Does your company provide self-insured health coverage to its employees? If so, you will now be required to file an annual informational return with the IRS.
This requirement stems from the Affordable Care Act, and is meant to help the IRS determine compliance with the law’s individual shared responsibility provision. In other words, this filing establishes that an employee receives health care from their employer, and thus meets the requirement for having health insurance coverage.
But what does this mean for businesses? 2015 is the first effective year for this filing, meaning that coverage provided this calendar year must be reported in 2016. No matter the size of your company, if you provide self-insured health coverage to your employees, you are considered a “coverage provider” and are responsible for filing a return to report coverage information.
Here is what coverage providers must provide to the IRS:
- A Form 1095-B, Health Coverage, accompanied by a Form 1094-B transmittal, for each covered employee, no later than February 28 (March 31 if filed electronically) of the year immediately following the calendar year to which the return relates. Filers of more than 250 Forms 1095-B must e-file. The IRS allows and encourages entities with fewer than 250 forms to e-file.
Here is what coverage providers must furnish to employees:
- A copy of the 1095-B to the responsible individual – generally the primary insured, employee, parent or uniformed services sponsor. You may electronically furnish the Form 1095-B.
The IRS allows providers that meet the definition of a large employer (at least 50 full-time equivalent employees on average during the prior year) to report covered individuals on Form 1095-C instead of Form 1095-B. Form 1095-C combines reporting for two provisions of the Affordable Care Act for these employers.
For each covered employee, the employer must provide the following information to the IRS:
- The name, address, and employer identification number of the provider.
- The responsible individual’s name, address, and taxpayer identification number (TIN), or date of birth if a TIN is not available. If the responsible individual is not enrolled in the coverage, providers may, but are not required to, report the TIN of the responsible individual.
- The name and TIN, or date of birth if a TIN is not available, of each individual covered under the policy or program and the months for which the individual was enrolled in coverage and entitled to receive benefits.
Contributed by Ethel A.M. Nawrocki, CPA, a principal in RKL’s Tax Services Group. Ethel specializes in tax, accounting and consulting services for the manufacturing, wholesale, distribution, construction and real estate rental industries.