The Affordable Care Act (ACA) requires large employers to provide information on health insurance in the prior year to the IRS and employees under section 6056 of the IRS code. The regulations are proposed to go in effect on January 1, 2015, however compliance is encouraged in 2014.
The information will require reporting on the large employers’ compliance with the employer mandate and pay or play rules, which impose a fee penalty on large employers that do not offer required coverage to full-time employees and dependents.
In addition, employees can claim a premium tax credit if they are not offered affordable health coverage under an employer-sponsored plan and subsequently purchase insurance through the Exchange. The reporting will provide the necessary information for the employee to receive said credit.
Who is Affected?
Under ACA, a large employer is defined as employer 50 or more full-time employees (including full-time) equivalents during the previous calendar year. A full-time employee must work 30 hours per week in order to be classified as a full-time employee.
The section 6056 returns must be filed with the IRS no later than February 28 (March 31, if filed electronically) of the year following the return year. Employers with more than 250 employees are required to file electronically. Each section 6056 return is a separate return. Employers with fewer than 250 employees are encouraged to file electronically, though not required.
IRS Required Information
The following information must be reported on the section 6056 information return:
-The employer’s name, address and EIN, the name and telephone number of the employer’s contact person and the calendar year for which the information is reported;
-A certification as to whether the employer offered its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan by calendar month;
-The number of full-time employees for each month during the calendar year;
-For each full-time employee, the months during the calendar year for which coverage under the plan was available;
-Each full-time employee’s share of the lowest-cost monthly premium (self-only) for coverage providing minimum value offered to that full-time employee, by calendar month; and
-The name, address and TIN of each full-time employee during the calendar year and the months the employee was covered under an eligible employer-sponsored plan.
Section 6056 information returns may be filed using Forms 1094-C and 1095-C or any other form(s) designated by the IRS. A substitute form may be used if it includes the required information and complies with IRS procedures or other guidance. Employers must also provide employees with a written statement, and can be provided by either providing the employee with a copy of 1095-C or any other copy of a designated IRS form or a substitute statement if it complies with IRS regulations.
Employers that do not comply with the filing and statement furnishing requirements of section 6056 may be subject to penalties for failure to file a correct information return and failure to furnish correct payee statements. However, these penalties may be waived if the failure is due to reasonable cause and not to willful neglect.