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Benefit Insights Understand the ACA Reporting Requirements

We thought it helpful to provide an outline of the Affordable Care ACT (ACA) reporting requirements under IRS Sections 6055 & 6056. While some mandates continue to be delayed, we fully expect 2016 to be the year of full compliance with reporting requirements. There is a great deal of confusion regarding the use of the […]


Posted in Healthcare

We thought it helpful to provide an outline of the Affordable Care ACT (ACA) reporting requirements under IRS Sections 6055 & 6056. While some mandates continue to be delayed, we fully expect 2016 to be the year of full compliance with reporting requirements. There is a great deal of confusion regarding the use of the newly required 1095 and 1094 forms. This primer hopes to shed light on the subject and hopefully clear up questions on your responsibility.

This should not be construed as tax advice. We are sharing our understanding of the ACA requirements and how they apply to each market segment, but we are not operating as a tax advisor. As always, we strongly suggest that anyone should consult with a licensed tax professional or CPA before filing any IRS documents.

SUMMARY

  • Most Small Group Employers (under 50 full-time and full-time equivalent employees) are exempt from filing any documents under Sections 6055 and 6056
  • Large Employers are required to file 1095-C and 1094-C forms
  • 1095-B forms are filed directly by the Insurance Carriers unless you are an employer that offers a self-insured group plan
  • 1095-A forms impact individuals that purchase their insurance directly from a State or Federal Exchange and have no impact on group plans

FORM REQUIREMENT & RESPONSIBILITY MATRIX

 

Insurance Type Required Form 6055 Reporting
Insurer Responsibility
Required Form 6056 Reporting
Employer Responsibility
Individual (On-Exchange) N/A
Form 1095-A sent by Marketplace
N/A
Individual (Off-Exchange) Form 1095-B
Form sent by Insurance Carrier
N/A
Small Group Fully-Insured
Including SHOP Marketplace
Form 1095-B
Form sent by Insurance Carrier
N/A
Small Group Self-Insured Form 1095-B
Form sent by Employer not Carrier
N/A
Applicable Large Employer (ALE)   Fully Insured Form 1095-B
Form sent by Insurance Carrier
Form 1095-C
Sections I, II
Applicable Large Employer (ALE)   Self-Insured N/A Form 1095-C
All Sections 6055 + 6056

DEFINITIONS & EXPLANATIONS

FORM 1095-A

If you bought health insurance through one of the Health Care Exchanges, also known as Marketplaces, you will receive a Form 1095-A which provides information about your insurance policy, your premiums (the cost you pay for insurance) and the people in your household covered by the policy. The 1095-A form, only applies to those individuals that purchased their own plans directly from a State sponsored or Federal (www.healthcare.gov)

The Affordable Care Act, also known as Obamacare, requires most U.S. residents to have health insurance, but it also offers a tax break, the Premium Tax Credit, to help offset the costs of health coverage. If you bought coverage through one of the health insurance marketplaces, you should receive a copy of Form 1095-A, which provides information needed to claim the tax credit.

The 1095-A does not apply to any Small or Large Group plans and does not impact an company, medical plans.

FORM 1095-B

A Company is responsible for filing IRS Form 1095-B only if two conditions apply: It offers health coverage to its employees, and it is “self-insured.” This means that the company itself pays its employees’ medical bills, rather than an insurance company. A company that doesn’t meet both conditions won’t have to deal with Form 1095-B. Its employees might still receive a 1095-B, but this comes direct from their insurer carrier, not the employer. The 1095-B reports information showing that an employee or individual had the required minimum essential coverage required under the law. This is proof that an individual meets the ACA Insurance Mandate to have coverage. If an employee or individual cannot provide this proof, they may be subject to the ACA fines for not having insurance coverage.

FORM 1095-C

The Affordable Care Act requires certain employers to offer health insurance coverage to full-time employees and their dependents. Those employers must also send an annual statement to all employees eligible for coverage describing the insurance available to them. The Internal Revenue Service (IRS) created Form 1095-C to serve as that statement.

The health care law defines which employers must offer health insurance to their workers. The law refers to them as “applicable large employers,” or ALEs. A company or organization is an ALE if it has at least 50 full-time workers or full-time equivalents. A full-time worker, according to the law, is someone who works at least 30 hours a week.

Small Group employers with less than 50 full-time workers and full-time equivalents are not responsible for sending or reporting 1095-C information to the Federal Government or their employees. They are exempt as a small employer.

FORM 1094-B

Form 1094-B is the cover sheet used by insurance providers when they send the IRS information about who has health coverage that meets the standards of the Affordable Care Act. The 1094-B is brief and only takes up less than a page. This form is also used by any employer that offers health care coverage to its employees and is “self-insured”.

If an employer falls short of 50 full-time and full-time equivalents and is not “self-insured”, they are not required to send out 1095-C’s, 1095-B’s and do not need to report their health plan information to the IRS. Your insurer will report directly to the Federal Government using the 1095-B. Most employees on group coverage should receive a 1095-B directly from the insurance carrier.

FSAs, HSAs and HRAs are not subject to the Form 1095-B filing requirement (because they do not provide Minimum Essential Benefits and therefore by themselves do not relieve the employee from the individual mandate penalty tax).

FORM 1094-C

IRS Forms 1094-C and 1095-C are filed by employers that are required to offer health insurance coverage to their employees under the Affordable Care Act. The main difference between them is that the 1095-C provides information about health insurance (see above) and is sent to both employees and the IRS, while the 1094-C is a cover sheet about the 1095-C and is sent only to the IRS. If an employer is exempt from filing a 1095-C, the 1094-C is not required.

Contact Denis Squeri for more information – dsqueri@fp-ins.com