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Employer Reporting
Requirements

Whether you're an ALE or a small business, you should be aware of the latest ACA employer reporting requirements.

Essential ACA Guidelines Employers Must Know

The Patient Protection and Affordable Care Act – also known as the Affordable Care Act (ACA) – is the most comprehensive change to the nation’s healthcare system in decades. The goal of the law is to provide coverage to millions of uninsured Americans. This is done through expanded public insurance, as well as federal and state-run health insurance exchanges, also known as “marketplaces.”

Effective January 2016, the Employer Shared Responsibility provision under the ACA required certain employers to provide minimum and affordable health insurance coverage – or pay a penalty. These employers also have information reporting responsibilities, which includes reporting to the IRS details about the coverage – and supplying summary statements to employees. (This two-step process of furnishing copies to recipients by one date – and filing with a government agency by another – is similar to annual 1099 and W-2 reporting.)

In general, the reporting requirements apply to employers with 50 or more full-time employees, self-insured employers (regardless of size) and health insurance providers.

Businesses Affected by ACA Reporting

ACA reporting responsibilities depend on employer size and the type of insurance you offer, whether insured or self-insured.

You need to know your reporting responsibilities if you’re an employer with 50 or more full-time or full-time equivalent employees, a self-insured employer or a health insurance provider. The IRS forms used to report health plan information each year are the 1095-B and 1095-C, along with transmittal forms 1094-B and 1094-C.

For clarification, you’re a self-insured – or self-funded – employer if you pay for medical claims directly instead of paying premiums to an insurance provider.

ACA Reporting Requirements

Do
you have
50 or more
full-time equivelent employees (FTEs)

Do you offer health coverage

Do you offer health coverage

Is your
health plan self-insured

Is your
health plan self-insured

YOU DO NOT NEED TO FILE.
No reporting required.
YOU DO NOT NEED TO FILE.
Your Insurer files forms on your behalf and provides statements to your employees.
YOU NEED TO FILE.

Form 1095-B
(Parts I, III & IV) and Form 1094-B

A copy of
1095-B must be provided to employees.

YOU NEED TO FILE.

Form 1095-C
(Parts I & II) and Form 1094-C

A copy of
1095-C must be provided to employees.

YOU NEED TO FILE.

Form 1095-C
(Parts I, II & III) and Form 1094-C

A copy of
1095-C must be provided to employees.

YOU NEED TO FILE.

Form 1095-C
(Parts I, III & IV) and Form 1094-C

A copy of
1095-C must be provided to employees.

ACA Reporting for Smaller, Self-Insured Employers

If you’re a small business – which the ACA defines as anyone with fewer than 50 full-time or full-time equivalent employees -- your ACA reporting requirements are minimal, if at all.

For self-insured businesses, you need to fill out the 1095-B (and 1094-B transmittal) to report the name, address and Social Security number (or date of birth) of covered individuals.

If you’re a small business that isn’t self-insured, you don’t need to file anything.

ACA Reporting for Applicable Large Employers (ALEs)

The biggest impact with the ACA reporting requirements is with applicable large employers (ALEs) with 50 or more full-time or full-time equivalent employees.

There are specific considerations with this 50-or-more employee calculation, which is covered below. Keep in mind an ALE may be a single entity or consist of a group of related entities (such as parent and subsidiary, or other affiliated entities). If the combined number of full-time and full-time equivalent employees for the group is large enough to meet the definition of an ALE, then each employer in the group (called an ALE member) is part of an ALE – and subject to the Employer Shared Responsibility provision, even if the employer wouldn’t be an ALE separately.

Calculating Full-Time and Full-Time Equivalent Employees

So you think you’re an applicable large employer, but how can you be certain? This is where reviewing the hours of service for your workforce comes into play.

When you’re calculating the full-time and full-time equivalent employees for the preceding calendar year, keep in mind:

For hourly employees, you must count the actual hours worked and hours paid. For non-hourly, salaried employees, you should count either the actual hours worked and hours paid, or use one of two measurements: 1) days worked equivalence, which is 8 hours for each day with at least one hour of service, or 2) weeks worked equivalence, which is 40 hours for each week with at least one hour of service.

With all of the above, you must also include the hours eligible for payment, such as vacation, sick time, disability, jury duty, military duty and other leaves of absence. You’re looking at the hours of service to the employer, not just the hours worked on the job.

Based on recent guidance, however, you can exclude payments made to a current employee under a short-term disability or long-term disability plan when premiums were paid by the employee on an after-tax basis or included in income by the employer.

Becuase it’s more involved, here’s help determining the number of full-time equivalent employees:

3 steps to determine the number of
full-time equivalent employees (FTEs)
for a month:

1

Calculate the total part-time service hours in a month.
(up to 120 hours per employee)

2

Divide the total by 120

3

if this results in a fraction, round down to the next whole number.

example:
7 employees X 20 hours/week= 140 hrs/wk 140 x 4 wks/month=560
if 7 employees work 20 hours/week, the employer would have 4 FTEs.
560 hours ÷ 120 = 4.66
4.66 rounded down = 4 FTEs

Why Tracking Full-time Employees Is Critical

Monitoring your full-time employee count is important not only for determining ALE status, but also because it’s a trigger for when employees are eligible for coverage. When an employee becomes full-time, you must offer minimum essential coverage under the ACA to avoid penalties.

Obviously, calculating employee hours for annual ACA reporting is a huge undertaking. For this reason, you may want to explore dedicated time-tracking software, like TrackSmart. Or you may choose to outsource this responsibility to a payroll vendor or benefits administrator.


Get more details on what the IRS requires with 6055 and 6056 reporting.

 

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