Dear Jon,

We are a large employer.  I’ve been trying to stay on top of the rules relating to large employers and their IRS reporting obligation under the Affordable Care Act (ACA) but I have a few questions.  Are the reporting forms final yet?  Which employees do I report about and which can I exclude?

Rankled by Reporting Requirements

Dear Rankled,

Final Forms & Instructions Available

In September, the Internal Revenue Service released final 2015 reporting forms and instructions and accompanying guidance (“IRS Q&A”).  Under Section 4980H of the Internal Revenue Code, large employers are required to file a separate Form 1095-C for each of their full-time employees and a transmittal on Form 1094-C for all returns in that calendar year.

Large employers are defined as those with 50 or more full-time employees (including full-time equivalents) in the preceding calendar year.  For more on calculating large employer size, please read the in-depth article that appeared in the November 2014 edition of this magazine.  It can be found on the Western Growers website (www.wga.com/magazine).

Employees Who Receive a Form 1095-C

A large employer must file a Form 1095-C for each employee who was a full-time employee of the employer for any month of the calendar year.  A large employer that sponsors a self-insured plan must file a Form 1095-C for each employee who enrolls in the self-insured health coverage or enrolls a family member in coverage, regardless of whether the employee is a full-time employee in any month of the calendar year.

An employee is a full-time employee for any month of the calendar year if he or she averages at least 30 hours of service per week.  Under the final regulations 130 hours of service in a calendar month is treated as the monthly equivalent of at least 30 hours per week.

Employees Who Do Not Receive a Form 1095-C

According to the IRS Q&A the following employees are examples of those who would not receive a Form 1095-C

•    An employee who was not a full-time employee in any month of the year; or

•    An employee in a limited non-assessment period for al 12 months of year (for example, a new variable hour employee still in an initial measurement period).

For more on the definition of the limited non-assessment periods, see the Form 1095-C instructions.  Please note that initial measurement periods are used only by employers who have implemented the ACA’s Look-Back Rules.  The Look-Back Rules allow employers more flexibility to determine which employees qualify as full-time time and allow an employer to measure seasonal, part-time and variable hour employees over periods of up to 12 months to make this determination.

Implications

Large employers will file Form 1095-C Forms for each employee working at least 30 hours a week or 130 a month (save for the limited exceptions noted above).  This administrative burden will require immediate attention because the failure to file will trigger serious and substantial penalties of $250 per return capped at $3 million.  If the failure to file relates to the information return (the forms filed with the IRS) and a payee statement (the Form 1095-C required to be furnished to full-time employees), the penalty is doubled.  If the failure is due to intentional disregard, the $250 fine is doubled to $500.  It is imperative that large employers make sure their reporting obligations are in compliance.

For more information about this article or if you have other questions about health care reform, contact our Health Care Reform team today at [email protected] or 800-333-4WGA.  Write to Dear Jon at [email protected].  For more information and resources on Health Care Reform, visit www.wgat.com/health-care-reform.