CORPORATE TAX | 11/30/2024
Employee health coverage is a cornerstone of many companies’ benefits packages. However, navigating the administrative responsibilities that come with offering health insurance can be challenging. A critical aspect of this process involves understanding the reporting requirements set by federal agencies like the IRS. Is your business required to comply, and what steps must you take? Let’s explore the key questions.
When Does Compliance Begin?
Under the Affordable Care Act (ACA), employers with 50 or more full-time employees, known as Applicable Large Employers (ALEs), must meet specific reporting requirements. These include filing Forms 1094-C and 1095-C to provide details about health coverage offers and enrollment for employees.
- Form 1094-C: Summarizes employee health coverage information and transmits the 1095-C forms to the IRS.
- Form 1095-C: Reports coverage details for each full-time employee and is used to determine eligibility for premium tax credits or penalties under the employer shared responsibility provisions, commonly called the “employer mandate.”
Employers with fewer than 50 full-time employees (including equivalents) aren’t considered ALEs and are generally exempt from these requirements.
What Must Be Reported?
On Form 1095-C, ALEs are required to report the following information for each full-time employee:
- Employee name, Social Security number (SSN), and address
- Employer Identification Number (EIN)
- Employer contact person’s name and phone number
- Description of the coverage offered and applicable months
- Employee’s share of the lowest-cost, minimum-value plan by calendar month
- Safe harbor codes applicable under the employer mandate
Special Considerations for Self-Insured and Multiemployer Plans
For businesses offering self-insured plans, additional information must be reported on Form 1095-C. Employers with multiemployer plans may have different reporting requirements, as the plan sponsor or insurer often handles employee health coverage details. However, ALEs using self-insured plans still file Forms 1094-C and 1095-C, while smaller employers not subject to the employer mandate report using Forms 1094-B and 1095-B.
If your business is part of an aggregated ALE group or uses multiemployer plans, compliance may require a more nuanced approach.
What About W-2 Reporting?
Employers must also report certain health coverage details on employees’ Forms W-2. While these details differ from what’s reported on Forms 1094-C and 1095-C, the information is for compliance and informational purposes only. It does not make employer-provided health coverage taxable.
This is a simplified overview of the reporting requirements. Chartered Consulting can help you understand your obligations and ensure your business complies with these complex regulations. Contact us today for expert guidance and personalized support.