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The Affordable Care Act requires insurers, self-insuring employers, and other parties that provide minimum essential health coverage to report information on this coverage to the Internal Revenue Service (IRS) and to covered individuals (referred to as “section 6055 reporting”). Large employers (generally those with 50 or more full-time employees) are also required to report information to the IRS and to their employees about their compliance with the employer shared responsibility (“pay or play”) provisions and the health care coverage they have offered (referred to as “section 6056 reporting”).
Who is Required to Report
Only ALEs that are subject to “pay or play” are required to report under section 6056. An ALE is an employer that employed an average of at least 50 full-time employees (including full-time equivalents or “FTEs”) on business days during the preceding calendar year. Thus, employers that employed fewer than 50 full-time employees (including FTEs) during the prior year are not subject to the reporting requirements. (However, any employer that sponsors a self-insured health plan is required to report under section 6055, even if the employer has fewer than 50 full-time employees.)
Companies that have a common owner or are otherwise related generally are combined and treated as a single employer, and so would be combined for purposes of determining whether or not they collectively employ at least 50 full-time employees (including FTEs). If two or more related companies together constitute a large employer under “pay or play,” each employer member must file an information return with the IRS and furnish a statement to its full-time employees, using its own EIN.
Visit our Pay or Play section for additional information on calculating large employer status.
General Method of Reporting
Under the general method of reporting, an ALE must file:
- A separate Form 1095-C (or other form the IRS designates, or a substitute form) for each of its full-time employees; and
- A transmittal on Form 1094-C (or any other form the IRS designates, or a substitute form) for all of the returns filed for a given calendar year.
In an effort to simplify the section 6056 reporting process, certain information required to be reported to the IRS and furnished to full-time employees may be reported through the use of indicator codes rather than by providing more detailed information. The IRS has advised employers to refer to the forms and instructions for further details on the reporting process.
ALEs are permitted to use third parties to facilitate filing returns and furnishing employee statements to comply with reporting requirements. However, this does not transfer the ALE’s potential “pay or play” liability, nor does it transfer the potential liability for the failure to report and furnish statements.
In addition, if a person who prepares returns or statements under section 6056 is a tax return preparer, that person will be subject to the requirements generally applicable to tax return preparers.
If more than one third party is facilitating reporting for employers under common ownership or that are otherwise related, there must be only one section 6056 authoritative transmittal (Form 1094-C) reporting aggregate employer-level data for all full-time employees of the ALE. Additionally, there must be only one section 6056 employee statement (Form 1095-C) for each full-time employee with respect to employment with that ALE.