IRS Released Affordable Care Act Draft Forms

On July 24, 2014, the Internal Revenue Service (IRS) released drafts of the forms that large employers will be required to file in order to show that the health coverage they offer to their employees complies with the Affordable Care Act (ACA) “shared responsibility” mandate.

What is the employer’s shared responsibility mandate?

For 2015 and after, employers employing at least a certain number of employees (generally 50 full-time employees or a combination of full-time and part-time employees that is equivalent to 50 full-time employees) will be subject to the Employer Shared Responsibility provisions under section 4980H of the Internal Revenue Code (added to the Code by the Affordable Care Act). As defined by the statute, a full-time employee is an individual employed on average at least 30 hours of service per week. An employer that meets the 50 full-time employee threshold is referred to as an applicable large employer.

Under the Employer Shared Responsibility provisions, if these employers do not offer affordable health coverage that provides a minimum level of coverage to their full-time employees (and their dependents), the employer may be subject to an Employer Shared Responsibility payment if at least one of its full-time employees receives a premium tax credit for purchasing individual coverage on one of the new Affordable Insurance Exchanges, also called a Health Insurance Marketplace (Marketplace).

Form 1095-B, Health Coverage, collects information under tax code Section 6055, and Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, collects information under tax code Section 6056. The forms elicit details on whether health plans meet minimum standards set out under the ACA.

The IRS announced on its website (See subheads “Information Reporting on Health Coverage by Employers” and “Information Reporting on Health Coverage by Insurers”) that draft instructions won’t be published until next month and that both the forms and instructions will NOT be finalized until later this year.

Under the health care law, employers with 100 or more workers must begin providing health insurance coverage to at least 70% of their workers beginning on Jan. 1, 2015 or pay a tax penalty. Beginning on Jan. 1, 2016, they will need to provide health coverage to all their full-time workers.

As of Jan. 1, 2016, employers with at least 50 full-time workers will be required to provide health insurance to their full-time employees or pay a tax penalty.

Smaller businesses with less than 50 workers are exempt from providing coverage under the health care law.

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