Preparation time is over: 2015 has arrived, and so too has the Affordable Care Act’s Employer Mandate. Employers must now be able to show they are following the requirements of the law, or pay the price.
This has left many employers questioning what reporting the IRS requires of them, and seeking answers in sections 6055 and 6056 of the Internal Revenue Code. But many may have some difficulty digesting the information. So let’s simplify.
The first step to determining whether or not your company is required to complete 6055 or 6056 reporting is to find out what your ACA employer classification size is. Many employers think this is a cut-and-dry divide of 49 employees or less being classified as “small,” and 50 or more being classified as “large.” But classifications are actually significantly more complex, with plenty of loopholes and asterisks.
To find out which category your company falls into, read our post, “What classification size is my company under the ACA?”
Once you’ve determined if your company is classified as large or small, you’re halfway to figuring out your 6055 and 6056 reporting requirements. The other half is dependent on whether your company has a fully insured medical plan, or if it is self-insured.
Under Section 6055 insurers or plan sponsors are required to file forms 1094-B and 1095-B with the IRS and distribute to their members. Under Section 6056 all applicable Large Employers are required to file forms 1094-C and 1095-C with the IRS and distribute to their employees.
By using the chart or information below, you can determine what is required:
* For small companies that have a fully insured medical plan, congratulations, you are not required to perform any reporting!
* For small companies that are self-insured, you must follow the requirements of section 6055 and provide 1094-B and 1095-B forms for all enrolled persons.
* For large companies that have a fully insured medical plan, you must follow the requirements of section 6056 and provide 1094-C and 1095-C forms for all fulltime employees.
* For large, self-insured employers, you must follow both the requirements of 6055 and 6056.
To ensure proper filing, employers should be keeping track of pertinent employee insurance information on a monthly basis, and not rooting through old records come reporting time the following January.
In reading sections 6055 and 6056, many employers may be delighted to note that the IRS will be offering relief from penalties to companies that incorrectly filed their paperwork for 2015, but who acted in “good faith” to do so. However, this is a gray area that has been untested, and employers may find themselves on the receiving end of a penalty if they can’t prove “good faith” to the federal government’s satisfaction.
If your company has any questions on 6055 or 6056 reporting, or is unsure of how to keep track of records in a way that will satisfy ACA requirements, consultation with a firm such as Creative Benefits is highly recommended to avoid a penalty.
About the author: Angie Plocinik is a Senior Account Manager with Creative Benefits, Inc. She also serves on the company’s Health Care Reform Committee.