IRS Issues Final Forms for Mandatory Reporting under the Affordable Care Act

On Tuesday, September 15, 2015 the IRS published final versions of two new forms that employers will use for mandatory health care information reporting. Under the Affordable Care Act (ACA), all large employers—those with 50 or more full-time or full-time equivalent (FTE) employees—must submit a report to the IRS that shows which employees were offered health coverage and whether such coverage meets the affordability rules of the ACA.

Large Employers. The IRS has clarified that all large employers, including employers that qualify for transition relief for 2015 and those that offer no group health benefits, must complete Form 1095-C along with its transmittal form, Form 1094-C, for their full-time employees. Likewise, all full-time employees must receive form 1095-C, including employees who turned down the employer’s offer of coverage in 2015.

Small Employers. Small self-insured employers (those with fewer than 50 full-time employees, including FTEs) must provide all employees, including part-time employees, who enroll in coverage with Form 1095-B and file those forms, along with the transmittal, Form 1094-B, with the IRS.

Filing Deadlines. Deadlines to submit and file the new forms correspond with existing deadlines for Form W-2. Forms 1095-C and 1095-B are due to employees by Feb. 1, 2016. Transmittal forms 1094-C and 1094-B are due to the IRS by Feb. 29, 2016, if filing on paper, or by March 31, 2016, if filing electronically. If necessary, employers may file Form 8809 to request an automatic 30-day filing extension. Additional requests for an extension require a good reason.

Start planning now. Information reporting is by month, so you will need health coverage information for your full-time employees and their non-spouse dependents broken down by month. You will also need to determine your affordability safe harbor or whether other relief applies for an employee for a month (e.g., the employee is in a waiting period). It is also important to note that the IRS has created a new electronic system—the Affordable Care Act Information Return System—which accepts data submitted in XML format. For most large employers, this method will be simpler and more convenient to submit the data required. Employers may want to register through the IRS’ online e-Services Registration portal soon in order to apply for log-in credentials and have enough time to submit required test files. The IRS has released two draft publications for software developers and employers: Pub. 5164, Test Package for Electronic Filers, and Pub. 5165, Guide for Electronically Filing Affordable Care Act (ACA) Information Returns. (More information can be found here.)

MSEC recommends that you consult your tax advisor and health plan administrator for more information about completing these new forms. MSEC also plans to have a workshop later this year for MSEC member organizations wanting more information on how to comply with these new reporting requirements. Announcements for this service, including dates and pricing, will be forthcoming.