ACA Reporting Requirements Will Be Tall Order

By Allen Smith Jan 11, 2016

Even with the extension of filing deadlines for Affordable Care Act (ACA) reporting, employers need to actively prepare for the law’s reporting requirements. The tangled web of reporting requirements can get confusing quickly.

Many employers are pushing to get their Forms 1095 to workers as soon as possible to head off employee misunderstandings when it comes time to file their taxes, said Bob Seng, an attorney with Dorsey & Whitney in Minneapolis.

Employees will use the reporting forms to demonstrate compliance with the individual mandate to purchase health insurance coverage on their individual tax returns. Applicable large employers (ALEs) also need to file certain forms to show compliance with the employer mandate to provide affordable coverage to their employees.ALEs are organizations with 50 or more employees in the previous year, including full-time equivalent employees.

“We expect mass confusion with individuals in insured plans and multiemployer plans who will be receiving more than one Form 1095 for participation in the same plan,” Seng said. “Employers with facts like this would be well-served to have talking points for people who will be receiving phone calls or e-mails from confused participants.”

Compliance Nuts and Bolts

ALEs offering self-insured coverage must complete 1095-C, Parts I, II and III, for employees who enroll in health coverage for any month of 2015, according to Nicole Bogard, an attorney with Seyfarth Shaw in Atlanta. And every ALE will need to complete the Form 1095-C for each full-time worker who was an employee for any month of the calendar year.

Employers with 50 to 99 employees were not subject to the employer mandate in 2015, but still are required to satisfy the reporting requirements, she noted.

ALEs offering coverage through an insured health plan will need to complete Form 1095-C, Parts I and II, but not Part III, she added.The health insurance issuer is required to provide the information about the health insurance to the enrolled employees. So, Part III is left blank and the individual gets the information from Form 1095-B.

For fully insured employer group health plans, it is the health insurance company that needs to complete Form 1095-B. Both the 1095-C and 1095-B are like a W-2 for health coverage, Bogard said.

An ALE may use Form 1095-B instead of Form 1095-C to report coverage of individuals who are not full-time employees, said Gretchen Harders and August Huelle, attorneys with Epstein Becker Green in New York City, in an e-mail.

ALEs with self-funded health plans will file Form 1094-C with the IRS; the health insurance company for insured group health plans will file Form 1094-B with the IRS.

On Dec. 28, 2015, the IRS extended the 2015 filing deadlines for these forms (and no requests for these extensions are necessary) as follows, according to Bogard:

  • Forms 1095-B and 1095-C to insured individuals and employees—March 31, 2016.
  • Forms 1094-B and 1094-C (transmitting all the 1095 forms) to the IRS—May 31, 2016.
  • Forms 1094-B and 1094-C filing electronically to the IRS—June 30, 2016.

Subsidiaries have asked the IRS whether they are to use the employer identification number (EIN) of the parent corporation or the subsidiary on the 1095-C. The EIN of the subsidiary must be used, Bogard said.

“It’s so confusing for employers,” she remarked, adding, “Employers are not ready for this.”


Gary Kushner, president and CEO of HR consultancy Kushner & Company in Portage, Mich., said the most common question he hears about the reporting requirements is perplexed benefits professionals asking, “Really?” Yes, he responds, they really have to make sense of all of the forms, complete and file them too. “After getting over the initial shock, most employers are questioning the proper coding of 1095-C boxes 14 and 16, and the need to collect all of the spouse and children data such as Social Security numbers and birth dates for Part III of the 1095-C,” Kushner added.

He remarked that the 1095-C provides ALEs and self-funded employers of any size with information about:

  • The employer’s offer of coverage.
  • The employee cost-share.
  • Any safe harbor that the employer may use to be considered as having offered coverage that is affordable and meets minimum essential coverage requirements as well as the minimum value of at least 60 percent—that is, the bronze level of coverage or better.

Hefty Penalties

The reporting mandate “is a serious requirement with serious repercussions for not completing and filing the forms with the IRS—$250 per incorrect or unfiled form, up to a $3 million penalty,” Kushner said. The penalty is a total per employer each year.

An extension of the deadline to distribute Form 1095-Cs to employees may be sought by filing Form 8809 for an automatic 30-day extension with the IRS, noted Linda Mendel, an attorney with Vorys in Columbus, Ohio. The extension must be filed by the day the returns are due to the employees. In addition to the ordinary penalties that Kushner mentioned, she said that if there is intentional disregard of the reporting requirements, penalties may be $500 per return, with no cap.

However, Harders and Huelle said, “Employers should keep in mind that, for 2015 reporting, the IRS will not impose penalties on a filer for reporting incorrect or incomplete information if the filer can show that it made good-faith efforts to comply with the information reporting requirements for 2015. Timely filing, therefore, may be more important than 100 percent accuracy as long as employers can prove their good-faith efforts to comply.”

Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.


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