IRS ENFORCING PENALTIES FOR LARGE EMPLOYERS THAT FAIL TO MEET HEALTHCARE REPORTING REQUIREMENTS
Updated: Feb 24, 2020
Even though the individual mandate for health insurance went away and transitional reporting relief was provided for small employers, the reporting requirements for large employers are still in effect.
Until further guidance from the IRS, the W-2 reporting requirements in the Affordable Care Act are mandatory only for companies filing 250 or more W-2 forms. For all other companies, W-2 reporting is optional.
1095-C reporting is mandatory for companies with 50 or more employees. You will find details for each reporting requirement below.
FOR EMPLOYERS of 250 OR MORE
If you forgot to include the cost of health care benefits on employee W-2’s, you will need to file W-2c forms to correct this error. The IRS has a chart that shows the various types of health coverages that must be included in the total on Form W-2. You can find the chart here:
https://www.irs.gov/affordable-care-act/form-w-2-reporting-of-employer-sponsored-health-coverage
If you have fewer than 250 employees, then W-2 reporting is optional.
ADDITIONAL LARGE EMPLOYER RESPONSIBILITIES
Large employers, companies with 50 or more employees, are considered “Applicable Large Employers” (ALE) and must provide an annual report to employees on form 1095-C and file that report to the IRS.
If your business qualifies as an ALE, you must do one of the following:
-Offer "affordable" health care coverage to full-time employees. That coverage must provide "minimum value."
-Make an employer shared responsibility payment (ESR) to the IRS. This payment must be made if at least one full-time employee receives a premium tax credit for buying individual coverage on a health care exchange
The information that ALE’s are responsible for reporting to employees includes the following:
- A statement to employees about health insurance coverage offered to employees. This statement, on IRS Form 1095-C, must be (a) given to each employee and (b) reported to the IRS.
- If your business self-insures its health care plan, you must provide a statement to the IRS about this coverage. You will need to use Section III of the 1095-C form for this purpose.
For complete 1095-C filing instructions, check the IRS instructions here:
https://www.irs.gov/pub/irs-pdf/i109495c.pdf
SUMMARY
Reports on Form 1095-C are due for the previous calendar year. Be sure to use the correct form for the year you are reporting, not the year when you are completing the form.
Reporting to employees: You must give each employee a copy of Form 1095-C by January 31, for the preceding calendar year.
Reporting to the IRS: IRS Form 1095-C must be filed with the IRS before February 28 (March 31 if filed electronically).
Consult with your health insurance and/or payroll provider for more information or reach out to your CPA.