Pursuant to the Affordable Care Act (“ACA”), applicable large employers (ALEs) — those with 50 or more full-time or equivalent employees — must adhere to the ACA’s annual reporting rules to remain compliant regarding group health plan offerings. Also, an employer that sponsors self-insured health insurance coverage, no matter their size and whether or not the employer is an ALE, has information reporting responsibilities as a provider of minimum essential coverage (MEC). Employers report their health plan information to the IRS retroactively, so companies will file their ACA forms regarding their 2022 health plans in spring 2023.
Since these rules are complex and reporting is upon us, this update provides details on these ACA reporting requirements.
ACA Health Coverage Information Reporting Under the ACA employer shared responsibility (ESR) provisions, applicable large employers or ALEs must either offer MEC that is “affordable” and that provides “minimum value” to their full-time employees (and their dependents), or potentially owe an ESR penalty payment to the IRS. The ESR provisions are sometimes referred to as “the employer mandate” or “the pay or play provisions.” The same employers that are subject to the ESR provisions (that is, ALEs) also have information reporting responsibilities regarding MEC offered to employees. These responsibilities require employers to send reports to employees and to the IRS. An employer that sponsors self-insured health insurance coverage – whether or not the employer is an ALE – has information reporting responsibilities as a provider of MEC.
ACA Information Reporting Forms The IRS released the final 2022 forms needed for this ACA reporting. No major substantive changes were made to the forms for 2022 reporting, however additional information regarding these forms may become available once the IRS finalizes the instructions for the forms.
Form 1095-B; Form 1094-B; Draft B Form Instructions
Form 1095-C; Form 1094-C; Draft C Form Instructions
Reporting to Employees and Other Covered Individuals Here’s a quick summary of the employee and individual Form 1095-B/C information reporting requirements:
Insurance carriers must send Form 1095-B to individuals covered under a fully insured plan.
ALEs must send Form 1095-C to full-time employees showing information on the employee coverage offer, and must also send Form 1095-C (with Part III completed) to individuals covered under a self-insured plan (individuals will not receive Form 1095-B).
Non-ALEs must send Form 1095-B to individuals covered under a self-insured plan (individuals will not receive Form 1095-C).
Insurers, self-insuring employers, other coverage providers, and ALEs have until March 2, 2023, to provide Forms 1095-B/C to employees and individuals. This reflects a 30-day extension for providing Forms 1095-B/C to individuals which is automatic for 2023 (employers and providers don’t have to request the extension). The IRS will not grant an additional 30-day extension beyond this deadline.
Filing Forms with IRS Employers/coverage providers must also send the IRS copies of the Forms 1095-B/C information using Forms 1094-B/C. The due dates for filing Forms 1094-B and 1094-C with the IRS are not extended. Employers filing by paper must submit their Forms to the IRS by February 28, 2023. Those filing electronically have until March 31, 2023. Extensions of these filing deadlines are available by filing Form 8809. Employers and coverage providers who are filing more than 250 of these reporting forms are required to file electronically.
Note on State Employer Reporting Requirements Note that insurers and employers in certain states (e.g., California, Massachusetts, New Jersey, Rhode Island, Vermont, and the District of Columbia) that have enacted individual mandates may have reporting requirements similar to the ACA federal requirements. See, for example, the New Jersey website for more information on that state’s employer reporting requirement. In some cases, the federal ACA forms can be used to satisfy these state requirements. We recommend that clients touch base with their ACA reporting vendors to ask whether they will assist with satisfying any relevant state reporting requirements on the client’s behalf.
IRS Resources and Penalty Assessments Employers and plan sponsors should take note of the filing and timing requirements and review the information reporting requirements through IRS resources available at the IRS Applicable Large Employer Information Center. The webpage can be used to understand the Forms 1094/5, to determine ALE status, and as a means to finding additional resources on these complicated filing rules. Employers should also continue to be on the lookout for IRS penalty letters or notices related to past ACA filings and should immediately present any materials received to their ACA reporting vendors, legal counsel, and qualified tax advisers. We note that the IRS continues to assess ACA employer penalties (see Letter 226-J) for previous reporting years and also note that good faith relief from penalties for certain errors on the ACA forms no longer applies. It is important for employers to fully understand their ACA reporting obligations as it is expected the IRS will continue to be less lenient with basic reporting errors.
We will continue to monitor developments under the ACA including the ongoing legislative efforts to develop a common-sense reporting solution to ease what has become an enormously expensive compliance burden for employers. We will provide details on any new or revised employer obligations as they take shape over time.
Should you have questions about this or any aspect of federal health insurance reform, contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.