Who Has to Report – New Healthcare Law Requirements

Under the Affordable Care Act, applicable large employers (those with 50 or more full-time employees, including full-time equivalent employees) are required to take some new actions this tax season. These employers must file information returns with the IRS and also provide statements to full-time employees about health coverage the employer offered or to show the employer didn’t offer coverage.

Information was voluntary for calendar year 2014. However, all applicable large employers are required to report health coverage information for the first time in early 2016 for calendar year 2015.

Here is what you’ll need to do to make sure you’re prepared to report this information to the IRS and issue the new form 1095-C to employees to comply with the new regulations:

1. Determine if your organization is an applicable large employer.
2. Determine the kind of health insurance coverage you offered to full-time employees and their dependents, if any.
3. Identify who your full-time employees are for each month and track health coverage information in 2015 to help complete new IRS forms.

How do I know if I qualify as an applicable large employer?

Your organization is an applicable large employer if you or other entities that must be combined with your organization (for instance, other members of an aggregated group) employed an average of at least 50 full-time employees, including full-time equivalent employees, on business days during the preceding calendar year.

Which Employees Count?

Employers average their number of employees across the months in the year to see whether they will be an applicable large employer for the next year. To determine if your organization is an applicable large employer for a year, count your organization’s full-time employees, full-time equivalent employees, and if you are a member of a combined group, the full-time employees and full-time equivalent employees of all members of the group for each month of the prior year and then average the numbers for the year.

You can follow these general guidelines to determine employees types:

• Full-time employee – an employee who is employed on average, per month, at least 30 hours of service per week, or at least 130 hours of service in a calendar month.
• Full-time equivalent employee – a combination of employees, each of whom individually is not a full-time employee (has fewer than 30 hours of service per week), but who in combination are equivalent to a full-time employee.
• Aggregated group – commonly owned or otherwise related or affiliated employers, which must combine their employees to determine their workforce size.

Preparing for 2016 and Beyond

To get ready for 2016, and subsequent years, applicable large employers need to track information each month. Here is the information you will need to track:

• Whether you offered full-time employees and their dependents minimum essential coverage that meets the minimum value requirements and is affordable.
• Whether your employees enrolled in the self-insured minimum essential coverage you offered.
• You need to track this information because you could be subject to an employer shared responsibility payment if either:
  • You offered coverage to fewer than 70% (for 2015; after 2015 this threshold changes to 95%) of your full-time employees and their dependents and at least one full-time employee enrolled in coverage through the Health Insurance Marketplace and receives a premium tax credit, or
  • You offered coverage to at least 70% (for 2015) of your full-time employees and their dependents, but at least one full-time employee receives a premium tax credit (because coverage offered was not affordable, did not provide minimum value or the full-time employee was not offered coverage). After 2015, this threshold changes to 95%.

You can browse all the Affordable Care Act Tax Forms or read our Tips for Completing Affordable Care Act Tax Forms.