1 An applicable employee is any employee who, on average, works 30 hours a week (or 130 hours a month) during the measurement period.
2 ACA small employers (less than 50 full time equivalent employees) with self-insured health plans will self-file Forms 1095-B and 1094-B. ACA applicable large employers with self-insured health plans will not file Forms 1095-B and 1094-B at all.
3 An ACA applicable large employer is an employer with 50 or more applicable employees. They are also referred to as ALEs.
4 Electronic filing is required if an employer files at least 250 forms annually with the IRS.
5 Employee copies of Forms 1095-B and 1095-C can be provided to an employee electronically with the employee's consent.
6 To be considered to provide minimum value, a health plan must pay at least 60% of the benefits and provide, at a minimum, unlimited coverage of the following items: ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, including behavioral health treatment, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventative wellness services and chronic disease management, and pediatric services, including oral and vision care.
7 To qualify as affordable, the employee's required contribution for the calendar month for the lowest cost self-only coverage that provides minimum value cannot exceed 9.5% of the safe harbor per month.
Affordable Care Act
What You Need to Know - NOW!
The Affordable Care Act (ACA) imposes significant and complicated information reporting responsibilities on employers starting with the 2015 filing year. These new information reporting requirements will be similar to current Form W-2 reporting in that a form will be prepared for each applicable employee1(Form 1095-B or 1095-C), and these forms will be filed with the IRS using a single transmittal form (Form 1094-B or 1094-C). The purpose of the new information reporting requirement is to provide the basis for IRS enforcement of the ACA's employer mandate, individual mandate, and premium tax credits.
All employers with nonexempt health plans must file these forms. However, which forms are filed is based on an employer's health plan and the number of applicable employees. All employers, regardless of size, with an employer-sponsored group health plan through an insurance company should have Forms 1095-B and 1094-B filed by their insurance company to report individuals covered by their group health plan2. ACA applicable large employers3 must file Forms 1095-C and 1094-C. Forms 1095-C and 1094-C will be self-prepared and self-filed whether an ACA applicable large employer offers an employer-sponsored group health plan through an insurance company or self-insurance, or does not offer a group health plan at all.
What You Need to Do - NOW!
Employers must file these forms with the IRS by February 29, 2016 (if filing by paper) or March 31, 2016 (if filing electronically4). A copy of Form 1095-B and, if applicable, Form 1095-C must be provided to the employee by January 31, 20165. The penalty for not furnishing forms to employees by January 31, 2016, not filing paper forms with the IRS by February 29, 2016, not filing electronic forms with the IRS by March 31, 2016, or filing paper forms when electronic forms should have been filed is $250 per form, with a maximum penalty of $3,000,000 per year.
For proper preparation of these forms, employers must have tracked the following information for all of 2015:
- Whether applicable employees and their dependents were offered minimum essential health coverage that meets the minimum value requirements6 and affordability safe harbor7.
- Each applicable employee's enrollment in health coverage by month, affordability threshold by month, total employees by month, total applicable employees by month, identifying information for the employees and the organization, and information on the health coverage provided and obtained.
- All offers of health insurance that have been rejected by the employee.
Many employers do not know the ACA rules combine multiple business entities into one controlled group when there is common ownership. This results in companies which may not be subject to ACA applicable large employer rules individually but become subject to ACA applicable large employer rules when aggregated. Determining common ownership and ACA applicable large employer status are complicated areas. The following document can assist an employer in making these determinations. However, it is strongly recommended any employer concerned about ACA applicable large employer status or combined business entities rules contact the ACA Compliance Team at Trout Ebersole & Groff, LLP.
ACA Large Employer Determination Chart
How We Can Help - NOW!
Trout Ebersole & Groff, LLP has a knowledgeable and friendly ACA Compliance Team that has worked with employers of all sizes to assist those employers understand their various ACA needs and requirements. Our ACA Compliance Team can work with you to determine your company's situation and present you with various options to meet your needs.
For additional information about ACA Reporting Services, please contact Dan Chodan, CPA, at 717-358-9049 or firstname.lastname@example.org.
For additional information on ACA, visit www.IRS.gov/aca.