Clear Your Employees’ ACA Reporting Queries This Way!

2016 marks the first year to witness new reporting requirements as mandated by the IRS. This has resulted in a chaotic situation for employers as no previous reference is available and no one actually knows about the real deal. Every individual is struggling to find the ins and outs of each form to be filled so that all IRS requirements are properly followed.

Just like employers are working through the details, employees at the same time are wondering how this new law will affect them and what they actually are required to do.

To help them out, we’ve outlined some of the most commonly asked employee questions and how an employer must respond to them.

Employee: What is Form 1095-C?

Employer: Like the IRS uses Form W-2 to decide whether or not you owe any taxes, Form 1095 (A, B or C) is used to report your healthcare coverage information as mandated by ACA, starting with the 2015 tax year and every year from then on. It is to determine whether you and your dependents comply with the federal regulations and your employer also complies with the federal law by offering minimum affordable coverage to the employees who are eligible to avail the same.

Employee: What should I do with my Form 1095-C?

Employer: The information you provide on Form 1095-C might be required at the time of filing taxes for the year 2015, thus you must keep the documents safe. To fulfill the tax formalities, both your W-2 and 1095-C forms will be required. You might also need to furbish forms 1095-A and 1095-B too. Though, you need not attach the forms with your tax returns, but still keep them for the records.

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Employee: From where I will get this form?

Employer: We will be providing you with the form if your total working hours is 130 hours or more for a particular month or if you’re a part-time employee who has been enrolled in an employee-sponsored healthcare plan.

Employee: When can I expect to receive this form?

Employer: Form 1095-C will be provided to you on or before March 31, 2016. However, as this is the first year of reporting, the deadlines are extended by the IRS, otherwise from 2017 you’ll be getting it on or before January 31, same as Form W-2.

Employee: Will I receive the forms by email or by post?

Employer: You will be receiving Form 1095-C in paper format only, however if you wish to receive it via email then you need to provide us a consent mentioning the same, either in paper format or electronically. Also, if the consent is given on paper then a copy must also be sent electronically.

Employee: What about the Forms 1095-A and 1095-B?

Employer: These forms will be provided to you on the basis of the entity from where you availed your health insurance coverage for 2015. Generally, if that entity is a marketplace organization then you will receive Form 1095-A, whereas if the coverage is received through a self-funded group or SHOP then you are likely to receive Form 1095-B. In case you have enrolled in a fully-insured employer-sponsored healthcare plan then you might receive your Form 1095-B via your insurance carrier.

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Employee: There are 3 different parts in this form, what do I need to fill in each?

Employer: Part I: Employee and Applicable Large Employer member information requires you to fill your own and your employer’s basic information (like name, address, IDs, social security numbers, etc.)

Part II: Employee Offer and Coverage is used to report the offered health coverage and the affordability of that coverage. Also if you are not offered any coverage then a proper reason must be mentioned.

Part III: Covered Individuals section includes information of those covered in your health care plan, including the Social Security numbers of all individuals and dependents. Remember, your spouse is not included under the IRS’s definition of dependents.

Employee: Is it required to submit Form 1095-C with my individual tax return too?

Employer: No, it’s not required. You just need to keep the form for your own records or for referencing while completing federal tax formalities.

By keeping a checklist of such questions and answering them long before the actual process starts, an employer can ensure that everything goes smoothly. You definitely don’t want to get involved in solving these simple questions when your focus must be in fulfilling other crucial requirements while taking care of various rules & regulations.