How to complete your employee health coverage forms for the IRS

Last year, many organizations had to figure out the new rules for submitting information about their employee health coverage to the IRS. It’s that time of year again, and while the overall process is very similar some aspects have been adjusted since last year.

“Just like last year, different employers will have different requirements they have to meet,” says Amber Hulme, Medical Mutual regional vice president for Central Ohio. “To avoid fines for the business, or even tax penalties for employees, employers need to know which requirements apply to them this time around.”

Smart Business spoke with Hulme about what employers should do to understand the annual IRS reporting requirements and what they can expect for 2017.

What is the purpose of this reporting?

The reporting really consists of two parts. One helps the IRS prove that everyone in the U.S. has health insurance — or that they qualify for an exemption. The other is intended to make sure certain employers can offer ‘minimum essential coverage’ for their employees. To do all of that, the IRS needs to collect the appropriate information.

How do employers know which requirements apply to them?

First, look at funding type. If you’re fully insured, your insurance company will handle 6055 reporting for you.
Then look at how many full-time employees you have (including equivalents). That’s your ‘FTEs.’ If that number is 50 or more, you will need to report for 6056.

Self-funded employers usually have more work to do. They have to report for 6055, which includes collecting any missing Social Security numbers from employees and dependents. And they also have to report for 6056 if they have 50 or more FTEs.

How do insurance carriers handle 6055 reporting?

Insurance carriers are required by law to send 1095-B forms to all fully insured members. Those forms serve as their proof of coverage for the previous tax year. Then, if any of those members don’t have Social Security numbers on file for either themselves or a dependent, carriers are also required by law to contact members directly to collect that information. So employees might get requests to supply that type of information.

Has the process changed at all since last year?

The overall process is essentially the same, but the IRS has revised instructions on its website, IRS.gov. This year the deadline extensions are going to be different than they were in 2015. Generally speaking, any forms for employees need to be delivered to them by March 2, while forms submitted to the IRS are due by Feb. 28 if they are filed by mail, and March 31 if they are filed electronically.

Are the penalties the same for not complying?

Employers are subject to fines of $260 per instance, which is up slightly from last year. It’s also a flat rate now — instead of a range based on the intent behind a mistake or omission.

And like last year, employees could see money come out of their next tax return if the IRS doesn’t have all the Social Security numbers it needs from them. So even if your organization isn’t required to file, it’s smart to help your insurance carrier collect what it needs.

Any other reminders as organizations prepare?

Just make sure you know which forms you have to submit and what information is required. If anything is missing, it’s better to know sooner than later. And, as with any forms submitted to the IRS, it’s always a good idea to consult with a tax adviser or legal counsel.
In addition, keep in mind that these requirements are tied to a provision of the Affordable Care Act (ACA). So any changes to the ACA under the Trump Administration could affect what organizations will have to do.

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