Time to Prepare for Large Employer ACA Tax Reporting Requirements

Few would claim their favorite season is “tax season,” and this year, large employers have yet another reason to dread it: Mandatory filing requirements dictated by the Affordable Care Act (ACA) kick in for 2015.

If you are an applicable large employer (ALE), it’s important to note that you are responsible for filing Form 1094-C and Form 1095-C in early 2016—not your health insurance carrier or plan administrator.

ALEs generally are employers with 50 or more full-time employees, including full-time-equivalent employees, in the previous year. Bear in mind that you are still subject to this IRS reporting requirement even if you fall into the 50 to 99 employee range that is protected from ACA penalties until 2016.

Final versions of IRS forms recently released

The IRS recently released the final versions of two key 2015 forms and the related instructions that employers and insurers will send to the IRS and individuals this winter to report healthcare coverage they offered or provided.

The IRS published these forms in 2014 and released draft forms and instructions for 2015 this past summer. The final forms and instructions for 2015 are largely unchanged from the previously released drafts, but you should never file draft versions of IRS forms—the IRS is not a fan of that.

Although the forms were available for voluntary use in tax year 2014, the upcoming tax season will be the first time that reporting is mandatory.

What ALEs must file:

ALEs must file the following:

One or more Forms 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns.  In plain English, this form asks for overview information about you, the ALE offering health insurance coverage, and the number of employees who qualified for this coverage in 2015. Whether you file one or multiple 1094-Cs, one of them must be designated as the “Authoritative Transmittal.”

One Form 1095-C, Employer-Provided Health Insurance Offer and Coverage Insurance, for each employee who was a full-time employee for any month of calendar year 2015. You are generally required to provide a copy of Form 1095-C to each employee. This form drills down to requesting more specific details about employees covered by your health plan, including their names, Social Security numbers, dates of birth, and covered months (if they weren’t eligible for all of 2015). You also need to provide details about the type and price of coverage as well as information relating to the safe-harbor method of counting employees, if applicable.

Deadlines are looming:

Forms 1095-C are due to each of your employees by February 1, 2016.

Forms 1095-C and 1094-C and attachments are due to the IRS by March 31, 2016, if filing electronically and by February 29, 2016 (Happy Leap Year!), if filed on paper.

If you are required to file 250 or more information returns, you must file electronically.

Tax time may still seem like a ways off, but these forms are detailed and demanding, to say the least, and penalties for noncompliance are steep. Start getting your ducks in a row now to avoid a highly stressful early 2016!

We hope this information is valuable to you. If you have any questions regarding this alert, please do not hesitate to contact us by phone or email.