Understanding Employer Reporting Requirements of the Health Care Law

Understanding Employer Reporting Requirements of the Health Care Law

by Clarke & Company Benefits Posted on: February 19, 2015Categories: HR & Compliance   

Under the Affordable Care Act, applicable large employers– those with 50 or more full-time employees, including full time equivalent employees – are required to take some new actions. These employers must file information returns with the IRS and also provide statements to full-time employees about health coverage the employer offered or to show the employer didn’t offer coverage. Information reporting was voluntary for calendar year 2014. All applicable large employers are required to report health coverage information for the first time in early 2016 for calendar year 2015. To be prepared to report this information to the IRS and issue the new Form 1095-C to employees, you’ll need to:

• Determine if your organization is an applicable large employer.
• Determine the kind of health insurance coverage you offered to full-time employees and their dependents, if any.
• Identify who your full-time employees are for each month and track health coverage information in 2015 to help complete new IRS forms.

Are you an applicable large employer?

Your organization is an applicable large employer if you or other entities that must be combined together with your organization (for instance, other members of an aggregated group) employed an average of at least 50 full-time employees, including full-time equivalent employees, on business days during the preceding calendar year. For example, your 2014 employee count determines if you’ll be required to track employee and health coverage information in 2015 to report in 2016. A special rule applies for 2015 for determining if you are an applicable large employer. Under this special rule you may use any consecutive six-month period during 2014, rather than being required to use all 12 months of 2014. Reporting requirements apply starting in 2015 Applicable large employers are subject to certain reporting requirements for full-time employees. The reporting requirements apply to all applicable large employers starting in 2015, even to those employers with special circumstances that qualify for transition relief from employer shared responsibility
payments for 2015. Certain reporting requirements also apply to employers that sponsor self-insured coverage, even if the employer is not an applicable large employer. Which employees count when determining if you’re an applicable large employer Employers average their number of employees across the months in the year to see whether they will be an applicable large employer for the next year. To determine if your organization is an applicable large employer for a year, count your organization’s full time employees, full-time equivalent employees and, if you are a member of a combined group, the full-time employees and full-time equivalent employees of all members of the group for each month of the prior year and then average the numbers for the year. In general: A full-time employee is an employee who is employed on average, per month, at least 30 hours of service per week (or at least 130 hours of service in a calendar month). A full-time equivalent employee is a combination of employees, each of whom individually is not a full-time employee (has fewer than 30 hours of service per week), but who, in combination, are equivalent to a full-time employee. An aggregated group is commonly owned or otherwise related or affiliated employers, which must combine their employees to determine their workforce size. There are many additional rules on determining who is a full-time employee, including what counts as hours of service. For more information on these rules, see the employer shared responsibility final regulations and related questions and answers on IRS.gov.