If you employed an average of 50 or more full-time employees (including full-time-equivalent employees) in 2015, or if you offered a self-funded health insurance plan last year, deadlines are quickly approaching for you to file new forms with the IRS under the health care law: Forms 1095-B (Health Coverage) and Forms 1095–C (Employer-Provided Health Insurance Offer and Coverage).
Recognizing the complexity of these massive new reporting requirements, the IRS late last year extended the filing deadlines to May 31 for covered businesses that file paper returns, and June 30 for employers who file electronically. Groups that file 250 or more returns are required to file electronically.
What is a 1095 form?
The 1095 forms are aimed at helping the government enforce the Affordable Care Act’s employer and individual mandates, including identifying whether certain large businesses make offers of health care coverage to full-time employees. The forms also help determine which individuals may qualify for federal tax help to buy health insurance through government-run exchanges.
The Treasury Department and IRS first unveiled the forms in regulations issued in March 2014 to implement the ACA’s information-reporting rules for insurers and certain employers. The information-reporting requirements take effect for calendar year 2015, with reporting beginning in 2016.
The 1095 forms collect information required under new sections 6055 and 6056 of the tax code. Section 6055 requirements apply to any entity that offers a health plan, such as self-insured employers and health insurers, and tell the IRS who was enrolled in coverage and for what month. Section 6056 requires businesses that employ 50 or more full-time-equivalent employees to certify whether they offered minimum essential coverage (MEC) to full-time employees.
Employers who offer MEC to employees during a calendar year are required to report to the IRS certain information about individuals covered by MEC and also to provide a statement to those individuals.
What is the difference between Form 1095-B and Form 1095-C?
The 1095-B and 1095-C forms are similar in that they report information to the IRS and furnish information to taxpayers about health care coverage.
- Self-funded employers with fewer than 50 full-time-equivalent employees in 2015 use the Form 1095-B to report their offer of MEC to the IRS. The 1095-B is also used by other entities that offer MEC, such as providers of government plans (e.g., Medicare and Medicaid) and sponsors of multiemployer plans.
- Form 1095-C must be filed with the IRS by employers with 50 or more full-time-equivalent employees. These businesses are known as applicable large employers (ALE) under the ACA. Applicable large employers were required to furnish Form 1095-C to all full-time employees by March 31, 2016. ALE members have until May 31 (or June 30, for electronic filers) to transmit summary information and all Forms 1095-C to the IRS. (Businesses transmit Form 1095-Cs to the IRS using Form 1094-C.)
ALE members use the 1095-C for the combined reporting of MEC (under section 6055) and the offer of coverage (under section 6056) to the IRS. Reporting requirements depend on whether your business offers a self-funded or fully insured plan. ALE members who offer self-funded plans complete Parts I, II and III of the 1095-C. ALE members who offer fully insured plans complete Parts I and II, with their health insurer separately reporting information to the IRS about minimum essential coverage
Because this is the first year the reporting rules are in effect, and since so many questions remain about the requirements, the IRS says employers that put forth a “good-faith effort” will be considered to be in compliance for this year even though there may be errors in their filing.