Armanino Blog

IRS Releases Latest Rules On ACA Reporting

by Dan Jones
March 14, 2014

The IRS has released a combined reporting form and simplified reporting methods to comply with recent ACA requirements.

Quick Review of Reporting Requirements
The ACA enacted Internal Revenue Code (IRC) Sec. 6055, which requires health care insurers—including self-insured employers—to report to the IRS about the type and period of coverage provided and to provide this information to covered employees in statements. The information must be reported by Jan. 31 (March 31, if filed electronically) of the year following the calendar year in which the coverage is provided (i.e., reports are due January 31 or March 31, 2015, for calendar year 2014).

The ACA also enacted IRC Sec. 6056, which requires midsize-to-large employers (Those with at least 50 full-time employees (FTEs), including the FTE equivalents) to report to the IRS information about what health care coverage, if any, they offered to FTEs. Employers must report this information no later than February 28 (March 31, if filed electronically) of the year following the calendar year to which the Section 6056 reporting relates (i.e., reports are due February 28 or March 31, 2015, for calendar year 2014).

The IRS will use this information to determine whether a tax penalty will be assessed under the ACA’s employer shared-responsibility (also known as “pay-or-play”) provision because a large employer either:

  1. Didn’t offer “minimum essential” health care coverage to its full-time employees (and their dependents), or
  2. The coverage offered wasn’t “affordable” or didn’t provide “minimum value”
  3. And at least one full-time employee received a premium tax credit for purchasing coverage on an insurance exchange

Sec. 6056 also requires large employers to furnish related statements to employees that the employees can use to determine whether, for each month of the calendar year, they can claim a premium tax credit.

New Reporting Form
The latest regs provide for a single, combined form (Form 1095-C) for the information reporting to the IRS. “Small employers” with fewer than 50 FTEs (or FTE equivalents) are exempt from the employer shared-responsibility provision and exempt from the Sec. 6056 employer reporting provision. (If these employers are self-insured, they will, however, still be subject to Sec. 6055 reporting, which requires a different form).

Form 1095-C will have two sections. The top section will collect the information needed for Sec. 6056 reporting, and the bottom section will collect the information for Sec. 6055. Self-insured employers subject to the shared-responsibility provision will complete both parts of the form. Employers that are subject to the shared-responsibility provision but don’t self-insure will complete only the top section. NOTE: Electronic filing is required for employers filing 250 or more reports.

The ACA requires the reporting of some information that isn’t relevant to individual taxpayers or the IRS for purposes of administering the premium tax credit and the “pay-or-play” tax penalty. The latest rules omit these requirements, as well as requirements for providing certain information that is already provided through other means. The omissions below are intended to minimize the cost and administrative steps associated with the ACA reporting requirements:

  • The length of any waiting periods for coverage
  • The employer’s share of the total allowed cost of benefits provided under the plan
  • The monthly premium for the lowest-cost option in each of the enrollment categories (for example, self-only coverage or family coverage) under the plan
  • The reporting of months, if any, during which any of the employee’s dependents were covered under the plan (The rules require reporting only regarding whether the employee was covered under a plan)

The Simplified Reporting Alternative
The latest IRS rules also include a simplified reporting option for employers that provide a “qualifying offer” to any of their FTEs. A “qualifying offer” is an offer of minimum-value coverage that provides employee-only coverage at a cost to the employee of no more than 9.5% of the federal poverty level (about $1,100 in 2015), combined with an offer of coverage for the employee’s dependents.

If an employer provides a qualifying offer, it need only report the names, addresses and taxpayer identification numbers of those employees who receive qualifying offers for all 12 months of the year, as well as the fact that they received a full-year qualifying offer. The employer also must provide the employees a copy of that simplified report or a standard statement indicating that the employees received a full-year qualifying offer. For employees who receive a qualifying offer for fewer than all 12 months of the year, employers can report to the IRS and employees for each of those months by simply entering a code indicating that the offer was made.

In additional welcome news for employers, the latest IRS rules provide a phase-in for the simplified option. Employers that certify that they’ve made a qualifying offer to at least 95% of their FTEs (plus an offer to their dependents) can use an even simpler alternative reporting method for 2015. Specifically, they can use the simplified reporting method for their entire workforce—including any employees who don’t receive a qualifying offer for the full year. Such employers will provide employees with standard statements relating to their possible eligibility for premium tax credits.

The latest regulations also give a small number of employers—those that certify that they offered affordable, minimum-value coverage to at least 98% of the employees on whom they’re reporting—the option to avoid identifying in the report which of its employees are full-time, and instead, include in the report only those employees who may be full-time.

Transitional Relief
Although the latest regulations apply to calendar years beginning with 2015, they also provide some short-term relief from penalties for employers that can show they have made good-faith efforts to comply with the information reporting requirements. In addition, as the IRS continues to clarify regulations that will substantially streamline information-reporting requirements related to ACA compliance, we’ll be releasing additional information.


March 14, 2014

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Dan Jones - Partner, Tax - San Ramon CA | Armanino
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