Just when you thought the employer requirements pertaining to the ACA were subsiding, 2016 ushers in a whole new wave of employer responsibilities. More commonly known as the “ACA Pay or Play” provisions, the new rules require employers to validate whether they provide health insurance, who is enrolled, and if the plan is considered affordable. Lots of rules and new reporting requirements. Get used to hearing the terms, “1094-C and 1095-C.
Who must comply with the new rules?
The ACA targets employers who are considered an Applicable Large Employer (ALE). Just when you thought we couldn’t create another acronym in the health insurance business, the government just did. An ALE is an employer who has 50 or more full-time equivalent employees. Full-time equivalents are both your full timers and part timers, added together.
The good news: An employer who has more than 50 and less than 100 might be eligible for transition relief in the 2015 plan year reporting. The bad news: you should be identifying whether you are an ALE for plan year 2015 or getting prepared for 2016.
If your company had 100+ full time equivalents in 2014, you must report this information to the IRS on new tax forms, 1094-C and 1095-C, in 2016. Forms 1094-C is basically a monthly accounting summary of your total headcount. Each month, you must track the number of full-time employees, total headcount , and whether Minimum Essential Coverage was offered.
Form 1095-C is based upon each calendar month but gathers the following data:
Did the employer offer coverage?
What is the employee’s share of the lowest cost plan (monthly payroll deduction)
Whether an applicable Safe Harbor was used- we generally recommend W2 income
The 1095-C form is sent to the employee by January 31st, 2016 similar to the W2 requirements. Yes, lots of work to do and lots of head counting. The 1095-C forms are used to confirm whether the coverage was affordable, or whether the employee is eligible for a premium tax subsidy if the employee wishes to enter the Healthcare Marketplace during Open Enrollment.
One could surmise, the employer is doing lots of work for the federal government, but the government has no idea, who the employer is, and whether the employer offers healthcare coverage, offers affordable health insurance. The goal is also to confirm subsidies. Up until now, it’s really been the wild, wild, west with respect to documentation. There really has been no check and balance against someone lying on a Healthcare Marketplace Application and stating they were not eligible for health insurance or they paid lots of premium, therefore, obtaining a premium tax subsidy.
Where do I get the forms? You can download the forms by going to www.irs.gov/pub/irs-pdf/f1094c.pdf.