The Affordable Care Act added two new statutory provisions that require reporting: Section 6055 and Section 6056.

Section 6055

Section 6055 reporting relates to the Individual Shared Responsibility Mandate under ACA (aka the “Individual Mandate”). It allows the IRS to identify those individuals covered under minimum essential coverage (MEC) and the duration of their coverage.

Who is required to report? The “Coverage Provider” is the responsible reporting party.

For fully insured plans, the Coverage Provider is the insurance carriers.

For self-insured plans, the Coverage Provider is the Plan Sponsor.

  • Each employer who “maintains” the plan is responsible for reporting with respect to employees/former employees and their dependents who participate in the plan.  (There are special reporting rules for members of a controlled group that is not an ALE.)
  • Each employer participating in a MEWA constitutes a separate and independent plan sponsor.
  • If a plan is a multi-employer plan, the plan sponsor is the joint board of trustees, association or committee who maintains the plan.

For whom is the responsible entity required to report? Everyone covered under the Covered Provider’s plan that provides MEC at least 1 day during the calendar year needs to be reported. (The plan year of the plan is not relevant.)

This not limited to employees and former employees. It is very broad and includes:

  • Active employees
  • Retired and former employees
  • Qualified beneficiaries on COBRA (covered employee, ex-spouse, dependent child that ceased to be an eligible dependent)
  • Alternate recipients required to be covered via a QMCSO
  • Independent contractors and other self-employed individuals

What is the Coverage Provider required to report? The report must identify each month that the responsible individual and any dependents were covered under the plan at least 1 day. (Do not need to worry about current status, only look at if they had coverage for at least 1 day.)

What is MEC? Minimum Essential Coverage (MEC) is any health plan that provides other than excepted benefits. Affordability is not relevant and minimum value is not relevant.

How does the Coverage Provider report? Reporting is done on Form 1094 and 1095 using either the B-series or C-series.

Covered Providers will prepare the applicable form for each “responsible individual” and his/her covered dependents. A “responsible individual” is generally the person with the enrollment rights.

Which forms need to be used? If the employer is not an ALE member then the B-series forms need to be used.

If the employer is an ALE member, then:

  • C-series must be used if the responsible individual is employed at any time during the year, either part-time or full-time.
  • C-series may be used for any other responsible individual so long as the SSN is known.
  • B-series must be used for any responsible individual for whom the SSN is not known.

How does the Coverage Provider report to the responsible individual? The Form 1095 must be furnished to the last known address of the responsible individual via first class mail. Electronic distribution is allowed if there is advance consent provided by the responsible individual.

Forms are generally due January 31 following the reporting year (a 30 day extension may be permitted upon request). However, the 2015 reporting was automatically delayed until March 31, 2016.

The Form 1095s distributed to the responsible individuals are not required for the filing of taxes, they are informational forms only.

How does the Coverage Provider report to the IRS?

The Form 1094 must be filed with the IRS. Along with the Form 1094 the Coverage Provider will also be submitting copies of the Form 1095s sent to responsible individuals.

  • If the Coverage Provider is filing more than 250, electronic filing is required. Electronic filing is done through AIR. (Information on AIR can be found on the IRS website.)
  • Electronic filing is generally due March 31 following the reporting year (a 30 day extension may be permitted upon request). However, the 2015 filing was delayed until June 30, 2016.
  • Paper filing is generally due February 28 following the reporting year (a 30 day extension may be permitted upon request). However, the 2015 filing was delayed until May 31, 2016.

Section 6056

Section 6056 reporting relates to the Employer Shared Responsibility Mandate under ACA (aka “Pay or Play”). It allows the IRS to verify which employers meet the obligations under Section 4980H and if a penalty needs to be assessed.

Fully insured status or self-insured status does not matter for Section 6056 reporting. If an employer is an ALE member and has at least 1 employee who qualified as a Section 4980H full-time employee then Section 6056 reporting is required.

Who is required to report? Each applicable large employer is required to report.

  • Each member of the controlled group of corporations (“ALE member”) that constitute an applicable large employer is independently responsible for reporting.
  • A third party may file on behalf of an ALE member but the ALE member will remain the responsible entity.

For whom is the responsible entity required to report? Any individual who was a full-time employee at least 1 month during the calendar year needs to be reported. (The plan year of the plan is not relevant.)

What information is required to be reported? The required information will show if an offer of coverage was made, the cost of that coverage to see if it was affordable, and if the responsible individual accepted coverage.

How does the Coverage Provider report? Reporting is done using the Form 1094C and Form 1095C.

How does the Coverage Provider report to the responsible individual? The Form 1095 must be furnished to the last known address of the responsible individual via first class mail. Electronic distribution is allowed if there is advance consent provided by the responsible individual.

Forms are generally due January 31 following the reporting year (a 30 day extension may be permitted upon request). However, the 2015 reporting was automatically delayed until March 31, 2016.

The Form 1095s distributed to the responsible individuals are not required for the filing of taxes, they are informational forms only.

How does the Coverage Provider report to the IRS?

The Form 1094 must be filed with the IRS. Along with the Form 1094 the Coverage Provider will also be submitting copies of the Form 1095s sent to responsible individuals.

  • If the Coverage Provider is filing more than 250, electronic filing is required. Electronic filing is done through AIR. (Information on AIR can be found on the IRS website.)
  • Electronic filing is generally due March 31 following the reporting year (a 30 day extension may be permitted upon request). However, the 2015 filing was delayed until June 30, 2016.
  • Paper filing is generally due February 28 following the reporting year (a 30 day extension may be permitted upon request). However, the 2015 filing was delayed until May 31, 2016.

Determining Who and What to Report

Section 6055 applies:

  • To employers that maintain self-insured plans.
  • To employees that are enrolled in the employer’s self-insured plan at least 1 day during the calendar year.

Section 6056 applies:

  • To applicable large employer members.
  • To employees that are Section 4980H full-time employees at least 1 month during the calendar year.

Step #1: Determine which Section applies to the employer.

Step #2: Determine which Section applies to the employee.

Examples

Scenario #1: Employer has 20 FT employees and does not offer any type of health insurance.

Step #1: Since the employer does not maintain a health insurance plan, Section 6055 will not apply. Since the employer is a small employer, Section 6056 will not apply.

Step #2: Not applicable in this scenario.

Outcome: No reporting is required since the employer does not fall under either Section.

Scenario #2: Employer has 30 FT employees and offers a self-insured health plan. Twenty FT employees enrolled in the health plan and were covered for at least 1 day during the calendar year.

Step #1: Since the employer maintains a self-insured health plan, Section 6055 will apply. Since the employer is a small employer, Section 6056 will not apply.

Step #2: Since 20 FT employees enrolled in the self-insured health plan for at least 1 day during the calendar year, Section 6055 reporting is required for them. Section 6056 reporting is not applicable.

Outcome: The employer will need to report those 20 employees that enrolled in coverage on a Form 1094B and Form 1095B.

Scenario #3: Employer has 500 FT employees and offers a self-insured health plan. 400 FT employees enrolled in the plan and were covered for at least 1 day during the calendar year.

Step #1: Since the employer maintains a self-insured health plan, Section 6055 will apply.  Since the employer is an ALE, Section 6056 will apply.

Step #2: Since 400 FT employees enrolled in the self-insured health plan for at least 1 day during the calendar year, Section 6055 reporting is required for them. Since all 400 of the employees are FT under Section 4980H, Section 6056 reporting is required for them.

Outcome: Both section 6055 and Section 6056 is required. The employer will need to report those 400 employees on Form 1094C and 1095C.