Information reporting of employer sponsored coverage

Need-to-know details for employers

Under the Affordable Care Act, employers with 50 or more full-time equivalent employees are required to submit informational reporting about their employee health care coverage to the IRS, beginning January 2016. To help businesses comply with this requirement, Aflac has outlined the details you need to know:

Is my business an applicable large employer?

Applicable large employers (ALEs) are those with 50 or more full-time equivalent employees. To determine if your business is an ALE, you need to account for full-time (30 hour per week employees) and full-time equivalent employees.

Calculation:

  • Divide the number of hours in a month for employees who are not full-time by 120.
  • Add the number of full-time (average of 30 hour per week employees).

To get a yearly number, the FTEs for 12 calendar months are averaged.

Who is required to submit information reporting?

  • Applicable large employers (ALEs)

Note: Applicable large employers (ALEs) with self-funded major medical plans are also required to report that their plans meet the minimum essential coverage standards. To learn more, see: Information Reporting of Minimum Essential Coverage.

What does the reporting include?

ALEs are required to submit IRS Form 1095-C (an employee statement) and Form 1094-C (a transmittal). The report should include the employer's information, as well as information surrounding their benefits coverage options, and workforce demographics. Specifically:

  • The name, address and employer's identification number (EIN).
  • The name and telephone number of the employer’s contact person.
  • The months during the calendar year for which coverage under the plan was available.
  • The calendar year for which the information is reported.
  • A certification as to whether the employer offers  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.
  • 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 under an eligible employer-sponsored plan, by calendar month.
  •  The name, address and taxpayer identification number (TIN) of each full-time employee during the calendar year and the months, if any, during which that employee (and any dependents) were covered under any such health benefits plans.
  • Other information the Department of Health and Human Services (HHS) may require.

The employer must also provide a written statement to the covered individual, which includes:

  • The name, address and contact information of the reporting employer.
  • The information for the individual on the return being filed.

What is the deadline?

Similar to the applicable W-2 reporting deadline, statements should be provided annually to employees by Jan. 31. Forms must be provided to the IRS by Feb. 28 (March 31 if filed electronically) for the previous calendar year. Employers are encouraged to voluntarily report starting in 2015 for the 2014 plan year, but official annual reporting begins in 2016 for the 2015 plan year.

How do I submit the report?

Employers are required to provide the IRS with Form 1094-C, which is the transmittal form, and Form 1095-C, which is the employee statement.  A separate employee statement is required for each full-time employee, and a single transmittal may be used for all of the returns filed for the calendar year. Draft forms are expected to be available from the IRS as the reporting deadline approaches. Additionally, employers with 250 or more W-2s are required to submit the form electronically.

Can a third-party organization file the report?

Yes, the law allows employers to use a third party to assist businesses with filing IRS reporting and providing statements to individuals insured by the health plan.

Is there a penalty for non-compliance?

Currently, employers may face penalties for not filing informational reporting. However, the law explains that these fines may be waived for employers that do not file due to reasonable cause, or reduced for errors that are corrected in a timely manner that are not due to reasonable cause.

Where can I learn more?

The Internal Revenue Bulletin: irs.gov/irb/2013-40_IRB/ar16.html
The Federal Register: federalregister.gov/articles/2013/09/09/2013-21791/information-reporting-by-applicable-large-employers-on-health-insurance-coverage-offered-under

To learn more about reporting requirements, read W-2 reporting of employer-sponsored health care, Information Reporting of Minimum Essential Coverage or visit aflac.com/healthcare_reform.

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