ACA Reporting Requirements: Tips for What’s Ahead in 2016

By Penny C. Wofford © Ogletree Deakins Oct 1, 2015

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Update: Deadlines Extended for ACA Reporting

Employers subject to the Affordable Care Act’s 2015 information reporting requirements were given extra time to give these form to employees and file them with the government. In Notice 2016-4, issued by the IRS on Dec. 28, the agency extended the information reporting due dates. See the SHRM Online article IRS Extends Due Dates for ACA Information Reporting.



More than five years after its enactment, the Affordable Care Act (ACA) continues to be one of the top concerns for employers, and rightly so: the ACA is one of the most comprehensive laws impacting employee benefits since the Employee Retirement Income Security Act (ERISA) of 1974.

Phased implementation of the ACA requirements has kept employers consistently busy over the last few years, but there is still more to come. Throughout the end of 2015 and into the first half of 2016, employers will continue to focus on the employer shared responsibility provisions of the ACA, tackle the new reporting requirements (not an easy feat, to say the least), and begin planning for the “Cadillac” plan tax.

Here is a simplified cheat sheet and some tips for what’s ahead.

Employer Shared Responsibility

The employer shared responsibility provisions—also known as the employer coverage mandate—are the employer penalty provisions under the ACA. Penalties apply if an employer fails to offer minimum essential coverage that is affordable and provides minimum value to full-time employees working at least 30 hours per week.

Employers with 100 or more full-time or equivalent employees (when adding together part-time employees' hours) are subject to the employer shared responsibility provisions in 2015.

Employers with between 50 and 99 full-time or equivalent employees (“mid-size employers”) are subject to employer shared responsibility in 2016.

These employers must submit ACA information reporting forms to the IRS on or before Feb. 29 by mail (Feb. 28 being a Sunday), orfile electronically by March 31. Employers filing 250 or more forms must do so electronically.

To prepare for employer shared responsibility, mid-size employers should:

Identify full-time employees based on the ACA definition of full-time (those who average 30 hours of work per week in one month), considering special classifications such as staffing employees, independent contractors, temporary or short-term employees and even interns.

Assess whether the monthly measurement method or look-back measurement method to determine full-time status is best based on the nature of the company’s workforce.

Update plan documents and summary plan descriptions (SPDs) if necessary for the measurement method selected.

Determine the appropriate safe harbor the company will use for the affordability calculation: W-2, rate of pay, or federal poverty line.

Large employers subject to the ACA’s employer shared responsibility provisions this year should closely monitor their processes to ensure accurate implementation of the ACA’s measurement method and affordability calculation and document offers and waivers of coverage. Penalties will not be assessed until after employer reporting and individual tax filings in 2016, but once a penalty is assessed, there is no retroactive correction. If an employer finds a gap in its processes or a mistake, it should take steps to correct immediately to reduce the amount of potential penalties.

Reporting Requirements

The ACA’s reporting requirements apply to all employers with 50 or more full-time or equivalent employees for calendar year 2015. There is no extra year of relief from reporting for mid-size employers, as there is under the employer shared responsibility provisions. Mid-sized employers can find solidarity (and probably empathy too) with their fellow larger employers because they are all tackling this requirement together on the same schedule.

It is easy to get lost in the confusing numeric labels given to the ACA’s reporting requirements. There is Section 6055 reporting and Section 6056 reporting—and each of these reporting requirements are accomplished on either Internal Revenue Service Tax Form 1094-C, 1095-C, 1094-B or 1095-B.

To simplify, here is what is generally required for employers:

Regardless of whether sponsoring or participating in a fully insured or self-funded plan, employers will complete the “C” reporting. The “B” reporting is for insurance carriers (with some exceptions).

As noted above, applicable large employers must submit ACA information reporting forms to the IRS annually by Feb. 28 or file electronically by March 31.

Employers will complete Form 1095-C for each full-time employee and distribute to full-time employees (very similar to Form W-2 requirements and actually on the same distribution schedule) by Jan. 31 of each year.

Employers will transmit all these individual 1095-Cs to the IRS along with Form 1094-C. (Think of 1094-C as a cover sheet.)

The forms themselves are not easy to complete. There is a system of codes that an employer must use on various lines of the forms to tell the story of the employee’s employment and health coverage with the employer during the 2015 calendar year.

Cadillac Tax

What has become known as the “Cadillac” plan tax is a nondeductible 40 percent excise tax charged to employers on the cost of health coverage that exceeds certain annual limits. The Cadillac plan tax does not begin until 2018, but it is one of the more controversial provisions of the law since it in essence penalizes employers that offer benefit-rich plans to employees.

There is a lot of talk and some significant support for the repeal of this part of the law, but the IRS is proceeding with regulations that define how the tax will work. Employers will want to stay tuned to the debate on this provision and consider what alterations they may need to make to plans to avoid the potential tax.

Penny C. Wofford is a shareholder in the Greenville office of Ogletree Deakins. © 2015 Ogletree Deakins. All rights reserved. Reposted with permission.

Minor editing has been made, and some additional hyperlinks were added, by SHRM Online.​

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