Tuesday May 26th, 2015
January 31, 2016 seems so far away, doesn’t it? Yet the very preparation for that day should have begun no later than January 1, 2015. Regulations from the Affordable Care Act (ACA) went into effect on this date that would require marketplaces, issuers and providers of insurance, as well as Applicable Large Employers (ALE) to track data on a monthly basis throughout 2015, including participants, employees and types of coverage offered, to name a few. Forms 1094 and 1095 have been discussed in industry and client meetings all over the country; yet few if any steps have been taken to implement the required technology and mechanism to report and distribute these forms to the IRS, participants and employees.
In question and answer format, we’ll provide some important details to consider when working through these requirements.
Who is the filer of Forms 1094-B & C and 1095-B & C?
The entity who is legally obligated to file is the provider or plan sponsor for purposes of Forms 1094-B and 1095-B. For purposes of Forms 1094-C and 1095-C, the entity who is legally obligated to file is the ALE.
What is the effective date of this requirement?
January 1, 2015. Which means that all providers, issuers, marketplaces and self-funded plans must comply this year. ALEs with 50 or more FTE in 2015, based upon the 2014 look-back, must comply in 2015 and report in 2016. This requirement is separate from when an ALE becomes subject to the employer mandate (ALEs with 50-99 FTEs are not subject to the mandate until 2016, but are still required to file for 2015).
Must the filer be a tax preparer?
No, most filers at the employer level (for small, self-funded plans and ALE) will be someone on either the executive or administrative team. The exception here is if the employer is working with a CPA or third party human capital management or payroll provider that is assisting with the form completion, filing and distribution.
Do I have to read the forms and instructions thoroughly to begin the process?
Absolutely, yes. The IRS states this step is crucial for any provider, plan sponsor or ALE to even begin to understand what they’ll have to do.
Can the forms be completed and mailed prior to the end of 2015?
No. Reporting for the 2015 calendar year means that each of the 12 months must be accounted for on the forms. Any incomplete reporting would require a corrected return. Forms are due to participants and ACA-defined full-time employees by January 31, 2016. Forms are due to the IRS by February 28 if by paper and by March 31 if filing electronically; any ALE who will complete 250 or more forms is required to file electronically.
What address do providers, issuers, plan sponsors and ALE use to mail the 1095-B or 1095-C to the participant or full-time employee’s home?
Regulations state you mail the form to the last known address by first class mail. It would be prudent to obtain an updated mailing address for anyone who cancelled coverage or terminated employment.
Can the 1095-B or 1095-C be provided electronically?
Yes. The provider, issuer, plan sponsor or ALE must have affirmative consent from the recipient to receive these forms electronically.
The purpose of the 1094-B and 1095-B is to enforce the individual mandate by accounting for who is covered by a plan that provides minimum essential coverage. Any individual who is covered for one day of the calendar month is deemed to be covered for the entire calendar month.
The purpose of the 1094-C and 1095-C is to enforce the employer mandate by accounting for who is covered by the plan that provides minimum essential coverage. Further penalties can be avoided by that coverage being deemed affordable and meeting the minimum value standard. Any individual offered coverage must have coverage available every day of that calendar month to be deemed a compliant offer of coverage.
For iSolved HCM solution customers that have both payroll and benefits administration, data from the system will be used to complete these forms. Infinisource will also be filing these forms electronically with the IRS and distributing them to employers.