6055 / 6056 Reporting
Certain employers will be required to report information about their employees’ and their health care coverage to both employees and the IRS each year.
Internal Revenue Code (Code) Section 6055 requires every entity that provides Minimum Essential Coverage (MEC) to file an annual return reporting specific information for each covered individual. The 6055 reporting is applicable to insurers of insured major medical plans and plan sponsors of self-funded plans. Employers of any size that sponsor Minimum Essential Coverage must submit this report. As a general matter, only major medical coverage is considered Minimum Essential Coverage. Statements must also be provided to each individual whose name and information are reported on the annual return.
Under Code Section 6056, every employer that employed on average at least 50 full-time equivalent employees on business days during the preceding calendar year (“large employers”) must file a return that reports the terms and conditions of the health care coverage provided to the employer's full-time employees during the year. In addition, the report is required to include and certify detailed and specific information on the employer's full-time employees, including those who received the coverage and when they received it.
Large employers are responsible for the Section 6056 reporting regardless of whether the health care coverage is fully insured or self-funded. All employers in a controlled or affiliated service group are combined for purposes of deciding if the employer is “large”, but each employer in the group must file the Section 6056 report separately.
Under both 6055 and 6056, the first reporting will be for calendar year 2015 (regardless of plan year), and will be due in 2016. They are due to covered individuals by January 31 and to the IRS by February 28, or March 31 if filed electronically. Insurers will be responsible for the reporting requirements for insured plans under Section 6055 via Form 1095-B. Employers sponsoring insured plans will be responsible for the reporting under Section 6056 via Form 1095-C. Large employers that sponsor self-funded plans are required to report the information required under both Section 6055 and 6056 on a single combined form using Form 1095-C. Final regulations along with draft forms and instructions (available in the Additional Resources box below) have been published for review and comment.
6055/6056 Reporting Hot Topics & FAQs
- IRS Issues Delay in Requirement to Furnish Form 1095 under ACA
On Friday November 18, 2016, the Internal Revenue Service (IRS) announced an extension of the deadline to issue Forms 1095-B and 1095-C to individuals and employees for the 2016 tax year. The notice also extends the good-faith transition relief which was available for the 2015 Patient Protection and Affordable Care Act (ACA) filings to the 2016 information-reporting requirements.
The extension is welcome news for employers struggling to gather and analyze the data required to create Form 1095. We urge you to make the most of this extra month and to keep working diligently to compile the information required to meet the March 2nd deadline. The extension of time to furnish 2016 Forms 1095-B and 1095-C will occur automatically and no request needs to be sent to the IRS. The IRS firmly stated that no further extensions to the due date for furnishing the 2016 Form 1095-B and the 2016 Form 1095-C to individuals will be available for the 2016 reporting period. In fact, the IRS will not formally respond to any such requests.
There are two components to information reporting under the ACA: furnishing statements to employees, responsible individuals and the IRS using Form 1095, and filing with the IRS using Form 1094. Employers should note that the IRS did not extend the deadline for health coverage providers and employers to file Forms 1094-B and 1094-C (together with copies of all individual 1095 statements). Employers must still file Form 1094, with IRS copies of all Forms 1095 issued to employees, by February 28, 2017 (if filing on paper), or March 31, 2017 (if filing electronically). Extensions to this deadline may be requested by filing IRS From 8809 as soon as you know that a 30-day extension of time to file is needed, but no later than the filing deadline.
The notice also explains that some individual taxpayers may not receive a Form 1095-B or Form 1095-C by the time they are ready to file their 2016 tax return. Taxpayers do not need to wait to receive Forms 1095-B and 1095-C before filing their returns. They may rely on other information received from their employer or other coverage provider for purposes of filing their returns, and should keep this information with their tax records (but need not submit it with their tax return).
- IRS Releases Final ACA Forms and Instructions for 2016
The IRS recently released the final forms and instructions large employers will use to meet their 2016 Employer Mandate reporting obligations under the Patient Protection and Affordable Care Act (ACA). Employers may now view final version of the following:
• Form 1095-C: individual employee statement used to report details of the health coverage offered to each employee who qualified as full-time under the ACA during 2016 and, for self-funded coverage, to report 2016 enrollment information for all participants covered under a self-funded plan.
• Form 1094-C: transmittal form used to report aggregated employer-level information on a month-by-month basis, including full-time employee count and whether the employer offered coverage during 2016 to “substantially all” full-time employees as defined by the ACA.
The IRS also released final instructions for use in completing the 2016 forms. While the final instructions are substantially similar to the draft version released earlier this year, employers should take note of the following changes:
• Requests for a Waiver of the Electronic Filing Requirement: to request a waiver of the electronic filing requirement for filers of 250 or more Forms 1095-C, an employer must submit Form 8508 to the IRS at least 45 days before the due date of the return. Waiver requests will not be processed until January 1, 2017.
• Increased 2016 Penalty Amounts: each failure to distribute a Form 1095-C employee statement to employees and/or to file a copy of each statement with the IRS using Form 1094-C is subject to a penalty of $260/violation, up to a cap of $3,193,000.
• New Conditional Offer Codes for Form 1095-C: new codes 1J and 1K may be entered on line 14 of the 1095-C to more accurately describe conditional offers of coverage to an employee’s spouse.
• Enrollment by Non-Full-Time Employees in Self-Funded Coverage: Code 1G is used to report enrollment of individuals other than full-time employees in a self-funded health plan. The final instructions clarify that code 1G must either appear in the “All 12 months box” or in every monthly box.
• Affordability Safe Harbors: The final instructions warn employers not to enter an affordability safe harbor (codes 2F, 2G and 2H) on line 16 of Form 1095-C for any month in which the employer did not offer minimum essential coverage to at least 95% of its full-time employees and their dependents (that is, any month for which the “No” box is checked on Form 1094-C, Part III, column (a)).
• Post-Employment Coverage: the instructions clarify that coverage offered after termination of employment (including COBRA and retiree coverage) should not be entered as an offer of coverage on line 14 of the 1095-C.
Individual statements (Form 1095-C) must be distributed to employees no later than January 31, 2017, and a copy of each Form 1095-C must be filed with the IRS along with the employer's Form 1094-C transmittal no later than February 28, 2017 if on paper (permitted for employers filing fewer than 250 returns) or March 31, 2017 if filing electronically (required if filing 250 or more returns).
For more information about this and other regulatory developments, please click here.
- IRS Issues Delay in Requirements to Furnish Forms 1094 and 1095 under ACA.
On December 28, 2015, the IRS announced an extension of the due dates for 2015 Patient Protection and Affordable Care Act (ACA) information reporting by employers, insurers, and other reporting entities. The transition relief provided applies to the furnishing of Forms 1094-C and 1095-C to individuals, as well as filing applicable forms to the IRS, as required under Internal Revenue Code sections 6055 and 6056.
The announcement provides for an automatic 60 day extension for employers to provide Forms 1095-B and 1095-C that must be distributed to employees from February 1, 2016 to March 31, 2016. The notice also automatically extends the due date for the submission of Forms 1094-B and 1094-C from March 31, 2016 to June 30, 2016 if filing electronically (the extension if not filing electronically is extended from February 28, 2016 to May 31, 2016).
The notice also explains that some employees who enrolled in coverage through the Federal or State Marketplace (the Public Exchange) could be affected by the extension if they do not receive their Forms 1095-C before they file their income tax returns. However, the individuals who rely upon other information received from employers about their offers of coverage for purposes of determining eligibility for the premium tax credit when filing their income tax returns need not amend their returns once they receive their Forms 1095-C or any corrected Forms 1095-C from the employer.
- 2015 ACA Forms
The Internal Revenue Service (IRS) has released final 2015 Patient Protection and Affordable Care Act (ACA) Forms 1094-C and 1095-C. The 1094-C and 1095-C forms are mandatory filings by employers with 50 or more full-time equivalent employees to enforce section 4980H of the Internal Revenue Code (IRC) Employer Mandate. Employers are required to report 2015 tax year information to both employees and the IRS. The 1095-C form is due to employees by February 1, 2016, and the 1094-C e-filing is due to the IRS by March 31, 2016 (February 29, 2016 for paper filing). Failure to comply with the reporting requirements could result in a fine of $250 for each return for which such failure occurs (up to $3,000,000).
The final forms are generally consistent with the drafts released earlier this year. However, there are some modifications to the instructions in completing the forms to reflect various scenarios.
- ACA Reporting Penalties to Increase
Congress recently passed the Trade Preferences Extension Act of 2015. The Act significantly increases penalties for reporting failures under several sections of the Internal Revenue Code, including the Patient Protection and Affordable Care Act (ACA) reporting using Internal Revenue Service Forms 1094 and 1095.
As employers are well aware, the ACA requires all large employers to report detailed information concerning their workforce and group health plan coverage offerings. These reports are due in early 2016, and cover the 2015 calendar year. Penalties may be imposed for incomplete, incorrect or failed reporting.
Penalties for ACA reporting failures (such as failing to file by the deadline, failing to provide required information, or failing to provide correct information) will increase from $100 to $250 per return. The yearly cap on total penalties will also increase, from $1.5 million to $3 million. "Intentional disregard" of the filing requirement may result in a penalty of $500 per return, and the cap on total penalties will not apply.
- IRS Releases Final Forms and Instructions for Employer Reporting Under the Affordable Care Act
The Internal Revenue Service (IRS) has released final versions of the forms that will be used to meet the Patient Protection and Affordable Care Act's (ACA) information reporting requirements under Internal Revenue Code sections 6055 and 6056. Sections 6055 and 6056 require insurers, including employers that sponsor self-insured plans, and large employers to file information returns with the IRS and also provide statements to employees. Reporting is mandatory for the 2015 calendar year regardless of an employer's plan year effective date in 2015. Information for 2015, including the actual months of coverage and dependent social security numbers, is required to be reported in early 2016.
Insurers and employers that sponsor self-insured health plans will use IRS Forms 1094-B and 1095-B to report under section 6055 on individuals enrolled in minimum essential coverage. Large employers (as defined by the ACA, those employing 50 or more full-time equivalents) will use IRS Forms 1094-C and 1095-C to report under section 6056 on offers of health coverage and enrollment in employer-provided plans. Employers that sponsor self-insured plans and that are also applicable large employers will use IRS Forms 1094-C and 1095-C to file a combined report under both section 6055 and section 6056.
- New Reporting Instructions Released
On August 28, 2014, the Internal Revenue Service (IRS) released draft instructions for completing and filing Forms 1094-B and 1094-C as well as forms 1095-B and 1095-C for reporting of health care coverage by insurers and employers as required by the Patient Protection and Affordable Care Act (ACA) under Internal Revenue Code Sections 6055 and 6056. Earlier this year, on July 24, the IRS released the draft forms that would be filed with the IRS and provided to employees annually.
Section 6055 and 6056 require insurers and employers to report information to the IRS and employees to manage the administration of the Individual Mandate, the Employer Mandate, and Premium Tax Subsidies. Although the first reports will not be due until early 2016, the reported data will be for the 2015 calendar year (regardless of the employer’s plan year). Employers will want to consider the data requirements now before the start of 2015 to make sure they have a process to capture the required information.
- Agencies Issue FAQ on Summary of Benefits and Coverage Requirements
On July 24, the Internal Revenue Service (IRS) released draft forms to be used by employers and insurers for reporting information regarding health care coverage and "minimum essential coverage" (MEC) as required under ACA. Final regulations were issued earlier in the year implementing the MEC reporting (Section 6055 of the Internal Revenue Code) and the reporting of health coverage (Section 6056). Instructions to the form have not yet been published. The reports are required for the 2015 calendar year regardless of plan year effective date and the first reporting will be due in early 2016. Learn more about the IRS reporting on our website.
- Employer Reporting White Paper
- Final Section 6055 Regulations
- Final Section 6056 Regulations
- Updated 2016 Form 1095-B: Health Coverage Employee returns to report Section 6055 information
- Updated 2016 Form 1094-B: Transmittal of Health Coverage Information Returns To transmit employee Section 6055 information returns to the IRS
- Updated 2016 Form 1095-C: Employer Provided Health Insurance Offer and Coverage Employee returns to report Section 6056 information
- Updated 2016 Form 1094-C: Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Return To transmit employee Section 6056 information returns to the IRS
- Comparison of the Requirements of Section 6055 and Section 6056
- Final 2016 Instructions for Forms 1094-B and 1095-B
- Final 2016 Instructions for Forms 1094-C and 1095-C
- ACA Employer Reporting Obligations Flowchart
American Fidelity Assurance Company does not provide tax or legal advice.