The ACA reporting requirements are enforced by two sections of the Internal Revenue Code. Together, they ensure that employers (and health insurance providers) report health plan details to the IRS and furnish statements to employees annually.
Section 6055 reporting requirements apply to health insurance providers, small employers that sponsor self-funded health plans and other entities that provide minimum essential coverage (MEC). These businesses must complete the 1095-B (and 1094-B transmittal).
Section 6056, on the other hand, is directed toward applicable large employers. It ensures compliance with the ACA – particularly the Employer Shared Responsibility provision – through mandatory information reporting on the 1095-C (and 1094-C transmittal). Basically, if you’re an ALE that doesn’t offer health insurance to your full-time employees and their dependents that is affordable and provides minimum value, you may be subject to penalties.
For purposes of ACA reporting, minimum essential coverage (MEC) refers to a legally definable level of coverage.
You may be penalized if you don’t offer MEC to at least 95 percent of your full-time employees and their dependents, and at least one full-time employee receives a premium tax credit through the health insurance marketplace.
A second type of penalty may be triggered if you offer MEC, as described above, but the coverage wasn’t affordable or didn’t provide minimum value.
Most broad-based medical plans meet the legal parameters for minimum value, where the plan pays for at least 60 percent of covered benefits. Regarding affordability, the premium for the lowest-cost, self-only minimum value coverage should be less than 9.5 percent of an employee’s gross household income. You can use three safe harbor tests to determine if the coverage you’re providing is affordable: 1) Form W-2 Safe Harbor, 2) Rate of Pay Safe Harbor and 3) Federal Poverty Line Safe Harbor.
Medicare part A, most Medicaid programs, CHIP, most TRICARE, most VA programs, Peace Corps and DOD Non-appropriated Fund Programs
In general, any plan that is a group health plan under ERISA, which includes both insured and self-insured health plans
Includes qualified health plans enrolled in through the federally facilitated and state-based marketplaces and most health insurance purchased individually and directly from an insurance company
Generally, any plan that existed before the ACA became effective, and that hasn’t changed
Other health benefits coverage recognized by the Department of Health and Human Services as MEC
Keep in mind: MEC doesn’t include fixed indemnity coverage, life insurance or dental or vision coverage.