Benefits and Compensation

Decisions Must be Made on How Employers Will Manage Section 6055/56 Reporting

Employers deciding how to comply with the Affordable Care Act’s reporting requirements have important housekeeping questions to decide, such as: (1) who will take phone calls from the IRS and employees about ACA forms; (2) whether electronic filing (for the IRS) and transmittal (to employees) is needed; and (3) which workers have coverage that was reported on by another plan, so the employer doesn’t submit a duplicate report on that employee.

John L. Barlament, an attorney with Quarles & Brady in Milwaukee discussed these and other matters relating to Section 6055 and 6056 reporting at an Oct. 8 webinar sponsored by the International Foundation of Employee Benefit Plans.

Appoint a Contact Person

The Form 1094-B is filed by insurers and employers to report individuals covered by minimum essential coverage. On that form, the employer is required to list the name of a contact person in field 3, and his or her telephone number in a field 4. The employer must decide who in the organization can take such calls.

Note: In Forms 1094-B and 1095-B reporting, employers and insurers need to list only people who are actually covered because this reporting is meant to help the IRS enforce the individual mandate. Therefore, insurers and employers do not report on employees who are offered coverage but decline it.

The 1095-B form goes to employees so they can attest that they comply with the individual mandate.

In contrast, Form 1095-C reporting is for employers to attest that they comply (or don’t) with the employer mandate; it requires them to list employees to whom offers of health insurance were made. This reporting is meant to help the government identify companies that comply with the pay-or-play mandate. But these forms are not required to be filed by any employer for 2014. The first Forms 1095-C are due in early 2016 to report 2015 coverage.

Forms 1094-C and 1095-C are for “applicable large employers” only (which are obliged to comply with the pay-or-play mandate). Therefore, self-funded plans must determine their ALE or non-ALE status. That’s because large employers must themselves report on their self-funded health plans. For fully insured plans, it appears to be the insurer’s responsibility to complete MEC-related forms. The Form 1095-C also requires the reporting of an employer contact telephone number.

Electronic Reporting

Electronic furnishing of ACA-required statements to workers is possible, but than ERISA’s rules for electronic transmission of required disclosures. Under the ACA, the individual must affirmatively agree and be allowed to withdraw from electronic receipt; the employer must meet hardware and software requirements; and obtain consent even from employees. As a result, many employers will decide to stick to paper transmittals for the first few years, Barlament said.

But when it comes to the IRS, electronic filing of Forms 1094-B and 1095-B is required if employers file at least 250 returns during the calendar year. Smaller employers may choose to do so.

Data Identified and Changes Tracked

In order to fill out the data on covered workers, employers first have to find it. To do so, some will have to go to external sources such as brokers, insurers or third-party administrators. For others, internal sources will exist for the data. Verifying who has the data is an important preliminary task. Then Barlament recommended, employers should prepare a “spreadsheet” of all information to be tracked. Because the information is subject to frequent change, the person who coordinates that flow of information will have to learn how to do that and adjust systems accordingly.

Employers might not have to report union-covered employees

Sometimes, the employer needs some knowledge about workers. If a unionized employee receives coverage through a unionized plan, that plan and not the employer will do MEC report on him or her. But if the employee is not unionized, and covered by a multiemployer plan, the employer will need to report on that worker

Social Security numbers

An example of a challenge is Social Security numbers: the IRS requires them on the filed forms if employers are to comply with the reporting requirement. If you fail to get them, a safe harbor applies, but if you fail to ask the requisite number of times to fill SSN gaps, penalties could result, Barlament said. A question to ask is for whom are SSNs lacking? Employers might consider adding a field to collect SSNs to this year’s open enrollment materials, Barlament said.

All this collecting and reporting brings with it the risk of sending SSNs to the wrong person or vendor. That mistake brings with it identity theft risks. Employers need to prevent such blunders, but if any occur, they would need to follow HIPAA breach notification rules, and ERISA plan notification rules, he said.

Leave a Reply

Your email address will not be published. Required fields are marked *