Question 1: Are all companies required to perform employer mandate reporting, or only those that have 50 or more full-time equivalent employees? Employers that have fewer than 50 full-time employees and offer no insurance or fully insured insurance are exempt from the ACA employer shared responsibility provisions and therefore from the employer reporting requirements for the 1095-C and 1094-C. Employers that have fewer than 50 full-time employees and have a self-insured plan need to complete the 1094-B and 1095-B forms for each participant of the plan.
Question 2: When are we required to begin employer mandate reporting? The forms must be filed for first time in early 2016 for the 2015 calendar year. Just like W-2’s, copies of the forms must be provided to employees by January 31. The forms must be filed with the IRS by February 28th if reporting on paper or by March 31st if reporting electronically. Employer mandate reporting must be done annually.
Question 3: We have less than 50 full-time equivalent employees and sponsor a fully-insured health plan. Are we required to do any employer mandate reporting? No, only employers that are an ALE and subject to the employer mandate must file Form 1094-C and Forms 1095-C for each employee.
Question 4: What is an "affordable rate"? Coverage is considered "affordable" if employee contributions for employee only coverage do not exceed 9.5% of an employee's household income. Since most employers do not know an employee's household income, there are three safe harbors in place for determining affordability:Option 1: W-2 Wages Safe Harbor – The amount the employee must contribute towards employee only coverage for a bronze level or higher plan does not exceed 9.5% of an employee's W-2 wages. The W-2 amount to use for the purpose is the amount reported in Box 1 of the W-2 Form. The employer may not add back in salary reductions under a 401(k) plan or cafeteria plan to this amount for the purpose of this safe harbor affordability calculation.
Question 5: What information is not required to be included on the 1094-C and 1095-C forms for companies that sponsor a fully-insured health plan? There are many misconceptions regarding employer reporting requirements for employer mandate purposes. It's important to note that the employer is not required to report the following data items on these forms:
- The length the employer's waiting period
- The amount the employer contributes to the plan
- The reporting of months, if any, during which any of the employee's dependents were covered under the plan (The rules require reporting only regarding whether the employee was covered under a plan).
- Identifying information regarding the employee's dependents, including social security numbers for an employee's spouse or dependents.
- Monthly premium for the lowest-cost option in each of the enrollment categories (such as employee-only coverage or family coverage) under the plan
- months dependents were covered under the plan
- Look-back measurement method used for variable hour employees
Question 6: How do I know if my health plan is self-insured or fully-insured? With a fully funded health plan, employers pay a set premium amount to an insurance company. The insurance company is then responsible for paying health care claim costs as outlined in the plan. Therefore, the employer does not directly pay claims and assumes no risk, as the risk of excessive claims is assumed by the insurance carrier. This is the most common form of employer-based health plans.
With a self-insured plan, instead of using an insurance company to provide health care coverage, the employer directly pays the health care claims of employees. Typically, the employer will have a pool of money set aside to handle the variability in claims from month to month. In this model, the employer may save money that would have been the insruance company's profit, but the employer is also assuming much greater risk of having to pay multiple large claims. This plan is typically only chosen by larger employers.
Question 8: Can we use the general method for all employees, or are we required to use the alternative methods (qualifying offer method, 98% offer method) if we qualify? Both alternative reporting methods are optional so that an employer may choose to report for any or all of its full-time employees using the general method even if an alternative reporting method is available.
Question 9: Are certain employers required to file electronically? Consistent with other tax information reporting requirements, the final regulations require electronic filing of section 6056 information returns (both Forms 1094-C and 1095-C), unless the employer will be submitting fewer than 250 1095-C forms for the calendar year. However, employers of all sizes are permitted to file electronically.