Is Your Company Ready to Report Health Information on Your Employees to the IRS?

The Affordable Care Act

The Internal Revenue Service (IRS) has released drafts of the forms that employers will use to report on the health coverage that they offer to their employees in 2015. This reporting is required as part of the Affordable Care Act (ACA). Employers with 100 or more employees (including full time equivalents) are required to provide certain information to the IRS and to their employees on the health care coverage they offer in 2015. Employers with 50 or more employees have a year before they have to report this data.

Although the reporting is not due until the end of 2015 or later, it is important that companies have systems in place to capture the necessary data.

We have reported on the ACA elsewhere on this website. This information provides a fine overview. More specific draft instructions relating to the forms will be available on on later this month and the finalized forms are expected later in the year. Based upon the information available at this date, here is the data that will probably be required.

What employee specific information is required?

Summary of recording requirements

1. Form 6055: Employers must provide names of employees and dependents covered under the health plan; name, address, Social Security number and a list of the specific months employees were covered, even for one day.

2. Form 6056: Employers must provide a report of the number of full-time employees, corresponding names, addresses and Social Security numbers of each employee; whether the employer coverage offered provided minimum essential coverage, minimum value, met the 9.5% affordability test, was offered to full-time employees and their dependents, and the employee’s share of the cost for the lowest-cost employee-only coverage offered. There is additional information required, which will allow employers to report using indicator codes.

As noted above, Form 6056 requires a significant amount of data. If a company can certify that coverage was offered to 95% of all full-time employees, the company will be eligible for simplified filing which requires much less information. The certification also eliminates the $2,000 per employee penalty for the company. It is obvious that employers will have to have an electronic tracking system in place to record both the elections and waivers of employees and dependents and date stamping of the event. Without this tracking, companies will have a difficult time meeting the simplified filing guidelines. Those employers who make a qualified offer to at least 98% of their full-time employees will qualify for even more streamlined reporting. It is likely that most HRIS systems will not capture all the necessary data for this reporting.

Therefore, it is important to strategize now on how to capture the necessary data and/or reduce your reporting requirements.