One of the requirements under the Affordable Care Act (ACA) is for employers and health insurers to provide information on their employees’ income, and benefit status. The purpose is to verify an employer’s compliance with the Act, as well as employees’ qualifications for premium assistance.
The “employer mandate information reporting forms” required by the ACA are one step closer to being finalized. On July 24, 2014, the IRS released draft versions of the new reporting forms for employers with 50 or more full-time or full-time equivalent employees, insurers, and plan sponsors of self-insured plans. These entities will be required to file the information forms in 2016 for calendar year 2015. Similar to W-2 reporting, the information returns will report health insurance coverage information to employees and the IRS.
The returns will be used by the IRS to enforce the employer shared responsibility provisions under the ACA. The returns will also be used to identify individuals who may be exempt from the individual mandate penalty tax, and those ineligible to receive premium assistance credits.
The new forms include:
Form 1095-B – Health Coverage
Form 1094-B – Transmittal of Health Coverage Information Returns
Form 1095-C – Employer-Provided Health Insurance Offer and Coverage
Form 1094-C – Transmittal of Employer Provided Health Insurance Offer and Coverage Information Returns
When and how to use the new forms, can be quite complex. Failure to submit the returns annually to the IRS may subject the employer to a penalty of up to $100 per return, with a maximum annual penalty of $1.5 million.
The ACA’s employer shared responsibility provisions and the mandate for large employers to offer affordable health coverage to their full-time employees do not come into effect until January 1, 2015. However, in order to avoid the non-compliance penalty payment of $2,000 per employee, employers are urged to utilize tax year 2014 for developing procedures which track employee hours and ultimately determine their large or small employer status.
Employers with fewer than 50 full-time employees are not subject to the reporting requirements, but are still subject to certain provisions for small employers.
Taxation and compliance issues regarding the Healthcare industry, especially since the passage of the Affordable Care Act, (ACA) can be quite complex. The healthcare services professionals at MBAF have been studying the ACA since its passage, and are here to help you comply with its provisions and use of the new forms. If you would like to benefit from our expertise in these areas or if you have further questions on this Advisory, or the ACA, do not hesitate to contact our Healthcare Specialists, or call us at 1-800-239-1474.