HRB 106 - 1) Finalized ACA Reporting Forms and 2) Employer Appeals to Marketplace (article)
Released February 16, 2015 I Download as a PDF
HRB 106 - 1) Finalized ACA Reporting Forms and; 2) Employer Appeals to Marketplace Determinations
Finalized Versions of ACA Reporting Form 1094 and 1095 Series Note, these are the forms for the voluntary reporting which can be done (but is not required) for the 2014 calendar year. The forms to be used for the mandatory reporting for the 2015 calendar year, which will be due in early 2016, will be issued later this year. Presumably, they will be quite similar to the forms just issued.
In recent days, the Internal Revenue Service (IRS) has issued a number of forms and compliance tools to assist employers subject to the Affordable Care Act’s shared responsibility requirements to comply with the law. Of particular note, the finalized version of the forms used to satisfy the IRC Section 6056 and 6055 reporting requirements, together with the related instructions, have been issued.
These forms, in large part, follow the draft forms and instructions issued in late July and August, 2014, respectively (see CBIZ Health Reform Bulletins, IRS Releases Draft Instructions for ACA Shared Responsibility Reporting and IRS Releases Draft Section 6055 and 6056 Reporting Forms).
Employer Health Insurance Reporting Requirement (IRC §6056)
The IRC Section 6056 reporting requirement is generally accomplished on the Form 1094-C (transmittal) and Form 1095-C (benefit statement) and is used for two purposes. First, it is used to help the IRS determine whether the employer might be at risk for an employer shared responsibility excise tax. Secondly, the forms are used to help the IRS to determine whether an individual is properly entitled to the premium tax credit. Both forms are filed by an employer subject to the ACA’s shared responsibility requirements.
- Instructions for Forms 1094-C and 1095-C (PDF or HTML):
- Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns
- Form 1095-C, Employer-Provided Health Insurance Offer and Coverage
Health Insurance Coverage Reporting by Insurers and Sponsors of Self-funded Plans (IRC§6055)
The IRC Section 6055 reporting requirement is used to verify that an individual has been covered by minimum essential coverage. Generally, it is accomplished by the insurer for an insured plan. An employer/plan sponsor of a self-funded plan subject to the IRC Section 6056 requirements described above can satisfy both Section 6055 and 6056 reporting obligations by completing Part III of the Form 1095-C, rather than using the B series of the forms.
- Instructions for Forms 1094-B and 1095-B (PDF or HTML)
In addition, the IRS released a revised Publication 5196, Affordable Care Act: Reporting Requirements for Applicable Large Employers. This brochure provides a snapshot of the types of information that an employer subject to the ACA’s shared responsibility requirements would need in order to prepare and complete the reporting forms.
Employer Appeals to Marketplace Determinations
Employers may be receiving notification from a Marketplace indicating that one (or more) of their employees applied for Marketplace coverage and was deemed to be eligible for a premium tax credit. The notice may go on to say that the employee’s eligibility for the tax credit is based on a determination that the employer failed to offer affordable minimum essential coverage that meets the minimum value standard, and thus the employer could be subject to the IRC Section 4980H tax penalty.
An employer will have two opportunities to appeal a claim that an individual is not offered adequate and affordable health coverage:
- Appeals to HHS. The first is one that would be triggered upon receiving a notice to that effect issued by a Marketplace. The notification letter may say that the individual has been granted the advanced premium tax credit, based on information the individual provided, stating that employer coverage was not offered. This does not cause the employer to become subject to the excise tax. Nevertheless, the employer can appeal it. The primary advantage to correcting the determination early is that it may relieve the employee from having to pay back an improperly received credit. The HHS regulations provide for an employer appeal process contained in 45 CFR 155.555. There is no standard format for an appeal to HHS. In general, the appeal request should be in writing and submitted within the timeframe indicated in the letter. The type of information to include in the appeal should 1) clearly identify the parties and reference the notice received and, 2) provide the basis for the appeal, i.e., explain when and what coverage was offered and to whom.
- Appeals to IRS. The second opportunity that an employer will get to explain its situation will come from the IRS. It will come after the individual’s tax filing due date and after the employer has filed its IRC Section 6056 filing (which is accomplished on the Forms 1094 and 1095-C, as above). It is based on this information that a potential excise tax would be assessed and the employer would certainly want to respond to that appeal. This information would come sometime in 2016 for instances occurring in 2015. Also see this FAQ from IRS below:
27. How will an employer know that it owes an Employer Shared Responsibility payment?
The IRS will adopt procedures that ensure employers receive certification that one or more employees have received a premium tax credit. The IRS will contact employers to inform them of their potential liability and provide them an opportunity to respond before any liability is assessed or notice and demand for payment is made. The contact for a given calendar year will not occur until after the due date for employees to file individual tax returns for that year claiming premium tax credits and after the due date for applicable large employers to file the information returns identifying their full-time employees and describing the coverage that was offered (if any).
Also noteworthy is a new IRS webpage entitled, “Types of Employer Payments and How They Are Calculated”. The information contained in this webpage is worthwhile reading for employers who want to understand how the ACA shared responsibility penalty process might work.
In summary, an employer should make certain that it has the systems in place to capture the data required for these reports. It will be to the employer’s advantage not only to ensure that any penalties for failure to complete and submit these tax forms be avoided, but also to be able quickly and accurately respond to an IRS inquiry should the need arise.
As a reminder, CBIZ recently launched its CBIZ ACA CheckPoint tool. CBIZ ACA Checkpoint provides employers with the tools to determine whether they are an applicable large employer, track and manage employee measurement periods (initial, standard, stability and administrative), and aid in complying with ACA’s employer shared responsibility reporting requirements. To view a short video demonstration of CBIZ ACA CheckPoint, click here. For more information, contact your local CBIZ consultant.
About the Author: Karen R. McLeese is Vice President of Employee Benefit Regulatory Affairs for CBIZ Benefits & Insurance Services, Inc., a division of CBIZ, Inc. She serves as in-house counsel, with particular emphasis on monitoring and interpreting state and federal employee benefits law. Ms. McLeese is based in the CBIZ Leawood, Kansas office.
The information contained herein is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. The information contained herein is provided as general guidance and may be affected by changes in law or regulation. The information contained herein is not intended to replace or substitute for accounting or other professional advice. Attorneys or tax advisors must be consulted for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.