For many employers, their most direct contact with the Affordable Care Act arrives this winter. Employers with 50 or more full-time-equivalent workers in 2015 must report to the IRS their offer of minimum essential and affordable health insurance to employees.
That means covered employers need to send each employee a Form 1095-C by Jan. 31, then report that information to the IRS by Feb. 29, (paper filings) or March 31, (electronic filings). These information reports are issued to employees and filed with the IRS, similar to a 1099 form. The details:
1095-Cs and W-2s
All staff get W-2s, but not all will get Form 1095-C. Information needed to complete this form likely resides in two departments’ computer systems:and benefits. Since 1095-Cs follow most of the filing rules for W-2s, it’s logical for payroll to take the lead in completing these forms.
What the benefits department knows. All full-time employees of insured employers (including workers who turn down your offer of coverage) must receive forms. If you’re self-insured, any employee who enrolls in the plan must receive a form. So a benefits department must supply payroll with five key pieces of information for each month:
- Full-time employees who have taken up your offer of coverage and those who haven’t
- Full-timers who are in a 90-day probationary period
- For Line 14 reporting, employees’ coverage (self-only or family)
- If you can’t enter Code 1A, Qualifying Offer, on Line 14, the cost of self-only coverage for the lowest cost plan for Line 15
- Each dependent of employees and their Social Security numbers, for employees in your self-insured plan.
What to do with the information you have. The information to complete Line 16 probably resides in your. For each month, you will need to cull the following:
- Employees who weren’t employed on any day of a month (i.e., terminating and new staff)
- Employees who work full time (i.e., 30 hours a week)
- Your affordability safe harbor.
Have an HR communication plan. This first-time delivery of Form 1095-C from you and Form 1095-B from your insurer is bound to generate confusion. It’s HR’s role to formulate a communications strategy to explain these forms, how employees are supposed to read them and what they should do with them.
Good news, bad news. The bad news is that penalties for failing to file Forms 1095-C/1094-C are going up next year. The good news is that the IRS will cut you some slack if your forms are incorrect.
In addition, since 1095-Cs are information returns, you can request an automatic 30-day extension of time to file by completing Form 8809. You may apply to the IRS if you need more time beyond that to provide employees with forms, but the IRS won’t routinely approve those requests.