Employee health coverage is a significant part of many companies’ benefits packages. However, the administrative responsibilities that accompany offering health insurance can be complex. One crucial aspect is understanding the reporting requirements of federal agencies such as the IRS. Does your business have to comply, and if so, what must you do? Here are some answers to questions you may have.
What if we are a large employer (over 50 full-time employees) and have a fully-insured health plan?
The Affordable Care Act (ACA), enacted in 2010, introduced several employer responsibilities regarding health coverage. Employers with 50 or more full-time employees (called “applicable large employers” or ALEs) must use Forms 1094-C and 1095-C to report information about health coverage offers and enrollment for their employees.
Specifically, an ALE uses Form 1094-C to report their employer’s summary information. A separate Form 1095-C is used to report information about each employee. In addition, Forms 1094-C and 1095-C are used to determine whether an employer owes payments under the employer shared responsibility provisions (sometimes referred to as the “employer mandate”).
What if we have a self-insured plan or another type of plan?
If an ALE offers health coverage through a self-insured type plan (or self-funded, level-funded, or a stop-loss plan) the ALE must report on additional covered dependent(s) information on Form 1095-C.
Employers that offer a self-insured type of health plan but have under 50 full-time employees/full-time equivalent employees are required to report the offer of coverage using Form 1094-B/1095-B for employees and their dependents who enrolled in the employer-sponsored, self-insured health coverage. This applies even if there is only one employee to report.
Suppose an employer provides health coverage in another manner, such as through a multiemployer health plan or an Individual Coverage Health Reimbursement Arrangement. In that case, the insurance issuer and the plan sponsor making the coverage available will provide the information about health coverage to enrolled employees and to the IRS as well on the applicable form, either 1094-B/1095-B or 1094-C/1095-C.
Be aware that these reporting requirements may be more complex if your business is a member of an aggregated ALE group (control group) or if the coverage is provided through a multiemployer plan.
What information must be reported on Form 1095-C?
On Form 1095-C, ALEs must report the following for each employee who was an eligible employee for any month of the calendar year:
- The employee’s name, Social Security number (SSN) and address,
- The Employer Identification Number (EIN),
- An employer contact person’s name and phone number,
- A description of the offer of coverage (using a code provided in the instructions) and the months of coverage,
- Each full-time employee’s share of the coverage cost under the lowest-cost, minimum-value plan offered by the employer, by calendar month, and
- The applicable safe harbor (using one of the codes provided in the instructions) under the employer shared responsibility or employer mandate penalty.
What information must be reported on Form 1095-B?
On Form 1095-B, employers must report the following for each employee who was an eligible employee for any month of the calendar year:
- The employee’s name, Social Security number (SSN) and address,
- The Employer Identification Number (EIN),
- An employer contact person’s name and phone number,
- A list of covered individuals enrolled in the plan, including their name and either their SSN or their date of birth
- A record of which months during the year each covered individual had coverage under the plan
What are the W-2 reporting requirements?
Employers also report certain information about health coverage on employees’ Forms W-2. But it’s not the same information as what’s reported on 1095-C. The information on either form doesn’t cause excludable employer-provided coverage to become taxable to employees. It’s for informational purposes only.
Nicholle Peterson, Benefit Plan Manager, comments:
“Navigating employee health coverage reporting can be complex for all sizes of employers depending on their type of health benefit coverage offered. Understanding the requirements of the Affordable Care Act, including the necessity of who needs to report on their offer of coverage is crucial to avoid penalties and ensure compliance.”
The above is a simplified explanation of the reporting requirements. Contact our CDS Benefit Plan Administrators at (888) 388-1040 with questions or for assistance in complying with the requirements.
