The IRS has issued final 1094-B, 1095-B, 1094-C, 1095-C forms and instructions that employers, plan sponsors and group health insurers will use to report health coverage as required by health care reform. Applicable Large Employers (ALEs), generally employers with 50 or more full-time employees in 2014, face changed reporting requirements relating to forms 1094-C and 1095-C. (Transition relief for 2015 allows the employer to determine the average number of full-time employees based on a period of at least six consecutive months during 2014.) Both forms are used to report offers of health coverage and enrollment in coverage for employees under IRC sections 6055 and 6056. These changes will require ALEs to file for each individual who was a full-time employee for any month of calendar year 2015. Employers with self-funded medical plans must report on all covered employees, even if they were not full-time employees.
The final instructions provide relief to health reimbursement arrangements (HRAs) that are integrated with either fully insured or self-funded coverage sponsored by the same employer. This removes the Minimum Essential Coverage (MEC) reporting obligation for many HRAs.
For calendar year 2015, Form 1095-C must be provided to employees by February 1, 2016 and Form 1094-C and copies of the 1095-Cs must be filed with the IRS by February 29, 2016 (or March 31, 2016 if filing electronically).
Under the Trade Preferences Extension Act of 2015, an employer failing to comply with the information reporting requirements will be subject to increased penalties. The penalty for missing information on a return or failing to file a return is generally $250 for each return. Since the 1095-C must be given to the employee and filed with the IRS, the practical amount of the penalty is $500 for each failure. Maximum penalties are $3,000,000 for each calendar year. For 2015 reporting, the IRS will not impose penalties on a filer for reporting incorrect or incomplete information reporting requirements for 2015 if the filer can show good faith efforts to comply with the requirements for 2015.
The Trade Preferences Extension Act also restored the Health Coverage Tax Credit (HCTC) retroactive to January 1, 2014 through January 1, 2020. The HCTC is a refundable Federal tax credit that was first made available in 2002 to subsidize the cost of qualified health insurance coverage for certain individuals and their qualifying family members. Individuals who are qualified for Trade Adjustment Assistance can benefit from a 72.5 percent tax credit (subsidy) on the cost of qualified insurance premiums. Eligible individuals can either take a tax credit or get advance payment of premiums paid for qualified health insurance, including continuation coverage under COBRA.
The HCTC subsidy cannot be used to pay for health coverage through the Marketplace Exchanges. An HCTV eligible individual has to choose COBRA continuation coverage with the HCTV subsidy or enroll in the Marketplace Exchanges and perhaps receive an income based subsidy.
The Internal Revenue Service (IRS) issued Notice 2015-68 providing penalty relief for failure to report a Social Security Number (SSN), modifying the SSN solicitation requirements and seeking comments on relief from reporting penalties for reasonable cause. The notice also addresses catastrophic coverage through an Exchange, expatriate plans and more.