While the recent focus often has been on how a company calculates full-time equivalent employees under the Affordable Care Act (ACA), there are many more federal reporting requirements created for employers and health plans.
“This reporting is primarily to provide the government with information to administer the large employer shared responsibility penalty and the individual mandate,” says Chuck Whitford, consultant with JRG Advisors.
The ACA’s employer penalties will take effect on Jan. 1, 2015, with that in mind, Smart Business spoke with Whitford about the requirements.
How are applicable large employers (ALEs) defined?
An employer qualifies as an ALE under the employer shared responsibility provisions if it employed an average of at least 50 full-time employees, including full-time equivalents, on business days during the preceding calendar year. ALEs must file a Section 6056 return with the IRS that reports the terms and conditions of the health care coverage provided to the employer’s full-time employees for the calendar year. A separate Section 6056 employee statement is required for each full-time employee.
What is required on the ALE’s tax return?
The return must include the following:
- The ALE’s name, address and employer identification number (EIN).
- The name and telephone number of the ALE’s contact person.
- The calendar year for which the information is reported.
- A certification as to whether the ALE offered to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage (MEC) under an eligible employer- sponsored plan, by calendar month.
- The calendar year months for which MEC under the plan was available.
- Each full-time employee’s share of the lowest cost monthly premium for self- only coverage providing minimum value offered to that full-time employee under an eligible employer-sponsored plan, by calendar month.
- The number of full-time employees for each month during the calendar year.
- The name, address and taxpayer identification number (TIN) of each full-time employee during the calendar year and the months during which the employee was covered under the eligible employer-sponsored plan during the calendar year.
- Other information the IRS requires.
The first Section 6056 returns required to be filed are for the 2015 calendar year, and must be filed no later than March 1, 2016 or March 31, 2016, if filed electronically.
What do employee statements need to list?
The employee statement must furnish:
- A copy of the Section 6056 return on Form 1095-C for that full-time employee (or a form the IRS designates).
- A substitute employee statement for that full-time employee, as long as it includes all the required information and complies with IRS procedures or other applicable guidance.
The employee statement must include the name, address and EIN of the ALE, and the information required to be shown on the Section 6056 return with respect to the full-time employee. Employee statements may identify the employee using an IRS truncated TIN rather than the employee’s social security number on the corresponding information return filed with the IRS.
The employee statements must be furnished annually to full-time employees. The first Section 6056 employee statements (the statements for 2015) must be furnished by Feb. 1, 2016 (Jan. 31, 2016, being a Sunday). Extensions may be available.
For employers who maintain any self-insured plans, the ACA requires them to file a Section 6055 annual return with the IRS reporting information for each individual provided with this coverage. Fortunately, the final regulations allow all ALEs to use a single combined form for reporting the information required under both Section 6055 and Section 6056.
All ALEs should discuss these new requirements with their advisors and not wait too long to start the process.
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