of full-time employees for each month of the prior calendar year to the total number of full-time equivalent employees for each calendar month of the prior calendar year and divides that total number by 12.
It is imperative that employers begin planning for 2016 and insure that they are in compliance with the new regulations. Since 2015 is the first year full-time employees will receive the 1095-C Form, employers should educate their workforce on what the Form 1095-C means and how it relates to their 2015 income tax returns.
In need of assistance with your ACA reporting? Contact Alternative HR today at 717-855-5589 or at [email protected].