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Compliance Corner: 1094/1095 Reporting

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In order to enforce the Affordable Care Act's (ACA) Employer Responsibility and Individual Mandates and reconcile with Marketplace subsidies, the IRS requires certain employers, insurers, and other parties to furnish information annually including - full-time employment status, health plan offers and covered individuals - to name a few.


Employers who are subject to the reporting requirements include those who sponsor a self-insured health plan (regardless of size), as well as, all "applicable large employers" (ALE).  As a reminder, ALEs have 50+ employees (counting both full-time and full-time equivalents per ACA definition), including those of other entities within their IRS-defined controlled group, if applicable.  For determination of ALE status, see IRS website.  ALEs are also subject to the pay or play rules/penalties if not offering certain health coverage.  But regardless of the date that an ALE becomes subject to those rules/penalties, the employer must report on information for the entire 2015 calendar year and furnish it to the IRS and certain individuals at the beginning of 2016.

In general, the information is reported on IRS Forms 1094/1095-B and/or 1094/1095-C.  The 2015 draft versions were issued on June 16, 2015 with little change to the 2014 versions; see links below.  Most changes were made to Form 1095-C, and listed on the last page of the draft; see link below.  These changes include (1) a Plan Year Field entitled “Plan Start Month” to designate the first month of the ALE’s plan year (optional for 2015); (2) a Continuation Sheet for  Part III for an individual who has more than six covered family members; and (3) Indicator Codes for line 14 to state whether an offer of coverage to an employee’s spouse is a conditional offer (beginning with 2016 reporting).  The IRS has not released 2015 instructions.

View Summary of reporting requirements, including deadlines and information necessary for completion
View Form 1094-C transmittal for ALEs
View Form 1095-C information return for ALEs to report for all full-time employees (and covered individuals for self-insured plans)
View Form 1094-B transmittal for self-insured health plan sponsors using Form 1095-B
View Form 1095-B information return for Non-ALE self-insured health plan sponsors to report on covered individuals. ALEs with self-insured plans may use this Form (instead of Form 1095-C) to report on covered non-employees (e.g., certain COBRA and retiree participants)

WHAT EMPLOYERS NEED TO KNOW:  Although we are still awaiting necessary guidance from the IRS to fully prepare for the upcoming 2016 filing deadlines, employer must act now -- to track data, outsource reporting if necessary, and continue to monitor developments.  Employers should be tracking the required information starting on January 1, 2015.  And as importantly, employers must decide NOW who will be generating and furnishing the IRS forms.

Some employers are planning to administer internally.  However we caution those employers to familiarize themselves with IRS submission and testing requirements.  The IRS will not accept an Excel spreadsheet. The IRS requires a Native XML uncompressed format with files size limit of 100MB and utilizes a UniqueRecordIDType and specific encoding. See IRS Guide (June 2015) for more information.

Many employers are evaluating their payroll vendors' capabilities or other technology resourcesEMPLOYERS MUST FIND THEIR SOLUTION NOW!  In order to properly prepare for client needs and meet IRS requirements, many technology vendors have set deadlines for taking on new clients, as early as July 15th.  Others are increasing their fees for employers who sign up later this year.

Contact your Cobbs Allen Health Plan Consultant today to determine how we can help you be prepared.

 

To learn more or to receive Compliance Corner by email, contact Tracy Leeth, tleeth@cobbsallen.com