Large employers with 50 or more full-time employees, including full-time equivalents (FTEs), are required to file information reporting forms to the Internal Revenue Service (IRS) about their compliance with the Affordable Care Act’s (ACA) employer shared responsibility provision, also known as “pay or play,” in early 2016 for calendar year 2015.
Employers who qualified for 2015 transition relief from “pay or play” penalties are still subject to the reporting requirements in 2016.
There are two forms employers will need to prepare in order to fulfill the information reporting requirements: Forms 1094-C and 1095-C. Form 1094-C is used to report summary information for each employer and to transmit Forms 1095-C to the IRS. Form 1095-C is used to report information about each full-time employee.
Additionally, Forms 1094-B and 1095-B will be used to enforce the individual mandate and will be filed by the insurance company for fully-insured plans or by the plan sponsors of self-funded plans.
Here are four points to help large employers report their compliance with the “pay or play” provision:
- Determine the employees who were full-time in 2015.
Employers must report information for all 12 months of the calendar year for any employee who is full-time for one month or more. An employee is considered full-time if he or she averages at least 30 hours per week or 130 hours per month.
- Prepare Form 1095-C for each full-time employee with a full 12 month history.
In order to comply with the ACA’s employer mandate, employers must document that minimum essential coverage, meeting the minimum value requirements, was offered to at least 95 percent of full-time employees and their dependents.
- Send employees a copy of their 1095-C form.
The deadline to furnish copies of Form 1095-C to each employee is February 1, 2016, otherwise on or before the last day of January. Employee statements must be mailed or hand delivered unless the recipient affirmatively consents to receive it in an electronic format.
- File all 1095-C forms with the IRS.
Bundle all 1095-C forms using the transmittal form, 1094-C.The deadline to file information reporting to the IRS is February 29, 2016 or March 31, 2016 if filed electronically. Employers who are filing 250 or more statements are required to do so electronically.
Large employers are permitted to hire a third party to fulfill their reporting responsibilities. However, employers who choose to use a third party will still be liable for failure to report and furnish statements and will be held responsible for any potential penalties under the employer mandate.
*This article is written for informational purposes only and should not be construed as providing legal advice.