Employer Reporting of Health Coverage —Code Sections 6055 & 6056

Substitute Statements

Substitute forms may be used, as long as they include all of the required information and comply with IRS procedures or other applicable guidance. Entities using substitute forms instead of the official IRS versions may develop substitute forms themselves or buy them from a private printer. Publication 5223, General Rules & Specifications for Substitute ACA Forms 1094-B, 1095-B, 1094-C, and 1095-C and Certain Other Information, explains the requirements for the format and content of substitute statements to recipients. Only forms that conform to the official form and the specifications in Publication 5223 are acceptable for filing with the IRS. Entities may not request special consideration.

DEADLINES FOR FILING WITH THE IRS AND FURNISHING STATEMENTS TO INDIVIDUALS

The Code Sections 6055 and 6056 reporting requirements took effect in 2015. The first returns were due in early 2016 for coverage provided in 2015.

Deadlines for Filing with the IRS

Forms must be filed with the IRS annually, no later than February 28 (March 31, if filed electronically) of the year following the calendar year to which the return relates.

• Due to a delay in IRS Notice 2016-4, for the 2015 calendar year, returns were required to be filed no later than May 31, 2016, or June 30, 2016, if filed electronically.
• For the 2016 calendar year, returns were required to be filed no later than Feb. 28, 2017, or March 31, 2017, if filed electronically. The IRS did not extend the due date for filing 2016 calendar year returns with the IRS (in 2017).

• The IRS also did not extend the due date for filing 2017 calendar year returns with the IRS (in 2018). Therefore, for the 2017 calendar year, returns must have been filed by Feb. 28, 2018, or April 2, 2018 (March 31, 2018, being a Saturday), if filed electronically.

For the 2018 calendar year, returns must be filed by Feb. 28, 2019, or April 1, 2019 (March 31, 2019, being a Sunday), if filed electronically.

Reporting entities may receive an automatic 30-day extension of time to file with the IRS by completing and filing Form 8809, Application for Extension of Time To File Information Returns, by the due date of the returns. The form may be submitted on paper, or through the FIRE System either as a fill-in form or an electronic file. No signature or explanation is required for the extension. Under certain hardship conditions, employers could have also applied for an additional 30-day extension.

Deadlines for Furnishing to Individuals

Each reporting entity must also furnish statements annually to each individual who is provided MEC (under Section 6055), and each of the ALE’s full-time employees (under Section 6056). Individual statements are due on or before January 31 of the year immediately following the calendar year to which the statements relate. Due to a delay in IRS Notice 2016-4, for the 2015 calendar year, individual statements were required to be furnished no later than March 31, 2016. For the 2016 calendar year, IRS Notice 2016-70 extended the due date for furnishing 2016 Forms 1095-B and 1095-C to individuals to March 2, 2017. For the 2017 calendar year, IRS Notice 2018-06 extended the due date for furnishing 2017 Forms 1095-B and 1095-C to individuals to March 2, 2018.

For the 2018 calendar year, IRS Notice 2018-94 extended the due date for furnishing 2018 Forms 1095-B and 1095-C to individuals, from Jan. 31, 2019, until March 4, 2019. The extension applies automatically and does not require the submission of any request or other documentation to the IRS. In view of this automatic extension, the rules allowing the IRS to grant extensions of time of up to 30 days to furnish Forms 1095-B or 1095-C do not apply to the extended due date. Also, because the 30-day extension of the due date to furnish applies automatically, and is as generous as the permissive 30-day extensions of time to furnish 2018 information statements under Section 6056 that have already been requested by some reporting entities in submissions to the IRS, the IRS will not formally respond to those requests.

The final rules do not allow an alternate filing date for employers with non-calendar year plans. Although employers may collect information on a plan year basis, employees will need to receive their individual statements early in the year in order to have the requisite information to correctly and completely file their income tax returns for that year.

However, extensions may be available in certain circumstances. Reporting entities may request an extension of time to furnish the statements to recipients by sending a letter to Internal Revenue Service, Information Returns Branch, Attn: Extension of Time Coordinator, 240 Murall Drive, Mail Stop 4360, Kearneysville, WV 25430. The letter must include: the filer’s name, TIN and address; the type of return; a statement that extension request is for providing statements to recipients; a reason for delay; and the signature of the filer or authorized agent.

A request must be postmarked by the date on which the statements are due to the recipients. If the request for an extension is approved, reporting entities will generally be granted a maximum of 30 extra days to furnish the recipient statements.

MANNER OF FILING AND FURNISHING

Any reporting entity that is required to file at least 250 returns under Section 6055 or Section 6056 must file electronically. The 250-or-more requirement applies separately to each type of return and separately to each type of corrected return. Entities filing fewer than 250 returns during the calendar year may choose to file in paper form, but are permitted (and encouraged) to file electronically. Individual statements may also be furnished electronically if certain notice, consent and hardware and software requirements are met.

Electronic filing is done using the ACA Information Returns (AIR) Program. IRS Publication 5165, Guide for Electronically Filing ACA Information Returns for Software Developers and Transmitters provides very detailed technical information regarding standards for software developers and transmitters that plan to facilitate this electronic reporting through the AIR System. More information on the AIR Program is available on the IRS website.

Waiver of the Electronic Reporting Requirement

A waiver from the requirement to file returns electronically is available in certain circumstances. To receive a waiver, reporting entities must submit Form 8508, Request for Waiver From Filing Information Returns Electronically. Entities are encouraged to submit Form 8508 at least 45 days before the due date of the returns, but no later than the due date of the returns. The IRS does not process waiver requests until January 1 of the calendar year the returns are due.

Reporting entities cannot apply for a waiver for more than one tax year at a time, and must reapply at the appropriate time for each year in which a waiver is required. Any approved waivers should be kept for the reporting entity’s records only. A copy of an approved waiver should not be sent to the service center where paper returns are filed.

If a waiver for original returns is approved, any corrections for the same types of returns will be covered under the waiver. However, if original returns are submitted electronically, but the reporting entity wants to submit corrections on paper, a waiver must be approved for the corrections if the reporting entity must file 250 or more corrections.

Without an approved waiver, a reporting entity that is required to file electronically but fails to do so may be subject to a penalty of up to $260 per return (as adjusted each year), unless it can establish reasonable cause. However, reporting entities can file up to 250 returns on paper; those returns will not be subject to a penalty for failure to file electronically.

APPLICABLE LARGE EMPLOYER HEALTH COVERAGE REPORTING (CODE § 6056)

Code Section 6056 requires ALEs subject to the ACA’s employer shared responsibility rules to file information returns with the IRS and provide statements to their full-time employees about the health insurance coverage the employer offered to its full-time employees. The IRS uses the information provided on the information returns to administer the ACA’s employer shared responsibility rules, which impose penalties on ALEs that do not offer affordable, minimum value coverage to their full-time employees (and dependents).

The employer shared responsibility rules generally took effect on Jan. 1, 2015. The IRS and the ALE’s employees will use the information provided as part of the determination of whether an employee is eligible for a premium tax credit for coverage purchased through an Exchange under the ACA.

ALEs will use the following forms to report under Section 6056, as well as for combined reporting by ALEs who report under both Sections 6055 and 6056:

• Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns; and
• Form 1095-C, Employer-Provided Health Insurance Offer and Coverage.

Affected Employers

The Section 6056 reporting requirements apply to ALEs subject to the ACA’s employer shared responsibility rules. An ALE is an employer that employed an average of at least 50 full-time employees, including full-time equivalents (FTEs), on business days during the preceding calendar year. Full-time employees are those employed, on average, at least 30 hours of service per week. An employee’s full-time status for this purpose is determined under either the look-back measurement method or the monthly measurement method, as described in the employer shared responsibility final rules.

Section 6056 applies to all employers that are ALEs, regardless of whether coverage is offered to full-time employees, and regardless of whether the ALE is a tax-exempt or government entity (including federal, state, local and Indian tribal governments). However, only ALEs with full-time employees are subject to the Section 6056 requirements (and only with respect to their full-time employees). Thus, ALEs without any full-time employees are not subject to the Section 6056 reporting requirements.

Controlled Group Rules

For purposes of Section 6056, related employers are treated as a single employer for determining employer size if they meet certain IRS criteria. Thus, all persons treated as a single employer under Code Sections 414(b), (c), (m) or (o) are combined and treated as a single employer for purposes of determining whether or not the employer has at least 50 full-time (and FTE) employees, and together will be an ALE (called an Aggregated ALE Group). When the combined total of full-time (and FTE) employees meets the threshold, each separate company (or ALE member) is separately subject to the Section 6056 reporting requirements, even if any particular company individually does not employ enough employees to meet the 50-full-time-and-FTE-employee threshold.

However, each ALE (and each ALE member) is responsible for its own reporting obligations. For purposes of the information reporting requirements under Section 6056, each ALE member must file an information return with the IRS and furnish statements to its full-time employees, using its own employer identification number (EIN).

ALEs That Sponsor Self-Insured Plans

ALEs that sponsor self-insured group health plans are also required to report information to the IRS and provide individual statements to covered individuals under Section 6055 about the health coverage they provided during the year. The IRS and individuals will use the information provided under Section 6055 to administer the ACA’s individual mandate.

These ALEs file with the IRS and furnish to employees the information required under both Sections 6055 and 6056 on a single form, using a combined reporting method. This combined reporting method is described in more detail below.

Excluded Employers

Non-ALE employers that are not subject to the ACA’s employer shared responsibility rules are not required to report under Section 6056. Thus, employers that employed fewer than 50 full-time (and FTE) employees during the prior calendar year are not subject to these reporting requirements. However, any employer that sponsors a self-insured health plan is required to report under Section 6055, even if it has fewer than 50 full-time (and FTE) employees.

Reporting Required for All Full-time Employees

Under Section 6056, each ALE is required to report information about the health coverage, if any, offered to its full-time employees (and their dependents), including whether an offer of health coverage was (or was not) made. This requirement applies to all ALEs, regardless of whether they offered health coverage to all, none or some of their full-time employees.

For each full-time employee—regardless of whether health coverage was offered to the employee—the ALE must file a return with the IRS and furnish a statement to the employee reporting whether an offer of health coverage was or was not made to the employee, and if an offer was made, the required information about the offer. Therefore, even if an ALE does not offer coverage to any full-time employees, it must file returns with the IRS and furnish statements to each of its full-time employees to report information specifying that coverage was not offered.

An ALE is not required to file a Form 1095-C for an individual who, for all months of a calendar year, is either not an employee of the ALE or is in a limited non-assessment period (for example, an employee who was hired mid-year and then was in an initial measurement period that continued into the following year). However, for the months in which the employee was an employee of the ALE, he or she would be included in the total employee count reported on Form 1094-C. Also, if the employee enrolled in self-insured employer-sponsored coverage during the limited non-assessment period, the ALE must file a Form 1095-C for the employee to report coverage information for the year.