The Affordable Care Act (ACA) created new reporting requirements
under Internal Revenue Code (Code) Sections 6055 and 6056. Under these new
reporting rules, certain employers must provide information to the IRS about
the health plan coverage they offer (or do not offer) to their employees.
On Feb. 8, 2015, the Internal Revenue Service (IRS) released final versions of forms and
related instructions that employers may use to report under Sections 6055 and
6056 for 2014. These forms are not
required to be filed for 2014, but reporting entities may voluntarily file
them in 2015 for 2014 coverage.
Forms and instructions for 2015 reporting have not yet been
released and may contain some changes from these 2014 versions.
On Feb. 9, 2015, the IRS also issued Publication 5196, Understanding
Employer Reporting Requirements of the Health Care Law, to help employers
prepare for reporting in 2016.
Few Changes in Final Forms
The
final versions of the forms do not differ significantly from the draft
versions. In general, the final instructions were edited to clarify existing
requirements. However, the final instructions for Forms 1094-C and 1095-C did
include a new option for applicable large employers (ALEs) reporting
information for nonemployees (such as nonemployee directors, retired employees
or nonemployee COBRA beneficiaries) covered under employer-sponsored
self-insured health coverage.
Section 6055 Forms and Instructions
The following forms and instructions are available for use under
Section 6055:
Form 1094-B, Transmittal of Health Coverage Information Returns
Form 1095-B, Health Coverage
Instructions for Forms 1094-B and 1095-B
Form 1094-B, Transmittal of Health Coverage Information Returns
Form 1095-B, Health Coverage
Instructions for Forms 1094-B and 1095-B
Section 6056 Forms and Instructions
The following forms and instructions are available for use under
Section 6056:
Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Return
Form 1095-C, Employer-Provided Health Insurance Offer and Coverage
Instructions for Forms 1094-C and 1095-C
Section 6055 ReportingForm 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Return
Form 1095-C, Employer-Provided Health Insurance Offer and Coverage
Instructions for Forms 1094-C and 1095-C
Health insurance issuers or carriers;
Self-insured health plan sponsors;
Government agencies that administer government-sponsored health insurance programs; and
Any other entity that provides MEC.
Self-insured
plan sponsors that are also ALEs subject to the employer shared responsibility
rules will report information about the coverage in Part III of Form 1095-C, instead of on Form 1095-B. In general, an
employer with 50 or more full-time employees (including full-time equivalents)
during the prior calendar year is considered an ALE.
Section 6056 Reporting
All ALEs (as defined under the employer shared responsibility
rules) must file Form 1094-C (a
transmittal) and Form 1095-C (an
information return) for each full-time employee.
Form 1094-C is used to report summary
information for each employer to the IRS and to transmit Forms 1095-C to the
IRS.Form 1095-C is used to report information about each employee.
These forms help the IRS determine whether an ALE owes penalties
under the employer shared responsibility rules, as well as whether an employee
is eligible for premium tax credits.
Combined Reporting
Form 1095-C will
generally be used by ALEs to satisfy both the Section 6055 and 6056 reporting
requirements, as applicable.
An ALE that sponsors a self-insured plan will complete all sections of Form 1095-C to report the information required under both Sections 6055 and 6056. Therefore, these ALEs will be able to use a single form to report information regarding whether an employee was covered.
An ALE that provides insured coverage will also report on Form 1095-C, but will complete only the sections of Form 1095-C related to Section 6056.
An ALE that sponsors a self-insured plan will complete all sections of Form 1095-C to report the information required under both Sections 6055 and 6056. Therefore, these ALEs will be able to use a single form to report information regarding whether an employee was covered.
An ALE that provides insured coverage will also report on Form 1095-C, but will complete only the sections of Form 1095-C related to Section 6056.
ALEs will also be providing only a single employee statement
(with the Section 6056 information, and, with respect to employers with a
self-insured group health plan, Section 6055 information).
New Option for ALEs Reporting Enrollment Information for Nonemployees
The final instructions for Forms 1094-C and 1095-C include a new
option for ALEs reporting information for nonemployees (such as nonemployee
directors, retirees or nonemployee COBRA beneficiaries).
This new option allows employers to report employer-sponsored
self-insured health coverage for nonemployees (and their family members) using either
Forms 1094-B and 1095-B or Form 1095-C, Part III.
This option applies only for ALEs offering self-insured health
coverage for any individual who enrolled in the coverage for one or more
calendar months of the year, but was not an employee for any calendar month of
the year, such as:
A nonemployee director;A retired employee who retired in a previous year;
A terminated employee receiving COBRA coverage who terminated employment during a previous year; and
A nonemployee COBRA beneficiary.
A nonemployee does not include an individual who obtained coverage through the employee’s enrollment, such as a spouse or dependent obtaining coverage when an employee elects family coverage.
Under this new option, ALEs may report enrollment for these
individuals using either:
Forms 1094-B and 1095-B or Form 1095-C, Part III.
If the Form 1095-C is used with respect to an individual who was
not an employee for any month of the calendar year, Part II must also be
completed by using Code 1G on Line 14 in the “All 12 Months” box (or the box
for each month of the calendar year).
In the case of a nonemployee who enrolls in the coverage under a
self-insured health plan, all family members who are covered individuals due to
the individual’s enrollment must be included on the same Form 1095-B or Form
1095-C as the individual who is offered, and enrolls in, the coverage.
Changes to Alternative Methods of Reporting Under Section
6056
The final instructions for Forms 1094-C and 1095-C also made
several changes to the alternative methods of reporting under Section 6056. Two
alternative methods of reporting are available under Section 6056—the Qualifying Offer Method (and the
Qualifying Offer Method Transition Relief for 2015) and the 98 Percent Offer Method.
The Qualifying Offer
Method (and the Qualifying Offer Method Transition Relief for 2015) allows
eligible ALEs to provide simplified employee statements to certain employees,
in lieu of a copy of the Form 1095-C. The final instructions added to the list
of information that must be included in these simplified employee statements. A
statement is now required that directs the employee to see IRS Publication 974,
Premium Tax Credit (PTC), (currently in draft form) for more information on
eligibility for the premium tax credit.
Also, the final instructions clarified that ALEs may not use the
alternative method of furnishing Form 1095-C to employees under the Qualifying
Offer Method (or the Qualifying Offer Method Transition Relief for 2015) for employees who enrolled in self-insured
coverage. For these employees, the ALE must furnish the information
reporting enrollment in the self-insured coverage on Form 1095-C, Part III. The
ALE may provide this information to the employee by furnishing a copy of Form
1095-C as filed with the IRS (with or without the statements regarding any
qualifying offer the employee received or the employee’s premium tax credit
eligibility).
The 98 Percent Offer Method is generally available to ALEs that
offer MEC that is affordable and provides minimum value to at least 98 percent
of the employees on whom it reports in its Section 6056 return. The final
instructions clarify that ALEs must also
offer MEC to those employees’ dependents to be eligible to use the 98
Percent Offer Method. For this purpose, the term “dependent” is defined to
include an employee’s child, but does not include a spouse.
Additional Changes in the Final Instructions
The final instructions also made the following changes and clarifications:
The Employer Identification Number (EIN) may be truncated on any statements furnished to employees or individuals, but not on any forms filed with the IRS (previously, truncation of EINs was not allowed on any forms).
When determining the total employee count for the ALE for purposes of Form 1094-C, Part III, Column (c), an ALE may now choose to use either the first or last day of the first payroll period that starts during each month, or the first or last day of each month.
All ALEs, including U.S. ALEs, should include a country code with the employee’s address in Part I of Form 1095-C.
An offer of coverage is treated as having been made to an employee’s dependents only if the offer of coverage is made to an unlimited number of dependents, regardless of the actual number of dependents (if any) an employee has during any particular calendar month.
If spouses (or employee and dependent) are employed by the same ALE, and one employee enrolled in a coverage option that also covered the other employee(s) (for example, family coverage that provided coverage to the other employee spouse and their employee dependent child), the enrollment information should be reflected only on the Form 1095-C for the employee who enrolled in the coverage (but it would report the other employee family members as covered individuals).
An ALE is not required to file a Form 1095-C for an individual who, for all months of a calendar year, is either not an employee of the ALE or is in a limited non-assessment period. However, for the months in which the employee was an employee of the ALE, he or she would be included in the total employee count reported on Form 1094-C, Part III, Column (c). (Also, if the employee enrolled in self-insured employer-sponsored coverage during the limited non-assessment period, the employer must file a Form 1095-C for the employee in order to report coverage information for the year.)
For purposes of reporting, an offer to a spouse includes an offer to a spouse that is subject to a reasonable, objective condition, regardless of whether the spouse meets the condition. For example, an offer to a spouse that is available only if the spouse certifies that he or she does not have access to health coverage from another employer is treated as an offer of coverage to the spouse for reporting purposes. (Note that this treatment is for reporting purposes only, and generally will not affect the spouse’s eligibility for the premium tax credit if the spouse did not meet the condition and therefore did not have an actual offer of coverage.)
More Information
Please contact Senn Dunn for more information on reporting under
Code Sections 6055 and 6056, or see the IRS’ Q&As
on Section 6055 and Q&As
on Section 6056.
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