IRS releases draft forms for Employer reporting of Health Coverage

The Affordable Care Act (ACA) created new reporting requirements under Internal Revenue Code Sections 6055 and 6056.  Under these new reporting rules, certain employers must provide information to the IRS about the health plan coverage they offer (or do not offer) to their employees.

On July 24, 2014, the Internal Revenue Service released draft versions of the following forms that employers will use to report under Sections 6055 and 6056:

1. Form 1094-B:  Transmittal of Health Coverage Information Returns;
2. Form 1095-B: Health Coverage;
3. Form 1094-C:  Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Return;
4. Form 1095-C:  Employer-Provided Health Insurance Offer and Coverage.

Forms 1094-C and 1095-C will be used by applicable large employers (ALEs) that are reporting under Code Section 6056.  Forms 1094-B and 1095-B will generally be used by entities reporting as health insurance issuers or carriers, sponsors of self-insured group health plans not reporting as ALEs, sponsors of multiemployer plans and providers of government-sponsored coverage under Section 6055.  However, a reporting entity that is reporting under Section 6055 as an ALE will file under a combined reporting method, using forms 1094-C and 1095-C. 

According to the IRS, these are draft forms currently and are intended to help stakeholders prepare for these new reporting provisions.

Overview of Sections 6055 and 6056

The Code Sections 6055 and 6056 reporting requirements are intended to promote transparency with respect to health plan coverage and costs. They will also provide the government with information to administer other ACA mandates, such as the employer and individual mandates. 

Reporting for Medium-sized ALEs

On Feb 10, 2014, the Treasury released final rules implementing the ACA's employer shared responsibility provisions.  These final rules include transition relief delaying compliance for medium-sized ALEs for one year, until 2016.  Medium-sized ALEs are those with at least 50 full-time employees but fewer than 100 full-time employees. 

ALEs eligible for this transition relief will still report under Section 6056 for 2015.  As part of this transition relief, the ALE must certify on its Section 6056 transmittal form (Form 1094-C) for calendar year 2015 (that is, for the Section 6056 transmittal form that will be filed in 2016) that it meets the following eligibility conditions:

1. The ALE employs a limited workforce of at least 50 full-time employees (including full-time equivalents), but fewer that 100 full-time equivalents), but fewer that 100 full-time employees (including full-time equivalents) on business days during 2014
2. Between Feb. 9, 2014 and Dec 31, 2014, the ALE does not reduce the size of its workforce or the overall hours of service of its employees in order to satisfy the workforce size condition
3. During the coverage maintenance period (that is, the period ending Dec 31, 2015 or the last day of the plan year that begins in 2015) the ALE does not eliminate or materially reduce the health coverage, if any, it offered as of Feb 9, 2014.