The Patient Protection Affordable Care Act (“ACA”) amends the Internal Revenue Code by adding new Section 6056 which requires Applicable Large Employers, beginning in 2016, to file informational returns certifying that the employer has complied with the employer mandate provisions of the ACA. Accordingly, this Update is a reminder to Applicable Large Employers of the filings that will be required by early next year.
Under the ACA, an Applicable Large Employer is one who has fifty (50) or more full-time or full-time equivalent employees. Applicable Large Employer status is determined on an annual basis. Employers should be mindful that the ACA defines full-time as working an average of 30 hours of service per week or an average of 130 hours of service per month. Employers should also be mindful of the ACA’s aggregation rules. An employer who is determined to be an Applicable Large Employer under the aggregation rules will be responsible for filing the informational reports even though the employer may have less than fifty (50) full-time equivalent employees.
Section 6056 and the accompanying regulations provide that the reporting requirement can be fulfilled by filing a separate return for each employee (Form 1095-C Employee Statement) along with a transmittal form (Form 1094-C Transmittal Form). Alternative reporting methods may be available for certain groups of employees. Applicable Large Employers who sponsor a self-insured health care plan are subject to additional reporting requirements pursuant to Section 6055 of the Internal Revenue Code.
Section 6056 requires Applicable Large Employers to include in the report: the employer’s biographical information, a certification as to whether the employer offered its full-time employees the opportunity to enroll in minimum essential coverage in an eligible employer-sponsored health plan, the number of full-time employees for each calendar month, for each full-time employee, the months for which minimum essential coverage was available, the employee’s share of the lowest-cost monthly premium for self-only coverage providing minimum value that was offered to each employee, and biographical information for each full-time employee covered under the employer-sponsored plan. This information must be provided on a month-by-month basis. Employers are also required to furnish a copy of the 1095-C Employee Statement to each employee.
The Section 6056 informational returns must be filed on or before February 28 (March 31 if filed electronically) of the year immediately following the calendar year for which the offer of coverage information is reported. This means that beginning in January 2015, Applicable Large Employers should have begun to track the information required by Section 6056 each month in 2015 for reporting on or before February 29, 2016 (or March 31, 2016 if filed electronically).
Applicable Large Employers are required to furnish each employee a copy of their 1095-C Employee Statement on or before January 31 of the year immediately following the calendar year to which the information relates. This means that for the 2015 calendar year, employees of Applicable Large Employers must be given a copy of their 1095-C Employee Statement on or before January 31, 2016.
The IRS will use the information reported pursuant to Section 6056 to determine employee eligibility for the the premium tax credit pursuant to Section 36B as well as employer assessable payments pursuant to Section 4980H (more commonly known as the “pay or play” and “free rider” penalties).
Applicable Large Employers who fail to comply with the reporting requirements of Section 6056 could face a penalty of $250 per return beginning in the 2016 reporting year. The fine may be reduced if failure to file the return is corrected within 30 days. However, willful failure to comply with Section 6056 may result in a fine of $500 per return.
What Does This Mean For You? Although the first informational reports pursuant to Section 6056 will not be filed until February or March 2016, Applicable Large Employers should be collecting and maintaining the information that must be included on the 1095-C and 1094-C forms.
f you have any questions about this or any other employment or labor law issue, please contact Grace Nguyen Bond at 717-509-7226 or email@example.com or Whitney Rahman at 717-509-7237 or firstname.lastname@example.org.