On March 5, 2014, the IRS issued final regulations on the reporting requirements for providers of “minimum essential coverage” under the Affordable Care Act (ACA). The shared responsibility provisions require employers who employ more than a certain number of full-time equivalent employees to offer affordable health care to a certain percentage of their full time employees (generally 70% for 2015, 95% for all future years) that provides a minimum essential coverage (MEC); employers who do not offer the coverage could be subject to significant excise taxes.
The ACA requires every health insurance issuer, sponsor of a self-insured health plan and any other entity that administers or provides MEC, to file an annual information return providing data on each covered individual. Each individual named in the annual information return must also receive a written statement for use in their personal income tax return.
The final regulations clarified a number of issues
The IRS will be issuing Forms 1095-B (which informs the IRS) and 1095-C (which informs the recipient) in the near future, which will be used to make these disclosures. These forms must be filed electronically if the filing entity is required to file at least 250 of either form. Paper filings are due February 28 of the year following the calendar year in which MEC is provided; the deadline for electronic filing is March 31.
The IRS is allowing the use of a streamlined form that contains information regarding the entity providing the coverage and the participants. The IRS will allow substitute forms, in accordance with soon to be issued guidance. Self-insured programs for large employers will complete the entire form; insured programs will complete the top half of the form (which deals with employer information), and the insurers will be responsible for completion of the remainder of the form (participant specific information). Information relating to other issues (for example, the length of waiting periods) will no longer be required.
Programs that provide additional benefits or supplemental benefits to a minimum essential coverage program do not have to file the forms required under IRC Section 6055(a).
No penalties will apply if a program does not file Forms 1095-B or C for the year ending December 31, 2014; however, the filers might want to take this step to make sure that their system works properly so that the December 31, 2015 filings go smoothly.
What should an employer do at this time?
Employers should contact their insurance providers (or third party administrators, if self-insured), to work with them to make sure that all necessary data will be available and procedures in place so that proper filings can be made. Although the initial deadline for filing without a penalty is not near, the participant data required by the IRS may not be in the insurer’s / third party administrator’s files.
We would be pleased to discuss issues related to the final regulation as well as other areas of ACA compliance. For more information on this topic, post a comment below or contact our Compensation & Benefits Advisory Services Group at 440-449-6800.
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