Starting January 1, 2015, all employers subject to the Affordable Care Act must track, on a month-to-month basis, each full-time employee (generally any employee who averages 30+ hours of service per week per month) and the employee’s share of the lowest cost monthly premium for self-only coverage (if any) by calendar month, among other information. These employers will also have to track the total number of full-time employees for each calendar month. This information will be reported to the IRS annually on a new form (IRS Form 1095-C, which has yet to be released), and employers will be required to file separate 1095-Cs for every person who was a full-time employee in any given month the preceding year (even if that person has since died or is no longer employed).
Anyone whose information is reported has to be furnished with a copy of their individual 1095-C by January 31st of each year starting in 2016 for the 2015 reporting year (the same due date for W-2s). The IRS will use the information reported on the 1095-Cs to determine whether a penalty may be assessed against the employer, and whether an employee is eligible for premium tax credits if the employee tries to purchase coverage on the public insurance exchange.
These reporting requirements affect every “large” employer subject to the ACA, even if the transition relief rules do not require your company to begin offering affordable group health coverage until later in 2015 or 2016 in order to avoid the employer penalties. For example, if you are an employer who has between 50-99 full-time employees/full-time equivalents and you are not subject to the employer penalties until the first day of your plan year in 2016, you still must track and report this data for calendar year 2015.
The scope and detail of the Form 1095-Cs will make reporting a significant burden for most companies. It will require employers to integrate and reconcile data from their payroll vendors, third party administrators and human resource personnel. There are alternative, streamlined reporting methods for full-time employees who receive a “qualifying offer” of coverage for all 12 months of the year. A “qualifying offer” is an offer of coverage to the employee, the employee’s spouse and dependents that meets the ACA’s minimum value standard and the employee’s annual premium cost for self-only coverage does not exceed 9.5% of the federal single poverty level (for 2014, a premium of $1,109 or less). For 2015 only, there are also reduced reporting obligations if your company provided qualifying offers to 95% or more of your full-time employees.
The only employers who need not worry about identifying and reporting full-time employees for each calendar month are those companies that offer at least 98% of all employees (including part-time and temporary employees) the option to purchase group health coverage.
The penalty for failure to file returns for your full-time employees will be $100 per missing or incorrect return, subject to certain monetary caps. All applicable large employers should make certain that they have systems in place to track this data beginning next January so you are not facing a mad scramble to gather everything needed to complete the new forms in January 2016.