Employer Reporting of ACA Officially Kicks in This Tax Year

Even after five years since its historic enactment, the Affordable Care Act (ACA) continues to be a major concern for employers. With the phased implementation of the ACA requirements, employers will need to focus on the employer reporting responsibility of the ACA beginning this year.

Applicable Large Employers (ALEs, defined in the definitions below) that have between 50 and 99 full-time or full-time-equivalent employees (FTEs) are exempt from the employer mandate for 2015 but are still required to file Form 1095-C. Beginning in 2016, companies with 50 or more full-time-equivalent employees must use IRS Form 1095-C to report 2015 insurance data for each full-timer to the IRS and the employee. Employers will also file with the IRS Form 1094-C, which requires more information. If your company sponsors an insured plan, the insurance company is required to file Form 1095-B.

Employers who are not ALEs (fewer than 50 employees), but provide self-insured medical coverage, must also comply even though they are not subject to the employer shared responsibility provisions or the information reporting requirements for ALEs. They’ll use Form 1095-B to report 2015 coverage information to employees and the IRS and 1094-B to transmit the health returns to the IRS.

For calendar year 2015, an employer must furnish a Form 1095-C to each of its full-time employees by March 31, 2016. Forms 1094-C and 1095-C are required to be filed with the IRS by May 31, 2016, or June 30, 2016 if filing electronically. Employers will not be given additional time to make these filings.

Form 1095-C is filed and furnished to any employee of an ALE who is a full-time employee for one or more months of the calendar year. ALEs must report that information for all 12 months of the calendar year for each employee. Form 1095-C shows the coverage that was made available to an employee, while a separate form, Form 1095-B, gives details about an employee’s actual insurance coverage.

At-a-Glance Summary of Forms for Employer Reporting of ACA

Definitions

Applicable Large Employer (ALE)
If an employer has at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is an ALE for the current calendar year, and is therefore subject to the employer shared responsibility provisions and the employer information reporting provisions.

For 2015, employers will use information about the number of employees they employ and their hours of service during 2014 to determine whether they employ enough employees to be an ALE for 2014. Transition relief is available for the first year. Rather than being required to use the full twelve months of 2014 to measure whether it has 50 full-time employees (or equivalents), an employer may measure during any consecutive six-month period (as chosen by the employer) during 2014.

Companies with a common owner or that are otherwise related under certain rules of section 414 of the Internal Revenue Code are generally combined and treated as a single employer for determining ALE status.

Full-time Employee
A full-time employee for any calendar month is an employee who has on average at least 30 hours of service per week during the calendar month, or at least 130 hours of service during the calendar month.

Full-time Equivalent Employees
An employer determines its number of full-time-equivalent employees for a month in the two steps that follow:

Combine the number of hours of service of all non-full-time employees for the month but do not include more than 120 hours of service per employee, and
Divide the total by 120.

An employer’s number of full-time equivalent employees (or part-time employees) is only relevant to determining whether an employer is an ALE. An ALE need not offer minimum essential coverage to its part-time employees to avoid an employer shared responsibility payment. A part-time employee’s receipt of the premium tax credit for purchasing coverage through the Marketplace cannot trigger an employer shared responsibility payment.