Just because the individual mandate was repealed, doesn't mean that ACA reporting is a thing of the past. Here's what employers need to know.
Since Affordable Care Act (ACA) coverage reporting only happens once a year, each January it always seems like everyone is starting from square one. I get the same questions every year. And I certainly understand. This stuff is a hotbed of confusion. Let’s break it down into understandable segments!
Two Different Mandates
The government tracks two sets of information, with each being used to support different ACA mandates.
Mandate #1: All individuals in the US need to be enrolled on qualified medical coverage – otherwise the individual will need to pay a personal penalty. Even though the personal penalty was lowered to $0 as of 1/1/2019, this reporting is still being required The insurance carrier (or employer) must provide forms to employees and a submission of the data to the IRS. This is called 6055 MEC (Minimum Essential Coverage) reporting and applies to all individual medical and group medical plans regardless of the employer’s size or funding methodology.
Mandate #2: All large employers in the US need to offer qualified, affordable medical coverage to their full time (30+ hours per week) employees – otherwise the employer will need to pay an employer penalty. This is called 6056 ALE (Applicable Large Employer) reporting. The government also uses this data to uncover those individuals who received a Federal subsidy who were not entitled to the funds.
MANDATE #1 – MEC REPORTING – IRS SECTION 6055
Employee 1095-B Forms
The original purpose of this form was for individuals to show proof they had insurance coverage during the tax year in order to avoid the individual mandate penalty. As noted prior, even though the penalty is now $0, the forms still need to be provided to all those covered under health insurance.
Providing the 1095-B Forms
All individuals covered under a fully-insured qualified medical plan will receive a form from the insurance company. If the individual was covered for some months under one insurance company, then other months under a different insurance company, they can expect to receive one form from each carrier providing coverage in2019.
Any employee covered under a self-funded medical plan (including partial self-funded and level-funded plans) needs to receive a form from the employer who provided the self-funded coverage. Another way to think about this: under a self-funded medical plan the employer is considered the “insurance carrier” and therefore must provide the coverage form to their employees just like any other insurance carrier.
Reporting to the IRS – 1094-B Form & Copy of 1095-B Forms
The insurance company (fully insured) or employer (self-funded) must provide the reporting data to the IRS. This includes a “rollup” data form (Form 1094-B) as well as copies of the forms that were sent to members/employees (all Form 1095-Bs).
MANDATE #2 – ALE REPORTING – IRS SECTION 6056
Employee 1095-C Forms
All Applicable Large Employers (ALEs) must provide data to the IRS regarding whether or not they offered coverage, and the type of coverage offered, to each of their full-time employees. Full-time employees are defined as those working either 30+ hours per week or 130+ hours per month. The IRS will use this information to administer the employer “pay or play” mandate, as well as to determine whether an employee who obtained individual coverage on their state health insurance exchange was eligible for an individual premium tax credit (also called a subsidy).
Providing the 1095-C Forms
All employers with 50+ full-time equivalent (FIE) employees during the prior calendar year must provide these forms to full-time employees. For the 2019 calendar year, the employer looks at their average FIE count over all of 2018. If they had 50+ FTE employees on average over all of 2018, then they must complete the 2019 calendar year reporting in early 2020.
Reporting to the IRS – 1094-C Form & Copy of 1095-C Forms
ALEs must provide the reporting data to the IRS. This includes a “rollup” data form (Form 1094-C) as well as copies of the forms that were sent to members/employees (Form 1095-Cs).
Note that if an employer must file both the “B” MEC series of reports (if self-funded) and the “C” ALE series of reports (if a large employer), they will be able to include the “B” and “C” data on one combined form (therefore, they will only have to mail one form to each employee and will only need to do one filing with the IRS).
TIMING OF REPORTING
For calendar year 2019 reporting, there are a few different due dates:
The Bottom Line
Even if your agency does not provide ACA reporting services to employers, it is advisable to understand the different reporting requirements as well as the deadlines. Employers may need some guidance with regard to their ACA reporting obligations, especially self-funded small employers who often think they are exempt from filing ACA forms. Unfortunately, not submitting required forms can lead to hefty employer penalties of $250 per form plus additional fines for “willful disregard” for filing. A small self-funded employer with 20 employees would be staring down at least a $5000 fine for not filing.
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I love numbers. I'm a math geek. I read benefits industry articles and periodicals for relaxation (but, honestly, I'm still a fun gal). I also like to share what I've learned and you'll find it all here.