On September 17, 2015, the IRS released Final instructions and forms for the first mandatory year of reporting for both “Minimum Essential Coverage (MEC) Reporting” and “Applicable Large Employer (ALE) Reporting” (Codes 6055 and 6056 respectively).
On September 17, 2015, the IRS released Final instructions and forms for the first mandatory year of reporting for both “Minimum Essential Coverage (MEC) Reporting” and “Applicable Large Employer (ALE) Reporting” (Codes 6055 and 6056 respectively). The August draft documents included a surprising and much agonized reporting requirement for those employers with Health Reimbursement Accounts (HRA) integrated with certain health plans. Employers were going to be responsible for reporting MEC coverage for plans that were not considered “supplemental” to a health plan and originally defined exclusive of this definition. This would have meant that employers would have had to report the HRA coverage, regardless of size. The good news is that the final instructions removed the HRA reporting requirement if the plan is integrated with the employer’ own group health plan.
Who must comply?
Any business with 50 or more full-time employees (or full time equivalent employees) in the previous year must use Forms 1094-C and 1095-C to report the information required under Sections 6055 and 6056 about offers of health coverage and enrollment in health coverage for their employees. Form 1094-C is used to report to the IRS summary information for each employer and to transmit Forms 1095-C to the IRS. The Form 1095-C is used to report information about each employee. Additionally, Forms 1094-C and 1095-C are used by employers to determine if a payment under the shared responsibility provisions under Section 4990H. And most important to employees, Form 1095-C is used in the determination of eligibility for a premium tax credit. Form 1095-C must be sent to every employee for any month of the calendar year.
For employers filing one or more Form 1095-C, multiple 1094-C Forms can be sent, however, there must be one Authoritative Transmittal Form 1094-C which includes data from all Form 1095-C submissions.
When to File
Employers are required to file the forms by February 28, 2016 if filing paper forms and by March 31, 2016 if filing electronically. Businesses with over 250 full time employees must file the forms electronically. The 250or-more requirement applies to individual Form submissions to each type of form. For example if Employer A has 1000 Form 1094-B and 100 1094-C, the company is only required to submit 1094-B electronically. Regardless of business size, the IRS encourages electronic submittal.
The penalty for failure tto file an information return is generally $250 for each return for which the failure occurs. Total penalties imposed for all failures cannot exceed $3,000,000 in a calendar year.
The failure to provide a correct payee statement is $250 for each statement with a total penalty payment is not to exceed $3,000,000.
ACA reporting is fraught with complicated information gathering, reporting and potential penalties. If you need help, now is a great time to talk to a PASBA Small Business Advisor to learn about your obligations and how you can be prepared to meet your obligations under the law.
PASBA member accountants bring the collective resources of a nationwide network of Certified Public Accountants, Public Accountants, Enrolled Agents and other practitioners available to answer your tax and financial questions and streamline your business accounting, bookkeeping, and payroll operations.
To find a trusted accountant in your area, visit www.SmallBizAccountants.com.
Please be advised that, based on current IRS rules and standards, any advice contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty that the IRS may assess related to this matter. Any information contained in this article, whether viewed or subsequently printed, cannot be relied upon as qualified tax and accounting advice. Any information contained in this article does not fall under the guidelines of IRS Circular 230