It’s been over nine months since my last post about the Affordable Care Act, commonly known as Obamacare. In that post, I discussed the exemptions from the “pay or play” penalty that would be effective for the 2015 calendar and plan years. Unfortunately for employers, the exemptions from that penalty do not apply to the reporting requirements imposed by Sections 6055 and 6056 of the Internal Revenue Code. Those requirements relate to the type of health insurance coverage provided by employers to their employees during 2015 and later years.
All employers, regardless of size, who offer any type of group health insurance are required to file the Section 6055 report for each employee, a copy of which report on Form 1095-B is to be given to each employee. Even those employers with less than 50 full-time equivalent employees are required to prepare and file this report. Fortunately, for those employers who have fully insured plans, the provider of those plans is responsible for preparing the report, distributing it to the employees, and filing it with the IRS. Those employers who self-insure their employees’ health insurance coverage will have to prepare, distribute, and file the required reports themselves.
Only those employers with 50 or more full-time equivalent employees have to file the report required by Section 6056. The employer is responsible for preparing this report, filing it with the IRS, and giving it to each full-time employee on Form 1095-C by January 31, 2016. This report must be prepared, filed, and delivered, even if the employer does not offer health insurance coverage to its employees and would be exempt from the penalty for not doing so because it had 30 or fewer true full-time employees (i.e., those who regularly work 30 or more hours a week). In addition, the employer must prepare and file with the IRS a transmittal form, Form 1094-C, for the Form 1095-Cs, which requires information about the insurance coverage provided and the number of employees on a monthly basis. For a more detailed explanation of the reporting requirements imposed by Sections 6055 and 6056 and what information must be provided click here. Even though the deadline for completing the required employee forms is only a little over four months away, the IRS has not yet released final versions of those forms for 2015. Click here for draft copies of those forms.
Earlier this month, there was a post on the Employee Benefit Adviser site that cautioned against seven myths about the above reports. For those employers who are planning on doing everything themselves, the author noted that the instructions for Form 1094-C and 1095-C are 14 pages long and written in the usual dense prose of the IRS. In addition, the IRS has released another 14 pages of clarifying questions and answers. For those who think they can wait a while longer before deciding what they will do, the author notes that information must be reported to the IRS on a monthly basis and many of the vendors who are offering their services in this area are increasing their fees the closer the deadline gets.
Although the IRS has indicated for this first year of reporting it will give some relief for improperly completed or filed reports under Sections 6055 and 6056, it has stated there will be no relief from the fines for failing to meet the requirements of those Sections for employers that cannot show a good faith effort to comply to the extent possible or who fail to timely file with the IRS or give a required report to their employees. Those fines are $250 for each form that is not filed or is incorrectly completed and filed with the IRS and for each form that was not properly delivered to an employee.