2016 marks the first year that large employers will have to report on health coverage offered to their staff under the Employer Shared Responsibility provision of the Affordable Care Act (ACA). You are considered a large employer if you employed at least 50 full-time staff members during 2015, including full-time equivalent employees (FTEs). The ACA’s employer mandate, which fines companies who do not offer health benefits to full-time employees, only applied to companies with more than 100 employees for 2015. That means if you employed between 50 to 99 full-time employees or FTEs in 2015, you won’t face fines for not offering health benefits, but you are required to report on any coverage you did (or did not) offer by using new IRS forms.
In order for your company to complete the required forms, it’s beneficial to start gathering information now since it could be scattered across multiple systems and administrative areas. You’ll need the following information to complete the reporting:
- Full-time employee names
- Employee addresses
- Health coverage offered to employee, if any
- Employee’s share of monthly premium
- Number of months employee was enrolled in coverage
- Full-time employee counts by month
- Total employee counts by month
There are two key forms that employers must complete by certain dates in order to report on health coverage provided in the previous year.
Form 1095-C by January 31, 2016: Employers must provide a 1095-C form (Employer-Provided Health Insurance) by mail to the last known permanent address of all employees eligible for coverage in 2015, whether the employee participated in the coverage or not. This form provides details about any coverage offered to the employee, the lowest-cost premium available to them, and the months of the year when the coverage was available. The employee will then attach this form to their tax return for 2015.
Form 1094-C by February 29, 2016: Employers must file a 1094-C form (Transmittal of Employer-Provided Health Insurance) with the IRS by February 29, 2016. This is a cover letter to the IRS and includes information about the employer such as address, phone number, employer identification number, number of employees, and name of a contact person. This form also summarizes the eligible and covered employees that were sent Form 1095-C.
Preparing these forms can be a little intimidating. However, if either of these forms are filed late or are inaccurate, there is minimum penalty of $100 for each. If you are a large employer and use a payroll provider, they’re likely your best resource for assistance with your reporting. Most payroll companies now provide services that track your employee’s eligibility for health benefits and will generate the 1095-C and 1094-C forms, much like they do for your W-2s or 1099s.