Under the ACA, the IRS requires information reporting for certain Applicable Large Employers (ALE) and smaller, self-insured employers. These requirements are mandated by two sections of the Internal Revenue Code. Together, they ensure that employers report health insurance coverage information to the IRS and furnish statements to employees annually. The reported information summarizes who was offered coverage and whether the insurance meets all ACA mandates.
- Section 6055 reporting requirements apply to health insurance carriers, small employers that sponsor self-funded health plans, and other entities that provide minimum essential coverage.
- Section 6056 of the reporting requirements is directed toward applicable large employers (ALEs), which generally include employers with an average of 50 or more full-time employees during the preceding year. Section 6056 also requires ALEs to share coverage details with employees so they can determine if they qualify for a premium tax credit.
Tax code sections 6055 and 6056 and the related 1095 reporting forms are designed to work in tandem to help the government enforce the Employer Shared Responsibility provisions where certain businesses with 50 or more full-time employees that don’t offer insurance may be subject to a payment.
What forms should I file?
The Affordable Care Act states that an information return will be prepared for each applicable employee, and these returns must be filed with the IRS using a single transmittal form (Form 1094-B & 1095-B or Form 1094-C & 1095-C). The filing requirements are based on an employer’s health plan and the number of employees and failure to file or report correctly will result in numerous and expensive fines for employers.
Required ACA Forms for Reporting: Forms 1095-C and 1094-C
The first reporting requirement for ALEs is to provide a copy of Form 1095-C to every full-time employee, regardless of whether they enrolled in the company-sponsored health plan. Employers must also keep a copy of every 1095-C form to send to the IRS to fulfill ACA reporting requirements. Correctly filling out lines 14 through 16 on this form can be particularly challenging for many people.
Employers must also complete Form 1094-C, which acts as a summary for the aggregated 1095-C forms and provides helpful information to the IRS, including contact information and the employer’s Employer Identification Number (EIN), the name of a contact person, and the total number of employees.
Preparing for ACA Year-End Reporting
Part of a solid preparation plan involves gathering the data needed to complete the required IRS forms in time for ACA year-end reporting. Compile the required information for Section 6055 reporting and/or the required information for Section 6056 reporting. An ALE will need a variety of information, and verifying, cataloging, and reporting accurate data takes a considerable amount of time. Starting the process early helps you to avoid an unnecessary last-minute rush to gather information and avoid costly late fees and penalties due to inaccuracies. Employers should also cross-reference facts such as employee hire dates and average hours worked, in case employees are newly eligible for benefits.
Review the IRS Forms and Instructions:
- Forms 1094-B and 1095-B (along with instructions) are available for Section 6055 reporting.
- Forms 1094-C and 1095-C (along with instructions) are available for Section 6056 reporting entities (or employers that are subject to both reporting provisions).
Section 6055 Deadlines (Forms 1094-B and 1095-B):
- Forms 1094-B and 1095-B must generally be filed with the IRS annually, no later than February 28 (or March 31, if filing electronically).
- Forms 1095-B must generally be furnished to responsible individuals (may be the primary insured, employee, former employee, or other related person named on the application) by January 31 (extended to March 2 in 2022).
Section 6056 Deadlines (Forms 1094-C and 1095-C):
- Forms 1094-C and 1095-C must generally be filed with the IRS annually, no later than February 28 (or March 31, if filing electronically).
- Forms 1095-C must generally be furnished to all full-time employees by January 31 (extended to March 2 in 2022).
Determine whether to manage your own filing or utilize a service like eFileMyForms. With eFileMyForms, you can quickly and easily upload your employee data and create forms and we can eFile, print, and mail on your behalf, making your ACA reporting a breeze. eFileMyForms can also handle any ACA direct state reporting obligations for you for an additional fee.