Benefits and Compensation

More IRS Guidance on ACA’s Health Coverage Reporting Rules

IRS on Aug. 29 issued two sets of questions and answers about reporting on health coverage for large employers under Section 6056 and for all employers under Section 6055 of the reform law.

Section 6056 reporting is required by “applicable large employers” that provide health coverage to their full-time employees and is needed for the government to carry out the employer mandate. The reporting is the ALE’s responsibility whether it is fully insured or self-insured.

Section 6055 reporting is required by entities that provide minimum essential coverage and is needed for the government to carry out the individual mandate. Section 6055 reporting requires less information gathering than 6056 reporting. Insurers perform the reporting for fully insured employers. Employers have to do it if their plans are self-funded.

Section 6056 Reporting

On the government return for Section 6056, ALEs must list: (1) their name, address and employer ID number; (2) the name, address and taxpayer identification number of each covered full-time employee, spouse and dependent; (3) certification that coverage was (or was not) offered; (4) the employees’ share of the lowest self-only premium; and (5) the months each full-time employee was covered. These are contained in the IRS Form 1095-C (government return).

Insured ALEs also will provide each full-time worker with a Form 1094-C (employee statement), which must include: (1) the ALE’s name, address and EIN; and (2) the information the ALE sent to the IRS about that individual employee.

ALEs that sponsor a self-insured plan will complete the government return and both sections of the employee statement to report information about health coverage provided and offers of health coverage. Form 1095-C will have separate sections to allow self-insured ALEs that to combine 6055 and 6056 reporting requirements on a single return.

Related companies that together are an ALE nevertheless must file individual forms, each using its own EIN, even if certain subsidiaries have fewer than 50 workers and wouldn’t be an ALE if they were a standalone company, one answer states.

There are two alternative ways ALEs can report this information without having to go through the trouble of listing every month that every employee had coverage. One way is to make an offer to 98 percent of the workforce.

Section 6055 Reporting

Smaller employers with self-insured plans and insurers that file Form 1095-Bs have to include: (1) names, addresses, and EIN; (2) each covered full-time employee, spouse and dependent’s name, address and TIN; (3) months of insured coverage for each individual; and (4) whether insurance was obtained through a small business health options exchange (SHOP).

Employee statements will have to include: (1) the information about the employer listed above; (2) the information the employer sent to the IRS about each employee; and (3) a policy number, if applicable. These are conveyed in IRS Form 1094-B.

Health coverage providers must file the information return and transmittal form with the IRS on or before Feb. 28 (March 31 if filed electronically) of the year after the calendar year in which it provided minimum essential coverage to an individual, one answer states.

Electronic reporting is optional, except for ALEs with more than 250 employees, for whom it is mandatory. Letting a contractor do the reporting does not shield the plan sponsor or insurer’s from liability for failure to file an accurate report.

Employer-sponsored insurance classified as “minimum essential coverage” that must report includes COBRA coverage and retiree coverage, another answer says.

For more information on the employer reporting requirements, go here.

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