IRS Publishes FAQs Related to ACA Reporting for Employers
The Internal Revenue Service (IRS) recently published a set of questions and answers on its website providing additional guidance on ACA reporting obligations for employers. As we have written in previous alerts, these reporting rules are set forth under Internal Revenue Code Sections 6055 (for sponsors of self-insured plans) and 6056 (for large employers).
Notably, the IRS clarified that an applicable large employer (ALE)—generally an employer with at least 50 or more full-time equivalent employees—that did not have any full-time employees in any month of the calendar year is not required to report whether it offered health coverage that provides minimum value and is affordable under the ACA; however, if such an employer sponsors a self-insured health plan, it is still required to file a Form 1094-C and Form 1095-C. The guidance also states that an ALE is required to report under Code Section 6056 for a full-time employee who was not offered health coverage, and must furnish a copy of the reporting (which is generally Form 1095-C) to the employee. In addition, the IRS clarified that a non-ALE employer that sponsors a self-insured health plan is not subject to reporting under Code Section 6056, but is subject to Code Section 6055 reporting obligations; such an employer must therefore file a Form 1094-B and Form 1095-B with respect to its self-insured health plan.
The question and answer set contains guidance on many other ACA reporting topics, including timing and methods of reporting; the 98 percent offer method, furnishing returns to employees and former employees; and potential penalties.
These reporting rules, as we have previously discussed, went into effect at the beginning of 2015, and the first reports will be due in early 2016. Given the complexity of these reporting requirements and the fact that ACA employer mandate penalties will be assessed to employers based on the these reports, employers of all sizes need to be planning now in order to be ready to fulfill their reporting obligations at the end of the year.