By Danielle Capilla
Chief Com­pli­ance Offi­cer at Unit­ed Ben­e­fit Advisors

IRSPaperworkApplic­a­ble large employ­ers and self-fund­ed employ­ers of all sizes have now com­plet­ed the first round of required IRS report­ing under the Patient Pro­tec­tion and Afford­able Care Act (ACA). The ACA requires indi­vid­u­als to have health insur­ance, while applic­a­ble large employ­ers (ALEs) are required to offer health ben­e­fits to their full-time employ­ees. In order for the IRS to ver­i­fy that (1) indi­vid­u­als have the required min­i­mum essen­tial cov­er­age, (2) indi­vid­u­als who request pre­mi­um tax cred­its are enti­tled to them, and (3) ALEs are meet­ing their shared respon­si­bil­i­ty (play or pay) oblig­a­tions, employ­ers with 50 or more full-time or full-time equiv­a­lent employ­ees and insur­ers were required to report on the health cov­er­age they offered. Sim­i­lar­ly, insur­ers and employ­ers with less than 50 full time employ­ees but that have a self- fund­ed plan also have report­ing oblig­a­tions. All of this report­ing is done on IRS Forms 1094‑B, 1095‑B, 1094‑C and 1095‑C.

Now that the first set of forms has been com­plet­ed, many employ­ers are won­der­ing what the next steps are. Employ­ers that did not ful­fill all of their oblig­a­tions under the employ­er shared respon­si­bil­i­ty pro­vi­sion (play or pay) might owe a penal­ty to the IRS. A penal­ty will be owed in regard to the 2015 plan year if:

  • The employ­er does not offer health cov­er­age or offers cov­er­age to few­er than 70 per­cent of its full-time employ­ees and the depen­dents of those employ­ees, and at least one of the full-time employ­ees receives a pre­mi­um tax cred­it to help pay for cov­er­age on a Mar­ket­place; or
  • The employ­er offers health cov­er­age to all or at least 70 per­cent of its full-time employ­ees, but at least one full-time employ­ee receives a pre­mi­um tax cred­it to help pay for cov­er­age on a Mar­ket­place, which may occur because the employ­er did not offer cov­er­age to that employ­ee or because the cov­er­age the employ­er offered that employ­ee was either unaf­ford­able to the employ­ee or did not pro­vide min­i­mum value.

As of March 2016, the only infor­ma­tion from the IRS on the pay­ment of these penal­ties is as follows:

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).

If it is deter­mined that an employ­er is liable for an Employ­er Shared Respon­si­bil­i­ty pay­ment after the employ­er has respond­ed to the ini­tial IRS con­tact, the IRS will send a notice and demand for pay­ment. That notice will instruct the employ­er on how to make the pay­ment. Employ­ers will not be required to include the Employ­er Shared Respon­si­bil­i­ty pay­ment on any tax return that they file.

Employ­ers will be noti­fied if an employ­ee who either was not offered cov­er­age, or who was not offered afford­able, min­i­mum val­ue, or min­i­mum essen­tial cov­er­age, goes to the Exchange and gets a sub­sidy or “advance pre­mi­um tax cred­it.” To under­stand this “Employ­er Notice Pro­gram” the appeals process, and how afford­abil­i­ty must be doc­u­ment­ed, request UBA’s newest ACA Advi­sor, “IRS report­ing Now What?

Read more here …