SECTIONS 6055 AND 6056 REPORTING REQUIREMENTS

The following information is being provided to help summarize the employer reporting requirements and obligations of the 2016 mandatory Affordable Care Act (ACA) reporting under Internal Revenue Code Sections 6055 and 6056. See Highmark's summary of Internal Revenue Code Sections Reporting Requirements for an outline of the responsible entities and what needs to be reported.

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About the Individual Shared Responsibility provision

The ACA includes the individual shared responsibility provision, which requires individuals to have qualifying health care coverage for each month of the year, qualify for a coverage exemption, or make a shared responsibility payment when filing their federal income tax returns.

For purposes of the ACA, qualifying health care coverage is also called minimum essential coverage (MEC).

Sections 6055 and 6056 reporting requirements

On March 5, 2014, the Internal Revenue Service (IRS) released two sets of final regulations addressing information reporting required by the ACA.

The first set of final regulations - Section 6055 reporting - applies to all entities providing MEC and requires them to report health care coverage information to the IRS, and provide a statement to all covered individuals. Entities subject to this requirement include health insurance issuers and sponsors of self-insured health care plans. The information reporting requirements under Section 6055 are first effective for coverage provided in 2015.

The second set of final regulations - Section 6056 reporting - applies to applicable large employers (ALEs), which are generally employers with 50 or more full-time and full-time equivalent employees. ALEs must report health care coverage information to the IRS and provide each full-time employee with a statement containing the same information as the IRS report. The information reporting requirements under Section 6056 are first effective for coverage offered (or not offered) in 2015.

Both reporting requirements are important because they function as key elements in administering the ACA's individual and employer mandates. Section 6055 reporting is needed for the individual mandate; Section 6056 for the employer mandate.

Reporting requirement still applies to mid-size employers

Although mid-size employers (between 50 and 99 full-time employees or equivalents) can take advantage of one year of transitional relief from the employer mandate requirements, delaying compliance until the first day of the employer's 2016 plan year. These employers are still required to comply with the pay-or-play reporting requirement and the individual mandate reporting requirement.

Reporting Penalties

Self-funded employers will be required to prepare an information return (Form 1095-B or 1095-C) for each applicable employee. These returns will be filed with the IRS using a single transmittal form (Form 1094-B or 1094-C).

Employers must file these returns annually by Feb. 28 (March 31 if filed electronically). Therefore, employers will be filing these forms for the 2015 calendar year by Feb. 28, 2016, or March 31, 2016.

Note that electronic filing is required if the employer files at least 250 returns.

A copy of Form 1095, or a substitute statement, must be given to the employee by Jan. 31 and can be provided electronically with the employee's consent. Employers will be subject to penalties of up to $200 per return for failing to file the returns in a timely manner or furnish statements to employees.

Information Highmark will provide

A report including monthly member-level enrollment data is being developed by Highmark to assist self-funded employers with 6055 reporting. Additional information about this report will be communicated later this year.

Resources

The IRS released Affordable Care Act: Reporting Requirements for Applicable Large Employers, which discusses getting ready for monthly tracking and preparing to fill out new IRS forms in 2016.

Highmark's summary of Internal Revenue Code Sections Reporting Requirements outlines the responsible entities and what needs to be reported.

More information

Visit the IRS's Questions and Answers site for more information about Code Section 6055 and Code Section 6056 reporting. Detailed questions should be directed to the client's tax consultant.

Please note that the information in this alert is based on our understanding of the Patient Protection and Affordable Care Act of 2010, as amended, and guidance as of the date of this publication. The chart summarizing the requirements of Code Sections 6055 & 6056 is for general informational purposes only and is not intended to constitute legal advice or a recommended course of action in any given situation, and should not be relied upon in making decisions of a legal nature.