November 3, 2015
Beginning with the 2015 calendar year, several information reporting requirements kick in as part of the Affordable Care Act (ACA). These serve several purposes, the most significant of which is enforcement of certain provisions of the ACA. Several forms were finalized recently, as they are required to be used this coming January and February.
The most significant reporting happens on Forms 1095, which are issued by the Health Insurance Marketplace (Marketplace), insurance providers and employers. These forms provide information about the individuals covered by insurance for each month of the year, or report the fact that an employer did not offer coverage to its employees.
A copy of these forms is issued to individual taxpayers, and a separate copy is provided to the IRS for their use in administering and enforcing key provisions of the ACA. This reporting helps the IRS determine whether individuals are subject to a shared responsibility payment (penalty) for not having health coverage throughout the year. They also allow the IRS to determine if an employer is liable for penalties for failure to offer minimum essential coverage or coverage that is not affordable. We recently wrote separate articles regarding the individual mandate and large employer coverage requirements.
Reporting by the Marketplace
Form 1095-A is prepared by the Marketplace for coverage obtained there. In addition to documenting health coverage, this form should be used by individuals to claim a premium tax credit and to reconcile the credit on their returns with advance payments of the credit they might have received. Credit advances are used to lower the premiums paid throughout the year.
Reporting by Insurance Providers and Employers
Form 1095-B is prepared by insurance providers on behalf of all of their business customers, large or small. Small employers offering self-insured plans are also required to prepare Form 1095-B.
Form 1095-C is prepared by large employers, as well as small employers that are commonly owned with other entities that collectively are categorized as large. The form reports both the offer coverage and actual coverage for each month of the year for all full-time employees, whether or not an employee is enrolled in the health plan. Even if no health insurance coverage is offered, Form 1095-C must be completed for each eligible employee. For employers offering self-insured plans, the form should also include any part-time employees enrolled in the plan.
Employer reporting is mandatory for the 2015 year. Similar to W-2s, these forms need to be furnished to employees by February 1, 2016 and to the IRS by February 29, 2016. Non-filers could be subject to penalties of $100 per form.
It’s important to note that insurance companies will typically not have all required information to complete Form 1095-C on behalf of the employer. Also, not all third-party administrators and payroll companies have expanded their services to include completion Form 1095-C. Now is the time to discuss upcoming ACA reporting requirements with your service providers.
Contact Johnson Price Sprinkle PA if you have questions about
reporting requirements under the Affordable Care Act.
Asheville Boone Marion
828-254-2374 828-262-0997 828-652-7044
About Johnson Price Sprinkle PA:
Johnson Price Sprinkle PA is a leading certified public accounting firm in Western North Carolina, providing innovative solutions created specifically for small to mid-sized businesses. With a sixty-year history, JPS has built its practice on providing superior accounting and exceptional service, in taxation, business advisory and assurance, to move clients forward by giving them the power of a national firm with the attention of a community-based one.