The Affordable Care Act (ACA) created reporting requirements under Internal Revenue Code (Code) Sections 6055 and 6056. Under these rules, certain employers must provide information to the IRS about the health plan coverage they offer (or do not offer) to their employees.
This ACA Overview describes the Section 6055 and Section 6056 reporting requirements under the ACA. Please contact Christensen Group Insurance for more information on Section 6055 and Section 6056 reporting.
- Section 6055 applies to health insurance issuers, self-insured plan sponsors, government agencies that provide government-sponsored coverage and other providers of minimum essential coverage.
- Section 6056 applies to applicable large employers—the employers subject to the employer shared responsibility rules (those with at least 50full-time employees, including full-time equivalents).
Purpose of Reporting
- Promote transparency in health plan coverage and costs; and
- Provide the IRS with information to administer the employer shared responsibility rules and individual mandate.
Links & Resources
- On March 5, 2014, the Internal Revenue Service (IRS) released two final rules on Section 6055 and Section 6056, which apply for calendar years beginning after Dec. 31, 2014. This date reflects a one-year delay provided in IRS Notice 2013-45.
- The IRS also released Q&As on Section 6055 and on Section 6056, as well as a separate set of Q&As on Forms 1094-C and1095-C.
- Forms 1094-B and 1095-B (and related instructions) for use to report under Section 6055.
- Forms 1094-C and 1095-C (and related instructions) for use to report under Section 6056.
- Notice 2015-68 and additional proposed rules provide additional guidance for purposes of Section 6055 reporting.
Under both Sections 6055 and 6056, each reporting entity must file all of the following with the IRS:
- A separate statement for each individual who is provided minimum essential coverage (MEC) under Section 6055, or for each of the ALE’s full-time employees under Section 6056;and
- A single transmittal form for all of the returns filed for a given calendar year.
Under Code Section 6055, reporting entities will generally file Forms 1094-B (a transmittal) and 1095-B (an information return). Under Code Section 6056, entities will file Forms 1094-C (a transmittal) and 1095-C(an information return) for each full-time employee for any month. Entities reporting under both Sections 6055 and 6056 will use a combined reporting method by filing Forms 1094-C and 1095-C.
Substitute forms may be used, as long as they include all of the required information and comply with IRS procedures or other applicable guidance. Entities using substitute forms instead of the official IRS versions may develop substitute forms themselves or buy them from a private printer. Publication 5223, General Rules & Specifications for Substitute ACA Forms 1094-B, 1095-B, 1094-C, and 1095-C and Certain Other Information, explains the requirements for the format and content of substitute statements to recipients. Only forms that conform to the official form and the specifications in Publication 5223 are acceptable for filing with the IRS. Entities may not request special consideration.
Deadlines for Filing with the IRS and Furnishing Statements to Individuals
The Code Sections 6055 and 6056 reporting requirements took effect in 2015. The first returns were due in early 2016 for coverage provided in 2015.
Deadlines for Filing with the IRS
Forms must be filed with the IRS annually, no later than February 28 (March 31, if filed electronically) of the year following the calendar year to which the return relates. For the 2020 calendar year, returns must be filed by March 1, 2021, or March 31, 2021, if filed electronically.
Reporting entities may receive an automatic 30-day extension of time to file with the IRS by completing and filing Form8809, Application for Extension of Time To File Information Returns, by the due date of the returns. The form may be submitted on paper, or through the FIRE System either as a fill-in form or an electronic file. No signature or explanation is required for the extension. Under certain hardship conditions, employers could have also applied for an additional 30-day extension.
Deadlines for Furnishing to Individuals
Each reporting entity must also furnish statements annually to each individual who is provided MEC (under Section 6055), and each of the ALE’s full-time employees (under Section 6056). Individual statements are due on or before January 31 of the year immediately following the calendar year to which the statements relate.
For the 2020 calendar year, IRS Notice 2020-76 extended the due date for furnishing Forms 1095-B and 1095-C to individuals to March 2,2021. The extension applies automatically and does not require the submission of any request or other documentation to the IRS. In view of this automatic extension, the rules allowing the IRS to grant extensions of time of up to 30days to furnish Forms 1095-B or 1095-C do not apply to the extended due date. Also, because the 30-day extension of the due date to furnish applies automatically, and is as generous as the permissive 30-day extensions of time to furnish 2020 information statements under Sections 6055 and 6056 that have already been requested by some reporting entities in submissions to the IRS, the IRS will not formally respond to those requests.
The final rules do not allow an alternate filing date for employers with non-calendar year plans. Although employers may collect information on a plan year basis, employees will need to receive their individual statements early in the year in order to have the requisite information to correctly and completely file their income tax returns for that year.
However, extensions may be available in certain circumstances. Reporting entities may request an extension of time to furnish the statements to recipients by sending a letter to Internal Revenue Service, Information Returns Branch, Attn: Extension of Time Coordinator, 240 Murall Drive, Mail Stop 4360, Kearneysville, WV 25430. The letter must include: the filer’s name, TIN and address; the type of return; a statement that extension request is for providing statements to recipients; a reason for delay; and the signature of the filer or authorized agent.
A request must be postmarked by the date on which the statements are due to the recipients. If the request for an extension is approved, reporting entities will generally be granted a maximum of 30 extra days to furnish the recipient statements.
Manner of Filing and Furnishing
Any reporting entity that is required to file at least 250 returns under Section 6055 or Section 6056 must file electronically. The 250-or-more requirement applies separately to each type of return and separately to each type of corrected return. Entities filing fewer than 250 returns during the calendar year may choose to file in paper form, but are permitted (and encouraged) to file electronically. Individual statements may also be furnished electronically if certain notice, consent and hardware and software requirements are met.
Electronic filing is done using the ACA Information Returns (AIR) Program. IRS Publication5165, Guide for Electronically Filing ACA Information Returns for Software Developers and Transmitters provides very detailed technical information regarding standards for software developers and transmitters that plan to facilitate this electronic reporting through the AIR System. More information on the AIR Program is available on the IRS website.
Waiver of the Electronic Reporting Requirement
A waiver from the requirement to file returns electronically is available in certain circumstances. To receive a waiver, reporting entities must submit Form 8508, Request for Waiver From Filing Information Returns Electronically. Entities are encouraged to submit Form 8508 at least45 days before the due date of the returns, but no later than the due date of the returns. The IRS does not process waiver requests until January 1 of the calendar year the returns are due.
Reporting entities cannot apply for a waiver for more than one tax year at a time, and must reapply at the appropriate time for each year in which a waiver is required. Any approved waivers should be kept for the reporting entity’s records only. A copy of an approved waiver should not be sent to the service center where paper returns are filed.
If a waiver for original returns is approved, any corrections for the same types of returns will be covered under the waiver. However, if original returns are submitted electronically, but the reporting entity wants to submit corrections on paper, a waiver must be approved for the corrections if the reporting entity must file250 or more corrections.
Without an approved waiver, a reporting entity that is required to file electronically but fails to do so may be subject to a penalty of up to $260 per return (as adjusted each year), unless it can establish reasonable cause. However, reporting entities can file up to 250 returns on paper; those returns will not be subject to a penalty for failure to file electronically.
Applicable Large Employer Health Coverage Reporting(Code § 6056)
Code Section 6056 requires ALEs subject to the ACA’s employer shared responsibility rules to file information returns with the IRS and provide statements to their full-time employees about the health insurance coverage the employer offered to its full-time employees. The IRS uses the information provided on the information returns to administer the ACA’s employer shared responsibility rules, which impose penalties on ALEs that do not offer affordable, minimum value coverage to their full-time employees (and dependents).
The employer shared responsibility rules generally took effect on Jan. 1, 2015. The IRS and the ALE’s employees will use the information provided as part of the determination of whether an employee is eligible for a premium tax credit for coverage purchased through an Exchange under the ACA.
ALEs will use the following forms to report under Section6056, as well as for combined reporting by ALEs who report under both Sections 6055and 6056:
- Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns; and
- Form 1095-C, Employer-Provided Health Insurance Offer and Coverage.
The Section 6056 reporting requirements apply to ALEs subject to the ACA’s employer shared responsibility rules. An ALE is an employer that employed an average of at least 50 full-time employees, including full-time equivalents (FTEs), on business days during the preceding calendar year. Full-time employees are those employed, on average, at least 30hours of service per week. An employee’s full-time status for this purpose is determined under either the look-back measurement method or the monthly measurement method, as described in the employer shared responsibility final rules.
Section 6056 applies to all employers that are ALEs, regardless of whether coverage is offered to full-time employees, and regardless of whether the ALE is a tax-exempt or government entity (including federal, state, local and Indian tribal governments). However, only ALEs with full-time employees are subject to the Section 6056 requirements (and only with respect to their full-time employees). Thus, ALEs without any full-time employees are not subject to the Section6056 reporting requirements.
Controlled Group Rules
For purposes of Section 6056, related employers are treated as a single employer for determining employer size if they meet certain IRS criteria. Thus, all persons treated as a single employer under Code Sections 414(b), (c), (m) or (o) are combined and treated as a single employer for purposes of determining whether or not the employer has at least 50full-time (and FTE) employees, and together will be an ALE (called an Aggregated ALE Group). When the combined total of full-time (and FTE) employees meets the threshold, each separate company (or ALE member) is separately subject to the Section 6056 reporting requirements, even if any particular company individually does not employ enough employees to meet the 50-full-time-and-FTE-employeethreshold.
However, each ALE(and each ALE member) is responsible for its own reporting obligations. For purposes of the information reporting requirements under Section 6056, each ALE member must file an information return with the IRS and furnish statements to its full-time employees, using its own employer identification number(EIN).
ALEs that Sponsor Self-Insured Plans
ALEs that sponsor self-insured group health plans are also required to report information to the IRS and provide individual statements to covered individuals under Section 6055 about the health coverage they provided during the year. The IRS and individuals will use the information provided under Section 6055 to administer the ACA’s individual mandate.
These ALEs file with the IRS and furnish to employees the information required under both Sections 6055 and 6056 on a single form, using a combined reporting method. This combined reporting method is described in more detail below.
Non-ALE employers that are not subject to the ACA’s employer shared responsibility rules are not required to report under Section6056. Thus, employers that employed fewer than 50 full-time (and FTE) employees during the prior calendar year are not subject to these reporting requirements. However, any employer that sponsors a self-insured health plan is required to report under Section 6055, even if it has fewer than 50 full-time (and FTE) employees.
Reporting Required for All Full-time Employees
Under Section 6056, each ALE is required to report information about the health coverage, if any, offered to its full-time employees (and their dependents), including whether an offer of health coverage was (or was not) made. This requirement applies to all ALEs, regardless of whether they offered health coverage to all, none or some of their full-time employees.
For each full-time employee—regardless of whether health coverage was offered to the employee—the ALE must file a return with the IRS and furnish a statement to the employee reporting whether an offer of health coverage was or was not made to the employee, and if an offer was made, the required information about the offer. Therefore, even if an ALE does not offer coverage to any full-time employees, it must file returns with the IRS and furnish statements to each of its full-time employees to report information specifying that coverage was not offered.
An ALE is not required to file a Form 1095-C for an individual who, for all months of a calendar year, is either not an employee of the ALE or is in a limited non-assessment period (for example, an employee who was hired mid-year and then was in an initial measurement period that continued into the following year). However, for the months in which the employee was an employee of the ALE, he or she would be included in the total employee count reported on Form1094-C. Also, if the employee enrolled in self-insured employer-sponsored coverage during the limited non-assessment period, the ALE must file a Form1095-C for the employee to report coverage information for the year.
Information Required to Be Reported on the IRS Return
The ALE’s return filed with the IRS must include the following information:
- The ALE’s name, address and employer identification number (EIN);
- The name and telephone number of the ALE’s contact person;
- A certification of whether the ALE offered to its full-time employees (and their dependents) the opportunity to enroll in MEC under an eligible employer-sponsored plan, by calendar month;
- The months during the calendar year for which MEC under the plan was available;
- Each full-time employee’s share of the lowest cost monthly premium for self-only coverage providing minimum value offered to that employee, by calendar month;
- The number of full-time employees for each month during the calendar year;
- The name, address and Social Security number(SSN) or other taxpayer identification number (TIN) of each full-time employee and the months (if any) during which he or she was covered under the eligible employer-sponsored plan during the calendar year; and
- Any other information required by the IRS.
Most employer-sponsored health plans will qualify as MEC. The ACA broadly defines MEC to include both insured and self-insured group health plans, as well as plans with grandfathered status under the ACA. However, MEC does not include specialized coverage, such as coverage only for vision or dental care, workers’ compensation, disability policies or coverage only for a specific disease or condition.
Each ALE will also have to report the name, address and EIN of any third party reporting on behalf of the ALE and whether the ALE is a member of an Aggregated ALE Group. Some of this information will be provided through the use of indicator codes, rather than detailed explanations or summaries.
Information Required to Be Reported on the Employee Statement
An ALE generally must furnish to each full-time employee a written statement showing the ALE’s name, address and EIN, and the information required to be shown on the Section 6056 return with respect to the full-time employee (and his or her spouse and dependents).
Methods of Reporting
For purposes of reporting under Section 6056, there is:
- A general method of reporting that all ALEs may use for filing forms with the IRS and furnishing statements to full-time employees; and
- Two alternative reporting methods for eligible ALEs.
If an ALE cannot use an alternative reporting method for certain employees, the ALE must use the general method for those employees. In any case, the alternative reporting methods are optional, so that an employer may choose to report for all of its full-time employees using the general method even if an alternative reporting method is available.
General Reporting Method
Under the general method of reporting, each ALE must file:
- A transmittal Form 1094-C for all of the returns filed for a given calendar year; and
- A separate employee statement Form 1095-C for each full-time employee.
An ALE that maintains a self-insured plan also uses Form 1095-C to satisfy the reporting requirements under Section 6055. The Form 1095-C has separate sections to allow ALEs that sponsor self-insured plans to combine reporting to satisfy both the Section 6055 and 6056 reporting requirements, as applicable, on a single return. More information on combined reporting is available in the “Combined Reporting” section below.
Alternative Reporting Methods
Two alternative methods of reporting are available under Section 6056, which are intended to minimize the cost and administrative tasks for ALEs. The alternative reporting methods may allow ALEs to provide less detailed information than under the general method.
The two alternative reporting methods are:
- Reporting Based on Certification of Qualifying Offers (the Qualifying Offer Method); and
- Option to Report Without Separate Identification of Full-Time Employees if Certain Conditions Related to Offers of Coverage Are Satisfied (the 98 Percent Offer Method).
In some circumstances, only some of the information required under the general method is necessary. Thus, the alternative reporting methods identify specific groups of employees for whom simplified alternative reporting would provide sufficient information.
If an ALE is not eligible to use an alternative reporting method for one or more full-time employees, the ALE must use the general method of reporting for those employees. Also, the alternative reporting methods are all optional. An ALE is not required to use any alternative reporting method, even if it is eligible, and may instead report the more detailed information under the general method.
Employers that are subject to both reporting provisions(generally, ALEs that sponsor self-insured group health plans) will use a combined reporting method. To allow these ALEs to satisfy both reporting requirements on a single return, Form1095-C has separate sections for reporting under Section 6055 and for reporting under Section 6056. More information on combined reporting is available in the “Combined Reporting” section below.