Health Care Law Reporting Requirements for Employers
Form W-2 Reporting, Form 1095-C and More
The new health care law (the Affordable Care Act (ACA) includes several provisions relating to reporting by employers to employees.
The provisions of the Affordable Care Act (ACA) are complex and detailed and there are tax consequences to these reports. Employers should review their understanding of requirements with tax or legal advisors before making any decisions or sending out any reports.
Reporting Requirements for All Employers
Reporting of Benefit Costs to Employees on Form W-2
The ACA "requires employers to report the cost of coverage under an employer-sponsored group health plan." Beginning in the 2011 tax year, employers were originally required to report the “aggregate cost” of “applicable employer-sponsored coverage” on an employee's W-2.
The latest information from the IRS on this reporting requirement (as of November 2014) is: " For the 2012 calendar year and for future years, employers generally are required to report the cost of health benefits provided on the Form W-2." This requirement applies to "all employers that provide "applicable employer-sponsored coverage" ....
The IRS also says that
...employers filing fewer than 250 Forms W-2 for the previous calendar year (for example, employers filing fewer than 250 2012 Forms W-2 (meaning Forms W-2 for the calendar year 2012, which generally are filed with the SSA in early 2013) will not be required to report the cost of coverage on the 2013 Forms W-2 (which generally are filed with the SSA in early 2014).
What must be reported on an employee's W-2?
The W-2 report must be included on each employee's W-2 form, using Code DD - Cost of employer-sponsored health coverage. When reporting, include the value of any medical, dental and vision coverage you may pay for.
The calculations and what's included in this W-2 report are complex and the details are still being worked out by the IRS.
Read more details about this reporting requirement from the IRS on this questions and answers page.
Reporting Requirements for Large Employers
If your business has 50 or more full-time equivalent employees, you are considered an "Applicable Large Employer" (ALE) for the purpose of reporting and for the purposes of Employer Shared Responsibility.
Full-time employees are those who work, on average, at least 30 hours per week.
In addition to the reporting requirements described above for all employers, the reporting requirements for ALE's are:
1. A statement to employees about health insurance coverage offered. This statement must be completed for each employee on Form 1095-C and reported to the IRS. See more about this requirement on this IRS page.
2. If your business self-insures its health care plan, you must provide a statement to the IRS about this coverage. Read more about this statement on this IRS page.
When Do These Reporting Requirements Go into Effect?
The information required of ALE's must be provided beginning with 2015, and reports must be submitted in 2016. Employers may voluntarily report 2014 information in 2015, but this reporting is not required.
When Must Reports be Provided?
The information return for 2015 must be provided to employees by the end of January, 2016, and to the IRS, along with a transmittal form, by the end of February 2016. Note that these are the same deadlines as for W-2 forms (except that W-2 forms must be submitted to the Social Security Administration, while the 1095 forms must be submitted to the IRS).
Reports for future years have the same deadlines.
Disclaimer: The information about employer requirements of the Affordable Care Act is complicated and the effective dates and transition relief are confusing and constantly changing, and each business situation is unique. Be sure to check with your tax, insurance, and legal advisors before you implement any of these reporting requirements.