Under the Affordable Care Act, there are two unique reporting requirements. The first is the individual mandate reporting requirement under Section 6055 of the Code. The second is the pay or play reporting requirement under Section 6056. Many employers have been wondering about how onerous these reporting requirements may be and while not finalized, the IRS did release draft forms that will apply to these requirements. There have not been any instructions issued (although they are expected in August) and they are not final and probably will not be until sometime later this year. But for now, they provide some insight into what information employers will have to collect.
See related story: Feds release draft tax forms for employer compliance with the ACA
Under Section 6055, health insurers and employers sponsoring self-funded group health plans must annually report to the IRS and participants whether the group health plan coverage constitutes minimum essential coverage under Health Care Reform. The IRS forms used for Section 6055 reporting will vary depending on whether the reporting entity is an employer or an insurer. Large employers that sponsor self-insured plans will report on IRS Forms 1095-C and 1094-C (transmittal form), completing both sections of Form 1095-C, under a combined reporting approach, to report the information required under Section 6055 and Section 6056, discussed below. Entities that are not reporting as large employers (for example, health insurers and sponsors of multiemployer plans) will report on IRS Forms 1095-B and 1094-B (transmittal form).
Under Section 6056, employers have to demonstrate they have satisfied the obligation to offer coverage to employees under the pay or play rules. To report this, employers are going to use Form 1095-C, with Form 1094-C as the transmittal. Note that even though they dont have to comply until 2016, mid-size employers (between 50 and 99 full-time employees) are still required to comply with the reporting requirements if the mid-size employer sponsors a self-funded group health plan.
See related story: IRS releases draft forms for ObamaCare
Now remember that these forms are drafts and the instructions are not written yet. Certainly we hope that the instructions will provide an even clearer understanding of how and when to report and who gets copies. But for now, employers should take a look at these drafts just to get a feel for what information they will have to provide and develop a system for making sure that information is collected in a timely manner.
Keith R. McMurdy is a partner with Fox Rothschild focusing on labor and employment issues; he can be reached at firstname.lastname@example.org or (212) 878-7919.
The information in this legal alert is for educational purposes only and should not be taken as specific legal advice.
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