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This blog post was authored by Shardé Thomas and Heather DeBlanc.

With a little less than four months left in 2015, now is the time to evaluate your Affordable Care Act (“ACA”) compliance.  If you are an applicable large employer or an employer that sponsors a self-insured health plan, you must provide written statements (e.g. copy of completed reporting form) to employees no later than January 31, 2016 and must file reporting forms with the Internal Revenue Service (“IRS”) by February 28, 2016 (March 31, 2016 if filing electronically).  The IRS recently released new draft forms and instructions for 2015 reporting.  They also increased reporting penalties for noncompliance.  Review the steps below to ensure your timely and accurate compliance.

Confirm ACA Plan

As of January 1, 2015, applicable large employers have exposure to potential penalties under the ACA for failure to offer affordable coverage to full-time employees (“employer mandate”).  Employers with around 50 full-time employees should document the “applicable large employer” calculation.

  • Employers with 50+ full-time employees, including full-time equivalents, per the calculation must comply with reporting requirements.
  • Employers with 50 to 99 full-time employees, including full-time equivalents, per the calculation have relief from exposure to penalties in 2015 but still must report.

Employers who know they are applicable large employers should:

  • Confirm method for identifying full-time employees (Monthly v. Look Back Measurement Method Safe Harbor (“LBSH”));
  • If using the LBSH, review practices and follow the complex rules relating to timing of full-time status, reasonable expectation analysis, and calculation of hours of service;
  • Identify whether offered coverage is affordable and select affordability safe harbor;
  • Review applicable contracts to determine how full-time status of employees could interact with existing contract provisions for eligibility for health benefits.

New Reporting Forms and Instructions Released for 2015

The IRS released new draft reporting forms and instructions for 2015 reporting.  Applicable large employers will need to report the following information for each month of the calendar year:

  • Identity of each full-time employee (using ACA’s full-time definition);
  • Whether minimum essential health coverage providing minimum value was offered;
  • Whether the offer was made to dependent children and spouses;
  • Whether the offer was affordable (identify of the affordability safe harbor); and
  • The employee’s premium contribution to the lowest cost employee-only plan.

Employers offering self-insured coverage will also need to report the identity and social security numbers of covered employees and beneficiaries.

The IRS stated that the recently released 2015 forms are drafts only and should not be used until final versions are released.  Presumably, the IRS will release the final forms at the end of this year and before the reporting deadlines.

Preparing for 2016 Reporting Deadlines

The applicable large employer (or employer with a self-insured plan) must report 2015 calendar year data, even if it has a non-calendar year plan.  Employers should be reviewing the 2015 reporting instructions and forms to familiarize themselves with the documents.  We recommend that you do the following:

  • Identify which forms you are required to file;
  • Identify potentially applicable reporting codes;
  • Identify procedure to gather relevant data;
  • Identify your timeline and procedure to identify full-time employees;
  • Prepare timeline for gathering data and completing forms;
  • Identify any issues or questions to get them resolved early.

Increased Reporting Penalties

The IRS recently increased reporting penalties under the ACA for general reporting failures, including failure to file by the due date, failure to include required information or failure to provide accurate information.  These penalties are $250 per return ($3,000,000 maximum penalty).  If the employer corrects or files the return within 30 days after the required filing date, then the penalty will be reduced to $50 per return, up to a maximum of $500,000.  If the failure to file results from intentional disregard, the penalty increases to $500 per return with no maximum cap.  These penalties also apply separately to each individual written statement that an employer must provide to employees under these reporting requirements.

The draft versions of the revised reporting forms and instructions can be found at the links below:

Form 1095-C: http://www.irs.gov/pub/irs-dft/f1095c–dft.pdf

Form 1094-C: http://www.irs.gov/pub/irs-dft/f1094c–dft.pdf

Form 1094-C and 1095-C Instructions: http://www.irs.gov/pub/irs-dft/i109495c–dft.pdf

Form 1095-B: http://www.irs.gov/pub/irs-dft/f1095b–dft.pdf

Form 1094-B: http://www.irs.gov/pub/irs-dft/f1094b–dft.pdf

Form 1094-B and 1095-B Instructions: http://www.irs.gov/pub/irs-dft/i109495b–dft.pdf