United States: IRS Issues Draft ACA Reporting Forms

On July 24, 2014, the Internal Revenue Service (IRS) released draft forms that employers will use to report on health coverage that they offer to their employees. In March, the IRS issued final rules implementing the health coverage reporting requirements under the Affordable Care Act (ACA).  The information reporting requirements become effective for the 2015 tax year. 

Section 6056 of the Internal Revenue Code, as added by the ACA, requires "applicable large employers" to provide information to the IRS about the type of health coverage offered to their full-time employees for purposes of the large employer "pay or play" insurance mandate. Applicable large employers are those with 50 or more full-time employees and full-time equivalent employees. The section also requires employers to provide certain information to employees so they can determine whether they are eligible for the ACA premium tax credit to subsidize the purchase of health insurance through a health insurance exchange. Section 6055 requires health insurance issuers and employers that than sponsor self-insured health plans that provide individuals with minimum essential health coverage to report to the IRS information concerning the type and period of coverage offered for the purposes of administering ACA's individual shared responsibility provisions. 

According to the IRS, the draft reporting forms were released to help prepare stakeholders for compliance with the new reporting obligations and to solicit comments from the public. The release of the draft forms signals that the IRS is intent on adhering to a 2015 effective date for the employer mandate.  This comes as House GOP leadership is preparing to sue the Administration over its decision to delay the 2014 effective date of the employer mandate specified in the statute.   

The draft reporting forms include the following: 

Form 1095-B is to be used to report the information required under Section 6055, and Form 1094-B is to be used to transmit the 1095-B return to the IRS. Form 1095-C is to be used to report the information required under Section 6056, and Form 1094-C is to be used to transmit the 1095-C return to the IRS. Self-insurance applicable large employers must report the information required under both Sections 6055 and 6056 on a single combined Form 1095-C.  

Despite efforts by the IRS to simplify the reporting obligations for employers, the new reporting obligations and forms are sure to present complexities and new administrative burdens for employers. The release of the draft reporting forms leaves a number of questions unanswered. The IRS has stated that it anticipates draft instructions relating to the forms will be released in August, and that both the forms and instructions will be finalized later this year.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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