Very few of us are ready for the new PPACA reporting requirements. Many of us are aware that reports are due at year end, but haven't even looked at the rules. Should we be concerned? The answer depends upon your company size and how your organization funds its group health benefits.

What are we talking about? The requirement mandates applicable large employers (those with 50 or more full-time equivalent employees) and small employers (under 50 full-time equivalent employees) sponsoring self-funded health plans to report on group health coverage offered to employees or to disclose that health coverage was not offered to employees in 2015. There are two reports employers must prepare: (1) an annual information return that is filed with the Internal Revenue Service (IRS), and (2) statements to provide to full-time employees about the group health plan coverage offered. As such:

  • Internal Revenue Code § 6056 requires applicable large employers with fully-funded health insurance to provide the annual statement (IRS Form 1095-C) to each full-time employee detailing the employer's health coverage offer.

  • Internal Revenue Code § 6055 requires employers that provide minimum essential coverage under a self-funded (uninsured) plan to provide the annual statement to covered employees (either IRS Form 1095-B or 1095-C, based on company size).

  • Employers also must file copies with the IRS using one of the Forms 1094transmittal documents.

The new reports are intended to help the IRS administer provisions under the Patient Protection and Affordable Care Act relating to the individual and employer mandates for health coverage. Specifically, the IRS will use information reported by employers to determine:

  • Whether applicable large employers failing to offer affordable minimum value coverage to full-time employees may be subject to potential penalties;

  • If employees are (or are not) eligible for subsidies when they purchase health insurance in the individual health Insurance exchange; and

  • Whether individuals who are enrolled in minimum essential coverage satisfy PPACA's individual mandate.

The bottom line is that these are important tax forms with potentially serious financial consequences to employers. Under the employer shared responsibility provisions of PPACA, often called "play or pay," year-end is when employers tell the government, through these reports, whether or not they chose the "play" option by providing their full-time employees and dependents affordable minimum essential health coverage that satisfies PPACA mandates or whether they may have to "pay" the employer shared responsibility premium penalties outlined in the law. Experts predict that these forms will receive a very high level of scrutiny by the government, so employers need to produce accurate and complete reports.

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