Groups will soon need to prepare for 2016 Internal Revenue Service (IRS) reporting requirements on their 2015 health insurance coverage. USHL will be sending an informational letter to all active groups in the fourth quarter of this year; review the information below to prepare yourself for fielding questions:
Beginning in early 2016, the IRS under the Affordable Care Act (ACA) will require groups to report on their Minimum Essential Coverage (MEC) and Applicable Large Employer (ALE) shared responsibility (IRS Code Sections 6055 and 6056). Both of these reporting requirements apply to health care coverage provided in 2015, and preparations will need to begin this year.
What are these reporting requirements referring to?
- Minimum Essential Coverage (MEC) is the health coverage that most U.S. citizens must have in order to avoid tax under the ACA. The penalty tax for not having MEC (or for those not granted an exception) generally starts at 1% of income, but rises thereafter. Most types of health plans qualify as minimum essential coverage, including retiree plans and COBRA coverage. Coverage for "excepted benefits" does not qualify. Examples of "excepted benefits" include coverage limited to dental and vision care, health flexible spending accounts, workers' compensation and coverage only for a specific disease or condition.
- Employer shared responsibility rules (aka "Pay or Play") require large employers to offer "good enough" health plan coverage or risk tax penalty. "Large" generally means having 50 or more full-time and/or full-time equivalent employees (FTEs) during the previous calendar year. The new rules require the employer to report to the federal government whether it has offered "affordable*, minimum value" health plan coverage.
*To qualify as "affordable," the amount an employee would have deducted from his/her paycheck for the lowest-cost single coverage available cannot exceed 9.5% of that employee's pay. Three methods of calculation are approved for determining affordability:
To be considered affordable, the following method selected must not exceed 9.5%:
- Employee's annual premium contribution for employee-only health insurance coverage divided by the employee's current W-2 wages;
- Employees monthly premium contribution for employee-only health insurance coverage divided by the employee's hourly rate of pay x130;
- Employee's annual premium contribution for employee-only health insurance coverage divided by the most recently published poverty guidelines for a single individual as of the first day of the plan year
- Many payroll companies and tax preparers have developed a tracking method to assist employers with this task
What action will be required of groups?
In early 2016, employers must file returns with the IRS and furnish statements to individual reporting coverage information for the 2015 calendar year. 2016 reporting liability related to 2015 coverage is due as follows:
To the employee: January 31, 2016
To the IRS: March 31, 2016 if filing electronically or
February 28, 2016 if filing paper forms
These reporting requirements determine:
- If an employer must pay a penalty for not offering affordable, minimum value health coverage to its full-time employees (employer "play or pay" mandate via Forms 1094-C and 1095-C)
- If an individual must pay a penalty for not having minimum essential health coverage (Forms 1094-B and 1095-B or Forms 1094-C and 1095-C)
- If individuals qualify for tax credits (subsidies) to buy health coverage in the public exchanges/marketplaces (Forms 1094-B and 1095-B or Forms 1094-C and 1095-C)
The charts below indicate forms requiring completion by each group:
Single Employer Plans
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Applicable Large Employer (ALE)
(50+ full-time equivalent EEs)
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Non-Applicable Large Employer (ALE) (under 50 full-time equivalent EEs)
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Self-Funded MEC Plan
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Forms 1094-C and 1095-C for active employees (For non-employees, use 1094-C and 1095-C OR Forms 1094-B and 1095-B)
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Forms 1094-B and 1095-B
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Fully-Insured MEC Plan
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Forms 1094-C and 1095-C, except Part III (Insurer files Forms 1094-B and 1095-B)
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Employer is not required to file (Insurer files Forms 1094-B and 1095-B)
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No MEC Health Plan
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Forms 1094-C and 1095-C, except Part III
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Employer is not required to file
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Multiemployer Plans
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Contributing Employer is an Applicable Large Employer (ALE)
(50+ full-time equivalent EEs)
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Contributing Employer is not an Applicable Large Employer (ALE) (under 50 full-time equivalent EEs)
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Self-Funded MEC Plan
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Multiemployer fund files Forms 1094-B and 1095-B Contributing employer files Forms 1094-C and 1095-C, except Part III (Multiemployer fund may furnish information on multiemployer-plan-eligible employees to contributing employers for these forms) *
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Multiemployer fund files Forms 1094-B and 1095-B
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Fully-Insured MEC Plan
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Forms 1094-C and 1095-C, except Part III (Insurer, not multiemployer fund, files Forms 1094-B and 1095-B)
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Multiemployer fund is not required to file (Insurer files Forms 1094-B and 1095-B)
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No MEC Health Plan
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Forms 1094-C and 1095-C, except Part III
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No reporting is required
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Will USHL provide any assistance with the required reporting?
While every employer must perform this reporting directly, USHL will provide a summary to member groups in January 2016 that can be used to assist in the MEC and ALE reporting. It is important to note that the summary will not be inclusive of benefits not provided by USHL, for which reporting may also be required.
Where can I get additional information?
Affordability Calculator
Questions and Answers On Information Reporting by Health Coverage Providers
IRS forms and instructions:
Form 1094-B: Transmittal of Health Coverage Information Returns
Form 1095-B: Health Coverage
Text of Instructions to 2014 IRS Forms 1094-B and 1095-B
Form 1094-C: Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns
Form 1095-C: Employer-Provided Health Insurance Offer and Coverage
Text of Instructions to 2014 IRS Forms 1094-C and 1095-C
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