All employers, including government agencies and non-profits, that provide “applicable employer-sponsored coverage” have reporting requirements under the Affordable Care Act (ACA). Note that for 2015 coverage year, Covered California for Small Business (CCSB) consisted of groups up to 50 full-time employees. Employers of 50 and more full-time employees (including full-time equivalent employees) are considered applicable large employers (ALE). Effective for plan year 2015, employers are required to report to their employees and the IRS the value of and type of coverage offered for each month of the plan year. The 1095-B and 1095-C are the IRS statements used to report that coverage.
1095-Bs are distributed to people who received insurance through small self-funded groups, employers who use the Small Business Health Options Program (SHOP) or fully insured employer-sponsored plans.
The Affordable Care Act requires employers with 50 or more full-time employees (including full-time equivalent employees) to offer healthcare coverage to full-time employees or potentially pay a monetary penalty. The 1095-C is the government’s way of tracking this. Similar to the W-2, your 1095-C will be used to file individual taxes and communicate your health insurance information.
CCSB/SHOP plan members of the Small Employer, less than 50 full-time employees, group plans will receive a 1095-B from the health insurance company.
If the individual is a recipient of Medi-Cal and other Government Sponsored Health Coverage in 2015; the Government Agency will issue a 1095-B to the plan member.
If the employer is an applicable large employer (ALE), generally at least 50 full-time employees, they are subject to the possibility of a shared responsibility payment to the IRS if the ALE does not offer to its employees and dependents minimum essential coverage that is affordable. All CCSB plans provide minimum essential coverage. CCSB plan members of this large employer group will issue 1095-Cs to their employees.
All employers that provide “applicable employer-sponsored coverage” must report the value of the healthcare coverage in box 12 of the annual W-2 form.
Generally, Employers with 49 and less full-time employees will only report the coverage value on the employee’s W-2. See question #9.
All employers, private, government, non-profit and multi-employer groups that offer “applicable employer-sponsored coverage” have reporting requirements under the Affordable Care Act.
The recipient will need the forms to complete a tax return if they received a tax credit or are going to take a tax credit on the return or if there was a gap in coverage of more than three consecutive months. If these do not apply to the recipient, they will just need to check a box indicating they were offered coverage and keep the form with their tax records. The IRS uses the information to verify that individuals have minimum essential coverage (MEC) that complies with the individual responsibility requirement of the ACA or they may face a tax penalty.
If they or a family member are expecting to receive a Form 1095-A, they should wait to file the 2015 income tax return until they receive that form. However, it is not necessary to wait for Forms 1095-B or 1095-C in order to file. Some taxpayers may not receive a Form 1095-B or Form 1095-C by the time they are ready to file their 2015 tax return. While the information on these forms may assist in preparing a return, they are not required. Like last year, taxpayers can prepare and file their returns using other information about their health insurance. They should not attach any of these forms to their tax return.
Small employers that are not an ALE member, and offer an employer-sponsored health insurance plan through SHOP or otherwise are not subject to the employer shared responsibility provisions, including the offer of dependent coverage, including employer shared responsibility payments, and the employer information reporting provisions under section 4980H of the Internal Revenue Code (Code). If the employer had less than 50 full-time employees (49 and under) in 2015, the health insurance company will issue a 1095B to the employer’s SHOP plan member employee.
Small employers, less than 50 have a narrower set of reporting requirements. Note that small employers who sponsor a self-insured plan must report to the IRS.
For more information: https://www.irs.gov/affordable-care-act/employers/employer-shared-responsibility-provisions.
An ALE member who is also a CCSB plan member is subject to the employer shared responsibility provisions, including the offer of dependent coverage, including employer shared responsibility payments, and the employer information reporting provisions.
For more information: https://www.irs.gov/affordable-care-act/employers/employer-shared-responsibility-provisions
The Small Business (less than 50 full-time employees including full-time equivalents) reporting requirements of the Affordable Care Act includes businesses, tax-exempt organizations, and federal, state and local government entities.
Reporting Requirements of Small Business Employers:
Additional Medicare Tax went into effect in 2013 and applies to wages, compensation, and self-employment income
above a threshold amount received in taxable years beginning after Dec. 31, 2012. You must withhold and report
an additional 0.9 percent of Medicare Tax on employee wages or compensation that exceed $200,000.
W-2: Small Business Employers that provide "applicable employer-sponsored coverage" under a group health plan, such as a small group plan with Covered California, are required to report the value of the health insurance coverage you provided to each employee on his or her Form W-2. The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan. In general, the amount reported should include both the portion paid by the employer and the portion paid by the employee.
Reporting the cost of health care coverage on the Form W-2 does not mean that the coverage is taxable. This reporting is for informational purposes only and will provide employees useful and comparable consumer information on the cost of their health care coverage.
Self-Insured: Effective for calendar year 2015, if you provide self-insured health coverage to your employees, you must file an annual return reporting certain information for each employee you cover.
Common Ownership: If you have fewer than 50 full-time employees, but are a member of an ownership group with 50 or more full-time equivalent employees, you are subject to the rules for large employers.
For more information: https://www.irs.gov/affordable-care-act/employers/employer-shared-responsibility-provisions
IRS form 1095-B: Health Coverage: primarily completed by insurers, certain government-sponsored programs like Medicare and health insurance companies, including small employers that sponsor self-insured plans. Form 1095-B is used to report certain information to the IRS and to taxpayers about every person who was covered by minimum essential coverage (MEC) in 2015. The issuer will provide one return for each responsible individual.
The health insurance companies of Covered California for Small Business for small employers (less than 50 full-time employees) will issue 1095-Bs to each responsible individual. Individuals should contact the issuing party with questions.
Medi-Cal recipients who have received a 1095-B and need assistance should contact your county human services agency or call the Medi-Cal 1095-B Help Desk 1-844-357-0883.
For more information: http://www.dhcs.ca.gov/services/medi-cal/Pages/CountyOffices.aspx
The form contains personal information on the responsible individual, generally the employee. For more information: https://www.irs.gov/uac/About-Form-1095-B
IRS Form 1095-C: Employer-Provided Health Insurance Offer and Coverage Insurance: Large Employer-Sponsored Health Insurance: filed and furnished by the employer to any employee of the applicable large employer who is a full-time employee for one or more months of the calendar year.
The ALE (at least 50 full-time employees) of plan members in a Covered California for Small Business (CCSB) group plan will issue a 1095-C to each responsible individual.
Individuals should contact the issuing party with questions.
The form contains personal information on the responsible individual, generally the employee; the employees share of the monthly premium for lowest-cost self-only minimum value coverage; the months the employee was enrolled in insurance; months the employer met an affordability safe harbor with respect to an employee and whether other relief applies for an employee for a month; and, if the employer offers a self-insured plan, information about the covered individuals enrolled in the health and dental plan by month. For more information: https://www.irs.gov/uac/About-Form-1095-C
The Affordable Care Act, requires certain employers to offer health insurance to full-time employees and their dependents. Further, those employers must send an annual statement to all employees eligible for coverage describing the health and dental insurance available to them. The Internal Revenue Service (IRS) created Form 1095-C to serve as that statement. For complete information refer to your tax professional or Form 1095-C instructions: https://www.irs.gov/pub/irs-prior/i109495c--2015.pdf.
For the 1095-C, you will need: https://www.irs.gov/uac/About-Form-1095-C:
Who is a full-time employee for each month.
Identifying information for employer and employee such as name and address.
Information about the health and dental insurance plan offered by month, if any.
The employee’s share of the monthly premium for lowest-cost self-only minimum value coverage.
Number of months the employee was enrolled in your coverage.
Number of months the employer met an affordability safe harbor with respect to an employee and whether other relief applies for an employee for a month.
If the employer offers a self-insured health or dental plan, information about the covered individuals enrolled in the plan, by month.
For the authoritative transmittal 1094-C you will need: https://www.irs.gov/pub/irs-prior/f1094c--2015.pdf
Identifying information for your organization.
Information about whether you offered coverage to 70% of your full-time employees and their dependents in 2015. (After 2015 this threshold changes to 95%.)
Total number of Forms 1095-C you issued to employees.
Information about members of the aggregated applicable large employer group, if any.
Full-time employee counts by month.
Total employee counts by month.
Whether you are eligible for certain transition relief.
The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan on the Employee’s W-2 in Box 12, Code DD. All employers that provide "applicable employer-sponsored coverage" under a group health plan are subject to the reporting requirement.
In general, the amount reported should include both the portion paid by the employer and the portion paid by the employee. See the chart, below, and the IRS questions and answers for more information:
An employer is not required to issue a Form W-2 solely to report the value of the health care coverage for retirees or other employees or former employees to whom the employer would not otherwise provide a Form W-2.
The chart below illustrates the types of coverage that employers must report on the Form W-2. Certain items are listed as "optional" based on transition relief provided by Notice 2012-9 (restating and clarifying Notice 2011-28). Future guidance may revise reporting requirements but will not be applicable until the tax year beginning at least six months after the date of issuance of such guidance.
| Form W-2, Box 12, Code DD | |||
|---|---|---|---|
| Coverage Type | Report | Do Not Report | Optional |
| Major medical | X | ||
| Dental or vision plan not integrated into another medical or health plan | X | ||
| Dental or vision plan which gives the choice of declining or electing and paying an additional premium | X | ||
| Health Flexible Spending Arrangement (FSA) funded solely by salary-reduction amounts | X | ||
| Health FSA value for the plan year in excess of employee’s cafeteria plan salary reductions for all qualified benefits | X | ||
| Health Reimbursement Arrangement (HRA) contributions | X | ||
| Health Savings Arrangement (HSA) contributions (employer or employee) | X | ||
| Archer Medical Savings Account (Archer MSA) contributions (employer or employee) | X | ||
| Hospital indemnity or specified illness (insured or self-funded), paid on after-tax basis | X | ||
| Form W-2 Reporting of Employer-Sponsored Health Coverage | Report | Do Not Report | Optional |
| Hospital indemnity or specified illness (insured or self-funded), paid through salary reduction (pre-tax) or by employer | X | ||
| Employee Assistance Plan (EAP) providing applicable employer-sponsored healthcare coverage | Required if employer charges a COBRA premium | Optional if employer does not charge a COBRA premium | |
| On-site medical clinics providing applicable employer-sponsored healthcare coverage | Required if employer charges a COBRA premium | Optional if employer does not charge a COBRA premium | |
| Wellness programs providing applicable employer-sponsored healthcare coverage | Required if employer charges a COBRA premium | Optional if employer does not charge a COBRA premium | |
| Coverage Type | Form W-2, Box 12, Code DD | ||
| Multi-employer plans | X | ||
| Domestic partner coverage included in gross income | X | ||
| Governmental plans providing coverage primarily for members of the military and their families | X | ||
| Federally recognized Indian tribal government plans and plans of tribally charted corporations wholly owned by a federally recognized Indian tribal government | X | ||
| Self-funded plans not subject to Federal COBRA | X | ||
| Accident or disability income | X | ||
| Long-term care | X | ||
| Liability insurance | X | ||
| Supplemental liability insurance | X | ||
| Workers' compensation | X | ||
| Automobile medical payment insurance | X | ||
| Credit-only insurance | X | ||
| Excess reimbursement to highly compensated individual, included in gross income | X | ||
| Payment/reimbursement of health insurance premiums for 2% shareholder-employee, included in gross income | X | ||
| Other Situations | Report | Do Not Report | Optional |
| Employers required to file fewer than 250 Forms W-2 for the preceding calendar year (determined without application of any entity aggregation rules for related employers) | X | ||
| Forms W-2 furnished to employees who terminate before the end of a calendar year and request, in writing, a Form W-2 before the end of that year | X | ||
| Forms W-2 provided by third-party sick-pay provider to employees of other employers | X | ||
We understand that this area of health care reform is complex. If you would like professional assistance, there is always local help available at https://www.coveredca.com/find-help/.
Resources you’ll find there are certified insurance agents, local events and links to the County Services Agencies.
http://irs.treasury.gov/rpo/rpo.jsf Use this tool to research tax return preparers near you or to determine the type of credentials or qualifications held by a specific tax professional. All tax return preparers are not in this directory. This directory contains only those with a PTIN who hold a professional credential or have obtained an Annual Filing Season Program Record of Completion from the IRS.
Individuals who prepare federal or state tax returns in California must complete required education, maintain a $5,000 tax preparer bond, and register with the California Tax Education Council (CTEC). https://www.ctec.org/Payer/FindVerifyPreparer/
Applicable large employers can find complete list of resources and the latest news at the IRS Applicable Large Employer Information Center: https://www.irs.gov/Affordable-Care-Act/Employers/ACA-Information-Center-for-Applicable-Large-Employers-ALEs
Employers of less than 50 full-time employees (including full-time equivalents) can find more information from the IRS here: https://www.irs.gov/Affordable-Care-Act/Employers/Affordable-Care-Act-Tax-Provisions-for-Small-Employers
