The Affordable Care Act (ACA) has resulted in major changes that will affect employers for the 2015 filing season. In general, any entity that provides minimum essential health coverage to its employees must report that coverage to the employees and to the IRS to verify that they are complying with the mandate for tax year 2015.
With the deadline approaching, now is the time for employers to begin assembling the necessary information.
Large employers that fail to offer appropriate health insurance to their employees will be penalized. The IRS defines a large employer as having 50 or more full-time employees, using the number of full-time employees in 2014 to determine the business size for 2015.
Be aware that this reporting is required even if you don’t offer health insurance coverage. And employers with at least 50 but fewer than 100 full-time employees or the equivalent that are eligible for the transitional relief from the employer shared-responsibility provision for 2015 must still comply with the information reporting requirements.
Reporting responsibilities regarding enrollment and eligibility depend on employer size and how the employer’s health coverage is funded. In other words, reporting responsibilities depend on whether a business is a small or large employer, and if the employer is insured by an outside party or self-insured.
Small vs. Large; Third-Party vs. Self-Insured
For small employers (those with less than 50 full-time employees), their insurer will issue Form 1095-B for them. If the small employer is self-insured, the employer would file Form 1095-B.
For large employers with 50 to 99 full-time employees who have insured health coverage, the employer will file Form 1095-C Parts I and II, and their insurer will file Form 1095-B. If the large employer is self-insured with 50 to 99 full-time employees, then they would file Form 1095-C Parts I, II and III.
Finally, for large employers with 100 or more full-time employees, the employer would file Form 1095-C parts I and II and their insurance provider would complete Form 1095-B. If this large employer is self-insured, then the employer would file Form 1095-C parts I, II and III.
Note that forms 1095-B and 1095-C must be distributed to employees by January 31st and filed with the IRS by February 28th if paper filing, and March 31st if filing electronically.
Failure to comply with the information reporting requirements may subject you to the general reporting penalty provisions, which will increase for returns and statements filed after December 31, 2015.
The ACA reporting rules are complex, and Clark Schaefer Hackett offers compliance services to help you with those reporting requirements if you need guidance.
UPDATE: As of December 28, 2015, the IRS has extended the filing deadlines for 2015 from February 29, 2016, to May 31, 2016 if not filing electronically, and from March 31, 2016, to June 30, 2016 if filing electronically. Also, the deadline for providing information to employees has been extended from January 31, 2016, until March 31, 2016.
ALEs must file Form 1095-C and Form 1094-C (the transmittal of Forms 1095-C) by February 29, or March 31 if filing electronically. The same information that was reported to the IRS must also be provided to all full-time employees by January 31.
Potential Tax Extensions Could Benefit Your Business
There are numerous business tax extenders that Congress needs to act on before the end of the year that could affect your 2015 return. Some of the major extenders include the following:
- Bonus depreciation of 50%
- Enhanced Section 179 depreciation of $500,000 (if not extended, maximum amount would be $250,000)
- Research tax credit
- Work opportunity tax credit
- Reduction in S-corporation recognition period for built-in-gains tax
We’re monitoring these extenders, and will report on their status as new information is released.
The 2015 filing season will be here soon. Consult your Clark Schaefer Hackett advisor to ensure that your business is prepared to comply with the ACA regulations, and that you’re taking advantage of all the tax credits you’re entitled to.
