Employers and insurers can now begin filling out the forms required by the Internal Revenue Service to ensure compliance with the Patient Protection and Affordable Care Act of 2010. As of February 4 of this year, the IRS has finalized the necessary documents and instructions that businesses must use to report relevant information on their employees.
Voluntary filing in 2015
The ACA requires all individuals to have minimum essential coverage status or pay a shared responsibility fee along with their federal income tax return. Employers that provide this coverage to their employees are responsible for alerting the IRS that all individual full-time workers are covered and the business is thus compliant.
While these forms are not required for businesses to fill out and file for the 2014 tax year, they will be required for 2015. That means employers and insurers can file these forms in 2015 voluntarily, but will be required to do so in 2016.
Section Codes and Forms to know
Employers will need to understand the ins and outs of IRS Code Sections 6055 and 6056.
Code Section 6055 applies to insurers, self-insured employers with group health plans and other entities that offer the minimum essential health insurance coverage to employees. Annual returns filed must include information about each individual supplied with health insurance by the business or insurer.
The forms that Code Section 6055 businesses and insurers are required to fill out to transmit the data to the IRS are Forms 1094-B and 1095-B. Form 1095-B is the return form that provides information to the IRS and taxpayers about each individual that receives coverage from a company. Form 1094-B is the transmittal document that the business then uses to send that information to the IRS.
Code Section 6056 applies to large employers. Large employers are considered businesses with 50 or more full-time employees. Under the ACA regulations, these companies must report to the IRS on the type of health care coverage they offer each of their employees. Included in this report must be a list of all full-time employees, the benefits packages offered each and the duration of time the employees have been covered.
The forms that Code Section 6056 businesses and insurers are required to fill out for the IRS are Forms 1094-C and 1095-C. Form 1095-C must be given to employees by January 31 of the calendar year after the year to which the form applies, according to ReedSmith. The employer is then responsible for filing the forms with the IRS by February 28 of the same year. Form 1094-C is the transmittal form that is used to send Form 1095-C to the IRS. If more than 250 Form 1095-C's are to be submitted, businesses must file electronically and will have until March 31 to do so.
Improve the filing process
While these forms do not have to be filed with the IRS this year, it's a wise move to begin working on collecting the data necessary for these reports. Failure to comply can result in steep fines. Businesses should consider integrated human resources technology. A robust platform that offers management solution for payroll, benefits and general HR tasks is essential to making sure the company is ACA compliant year in and year out. With HR technology, benefits administration becomes much simpler. HR professionals can tackle more employee requests, make changes swiftly and ensure documents reach the IRS on time. It's an invaluable tool from which small, midsize and large businesses can benefit.