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New Reporting Requirements under the Affordable Care Act apply to 2016 filings

Certain employers who provided health care coverage to employees in 2015 will be subject to new reporting requirements when they file information returns with the Internal Revenue Service (IRS) beginning in February of 2016. 

Applicable Large Employers (ALEs, who are generally those with more than 50 full-time equivalent employees) and certain others are required to provide new form 1095-C to employees by the first of February. These employers must also file the 1095-Cs along with a transmittal form 1094-C with the IRS by the applicable deadline

Deadlines

Due dates for the required forms are as follows:

  • Form 1095-C must be provided to each employee by February 1, 2016;
  • Form 1094-C (transmittal) and copies of each Form 1095-C are due to the IRS by February 29, 2016, or by March 31, 2016 if filing electronically.
  • If your organization files 250 or more Forms 1095-C, you will be required to file electronically.

Who must file?

There are three categories of employers who are required to file these forms in 2016:

  • Employers with 50 or More Employees

For calendar year 2015, employers with 50 or more full-time employees (including full-time equivalent employees) must report healthcare coverage information both individually to their employees and to the IRS.

Full-time employees are those who worked an average of 30 hours or more per week for more than 120 days in a year. Healthcare.gov has some tools, including a Full-Time Equivalent Employee (FTE) Calculator, to help determine an entity’s filing obligation as determined by the number of its FTEs.

  • Small Employers with Fewer Than 50 Employees That Are Members of a Controlled or Affiliated Service Group

Small employers with fewer than 50 full-time employees (including full-time equivalents) will be required to file Forms 1095-C and 1094-C if they are members of a controlled or affiliated service group that collectively has at least 50 full-time employees (including full-time equivalents). Companies could be in a controlled or affiliated service group if they have common owners, provide services for each other, or work together to provide services to third parties.

  • Employers with Employer-Sponsored Self-Insured Plans  

Employers of all sizes that offer employer-sponsored self-insured coverage will also be required to report information to the IRS and to affected individual employees for the months they are covered under the plan. Small Self-Insured Employers would file Forms 1094-B and Forms 1095-B; Large Self-Insured Employers would file the necessary information using Part III of Forms 1094-C and 1095-C.

Employers who fail to report will be subject to substantial fines. 

How to Prepare?

Given the complexity of information required to be reported and the potential size and impact of the penalties, employers need to ensure that adequate procedures are in place for determining and documenting each employee’s full-time or part-time status month-by-month, as well as procedures to collect information about health coverage and enrollment month-by-month.

Even what might seem a simple count of full-time employees is much more complex for employers that hire variable-hour or seasonal employees.

We strongly encourage you to take the extra time now, if you have not already done so, to discuss your reporting requirements with all of your applicable service providers (plan administrator, payroll vendor, and/or a qualified legal representative, etc.) to help you determine your company’s readiness for complying with the new information-reporting requirements for employers under the ACA. Be certain to clearly designate responsible parties for the data collection and form preparation. 

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Additional ACA resources and support for their clients are provided by Payroll Masters on their website here