Compliance Update: Employer Reporting of Health Coverage
Under the Affordable Care Act (ACA), specific reporting requirements have been instated over the years that require employers to account for the kind of health coverage they provide their employees with. These reporting requirements are governed by two Sections of the Internal Revenue Code, 6055 and 6056, and each relates to specific health-related topics. These Sections, like others in the Code, are subject to constant changes and updates that must be complied with if employers are to report their health coverage options legally.
In order to ensure your company is complying with new updates, it’s essential to be aware of the changes the Sections have undergone and what those differences mean for your companies’ filing habits this tax season. To better understand these updates, let’s take a closer look at the sections involved and the importance of employer reporting before delving into specific changes.
For more information on ACA compliance in these Sections or to receive a quote, contact Beckham Insurance Group today.
The Section 6055 of the Code applies to those organizations that aid companies in providing Minimum Essential Coverage (MEC) to employees. Those organizations listed in the Section specifically include health insurance issuers, self-insured plan sponsors, and government agencies that provide government-sponsored care.
Unlike Section 6055, Section 6056 concerns itself less with where the coverage is coming from and more with the responsibility roles that lie with Applicable Large Employers (ALE). Typically, these employers are those with at least fifty full-time employees, including those who may not be full-time, but hold positions equivalent to that title.
Importance of Employer Reporting
Employer reporting is an invaluable tool not only for the IRS but for employers and their employees as well. Employer reporting exists to promote more open transparency with healthcare-associated costs and medical plans. It keeps everyone in the same loop about where money is going, how much is necessary for which types of coverage, and which percentages each involved party, employer and employee, are responsible for.
Additionally, with the IRS specifically, employer reporting provides the government with the information it needs to successfully enforce shared responsibility rules and individual mandates to ensure that provided healthcare coverage systems are operating as intended.
According to specific Sections, 6055 and 6056 respectively, every reporting entity must file separate statements for every individual provided with MEC or for every full-time employee of the ALE. Additionally, the entity must also file a single transmittal form for every return they file in a given calendar year.
For those filing under Code Section 6055, Forms 1094-B and 1095-B will be filed. For those filing under Code Section 6056, Forms 1094-C and 1095-C will be most appropriate. Any entities who must file under both Sections will be able to use a combined Form 1094-C and 1095-C.
Determining whether substitute statements are permissible can greatly affect your filing practices. In some cases, the IRS does not allow any form of substitutions, whereas in others it does, so double-checking guidelines can save you a lot of time and hassle. For the most recent ACA compliance standards, substitute statements may be permitted so long as they include all of the necessary information and comply with all existing IRS procedures or alternative guidelines. Keep in mind that even with this allowance, only forms that conform to the specifications of official forms, like in Publication 5223, will be accepted by the IRS.
Deadlines for Filing with the IRS
In most cases, any physical forms you file with the IRS for the previous calendar year must be submitted no later than February 28th, and any digital forms must be submitted by March 31 annually. This means that all documents for last year, 2021, must be submitted physically by February 28, 2022, or digitally by March 31, 2022.
A thirty-day extension may be made available to you automatically if you choose to file a Form 8809 by the original due date in February or March, depending on your submission’s format. No explanation is required for this extension so long as the appropriate documentation is filed, and an additional thirty-day extension may also be available if you qualify under certain hardship conditions.
Deadlines for Furnishing to Individuals
Any employee who is provided with MEC must be furnished with statements annually as well. These are due by January 31 of the year following the calendar year for which the documents are being filed. Proposals are being put forward to grant this furnishing an automatic thirty-day extension as well, but no final decisions have been made at this time.
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At Beckham Insurance Group, our knowledgeable and experienced employee benefits representatives are here to help make your benefits administration as easy and stress-free as possible. Contact us today to learn more about how we can help you build a competitive and comprehensive benefits program.