Tax

ACA Information Reporting – Employer Notices Are Coming

July 2016
Author:  Brandon Baum

Brandon Baum

Associate

Tax

1201 Walnut Street, Suite 1700
Kansas City, MO 64106-2246

Kansas City
816.221.6300

June 30, 2016, was a reporting milestone for the Affordable Care Act (ACA):  Certain large employers were required to electronically file their 2015 IRS Forms 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and 1095-C, Employer-Provided Health Insurance Offer and Coverage Insurance. For employers eligible to file the paper forms, the deadline for IRS submission was May 31, 2016. 

Note:  The due dates for 2016 forms filed in 2017 are January 31, 2017, for furnishing employee copies and March 31, 2017, for IRS electronic filing (February 28 if paper filing with the IRS).

This reporting requirement affects all self-insured employers and any employer—or controlled group of employers—with an average of 50 or more full-time employees, including full-time equivalent employees, during the prior year.

As explained in a previously published BKD article, these reports are essential for the IRS to determine whether:

  1. An individual maintains minimum essential coverage for purposes of the individual health insurance mandate
  2. An individual qualifies for a premium tax credit from exchange plans
  3. An employer is subject to a shared responsibility penalty for failing to offer full-time employees affordable minimum essential coverage providing minimum value

Note:  Shared responsibility penalties generally only apply if a large employer fails to offer full-time employees affordable health coverage, and a full-time employee receives a premium tax credit or cost-share subsidy when purchasing individual health coverage on an exchange. 

Now’s the time to start planning for 2016 information reporting due in 2017. Please monitor BKD’s ACA IRS Reporting Resource Center for updates on the filing requirements and ways BKD can help your organization remain compliant with the reporting requirements.

CMS Employer Notice Letters

The Centers for Medicare & Medicaid Services (CMS) states the Federally Facilitated Marketplace (FFM) will begin sending notices to employers of individuals who enrolled in marketplace coverage and qualified for a premium tax credit in 2016, i.e., subsidized marketplace coverage. These notices are not junk mail and should be taken seriously; they’re intended to notify employers they may be subject to an employer-shared responsibility penalty.

Warning:  Notices will be sent to the employer address provided by the employee who enrolled in subsidized marketplace coverage. Therefore, employers with multiple locations should develop internal procedures to ensure these notices are sent to the correct individual within the organization.

Notices Sent to ACA-Compliant Employers

Since the marketplace doesn’t validate the legitimacy of an individual’s claim in real time, a notice doesn’t automatically mean the employer will be required to pay a penalty. If an employer receives a notice and doesn’t agree the employee was eligible for subsidized marketplace coverage, the employer will have 90 days to appeal using an Employer Appeal Request Form. Upon successful appeal, the FFM will send the employee a notice requesting to update his or her marketplace application. The notice also will explain that failure to do so may result in a tax liability to the employee.  

ACA Retaliation Rules

Employers must keep in mind the ACA retaliation rules when developing a plan to deal with these notices. According to the retaliation rules, a company can’t discharge or in any manner discriminate against any employee with respect to his or her compensation, terms, conditions or other privileges of employment because the employee (or an individual acting at the request of the employee) has received a credit under the ACA or reported any violation of, or any act or omission the employee reasonably believed to be a violation of the ACA. With this in mind, employers may want to consult outside legal counsel to help avoid the perception that their company procedures run afoul of the ACA retaliation rules. 

Contact your BKD advisor if you need help processing your 2016 ACA information returns or evaluating a plan of action for responding to 2016 CMS employer notices. 

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