Now that the Affordable Care Act’s “shared responsibility” provisions are in place, it’s time to get ready for the reporting requirements that go into effect in 2015.
When it comes to the individual mandate, you might be thinking it’s just for individuals and not for employers, but the usual domino effect applies here. The government has to verify the information employees report – and that’s where the ball gets thrown into your court.
The ABC’s of reporting requirements
As an employer, you’re required to report employees covered by Minimal Essential Coverage (MEC) and/or any exemptions. Employer-sponsored coverage, including self-insured plans, COBRA coverage, and retiree coverage, falls under the scope of MEC and has to be reported.
To administer the individual mandate and determine if an employer is liable for a shared responsibility penalty, the IRS has created three new 1095 forms:
- FORM 1095-A (Health Insurance Marketplace Statement). This form is sent by the Health Insurance Marketplace to individuals and dependent family members who are enrolled in the marketplace. Form 1095-A provides the necessary information for Form 8962, Premium Tax Credit, which has to be filed with an individual’s tax return to claim a premium tax credit. For more information, see the draft of this form at http://www.irs.gov/pub/irs-dft/f1095a--dft.pdf.
- FORM 1095-B. This form is filed by the coverage provider on behalf of a fully insured plan, or by the sponsor of a self-insured plan that is not an applicable large employer. Covered individuals receive a statement that shows which months of the year they had minimal essential coverage, which they report on their individual tax returns. For more information, see the draft of this form at http://www.irs.gov/pub/irs-dft/f1095b--dft.pdf as of 8/28/2014, or visit Questions and Answers on Information Reporting by Health Coverage Providers (Section 6055).
- FORM 1095-C. All Applicable Large Employers – fully insured, self-insured, and those not offering insurance – must file this form and provide a statement to full-time employees. Part II of this form lets the IRS know about coverage the employer offered (or didn’t offer) to full-time employees and dependents. Part III of this form is used by large self-insured plans instead of Form 1095-B, and gives the IRS specific information on each covered individual. For more information, see the draft of this form at http://www.irs.gov/pub/irs-dft/f1095c--dft.pdf as of 8/28/2014, or visit Questions and Answers on Reporting of Offers of Health Insurance Coverage by Employers (Section 6056).
Visit IRS.gov regularly to stay up to date on changes to these forms.
Have part-time, low wage workers?
Many large organizations have low-wage workers who may be classified as part-time, but technically meet the threshold for needing healthcare under the employer mandate. If you’re in that situation, you need to be able to prove that you offered affordable healthcare to those workers. When those workers fill out their taxes, many of them could easily forget and claim that healthcare insurance was not available through their employer – especially if offering a healthcare plan to part-time workers is a new practice for your company. If that happens, you’ll have to prove that the workers received adequate communication about, and notification of, the availability of healthcare coverage. And that means extra time and expense for you.
Don’t forget – COBRA coverage qualifies as Minimal Essential Coverage and has to be reported. Need help sorting it out? In addition to COBRA administration, COBRAGuard offers enrollment and eligibility services that include all necessary legal documentation of plan offers and notifications. Contact us to learn more.