The New Year Brings New ACA Reporting Requirements on Employees’ Coverage Status

January 22, 2015

The ACA’s requirement that large employers report the health coverage status of their employees was strictly voluntary for 2014. Not so for 2015. Copies of the forms must be provided to employees by January 31, 2016 for the calendar year 2015 and filed with the IRS shortly thereafter. That means recordkeeping must begin now.

The type of reporting an employer is required to do depends on which category the employer falls into:

  • Section 6055 reporting is required of self-insured employers and multiemployer plans employers. The IRS will use the information in these reports to enforce the individual mandate.
  • Section 6056 reporting is required of large employers, defined as those with 50 or more employees. The IRS will use this information to enforce the employer mandate.

Employers are already required to report on the value of the health coverage they offer employees on W-2 forms, which are wage and tax statements. Ben Lupin, senior regulatory advisor for Towers Watson Health and Group Benefits, calls these forms the “new health care W-2.”

According to Lupin, despite a year-long delay in the employer and individual mandates, prevailing opinion among experts is that there will be no further delays unless Congress passes legislation and President Obama signs it into law, which is unlikely.

“Pay or Play”

The employer mandate to provide health coverage for full-time employees, defined by the ACA as employees who work 30 or more hours per week, creates a “pay or play” decision, which most employers have made already. “Play” meaning to provide health coverage for full-time, active employees – which the vast majority of large employers are doing, and “pay” meaning to not provide coverage.

For employers who “pay,” there are two penalties:

  • The big penalty will be applied when an employer does not cover enough of its full-time employees. “Enough” is defined in 2015 as 70% and will increase to 95% in 2016. Employers subject to the big penalty will have a fine assessed for every employee under 70%.
  • The small penalty will be applied based on an employer’s failure to provide health coverage for a full-time employee. For every full-time person who receives a subsidy from a public exchange, an employer will be required to pay $3,000.

Lupin advises employers not to count on a bill passed by the House earlier this month raising the threshold for full-time employees to 40 hours a week from the current 30 hours. Even if the Senate also passes the bill, President Obama has vowed to veto it.

For more information on employer obligations for reporting, see the IRS website.

One Response to “The New Year Brings New ACA Reporting Requirements on Employees’ Coverage Status”

  1. […] For additional insights from Lupin on the “pay or play” option, see our blog post on the ACA reporting requirements that went into effect on January 1, 2015, here. […]

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: