Under the Affordable Care Act (aka ACA or Obamacare), employers with 50 or more full-time equivalent employees are required to submit informational reporting about their employee healthcare coverage to the IRS, beginning January 2016.
This article covers need-to-know information about the new Obamacare healthcare reporting requirements including who is required to report healthcare, what you’ll need to report on, and deadlines for reporting.
Who Is Required to Report Healthcare to the IRS?
Applicable Large Employers (ALEs) are required to report their employee healthcare coverage to the IRS. An ALE is any employer with 50+ full time equivalent employees. We’ll look at this definition next.
Are we an Applicable Large Employer (ALE)?
Simply put, if you have fewer than 50 employees, you are not an ALE. If you have 50 or more employees, you probably are an ALE.
But for those employers on the cusp of 50 employees, or with a mix of full time, part time, and seasonal employees, the calculation can get more complicated.
For a more comprehensive look at how to calculate ALE, use the worksheet below.
What Are the New Reporting Requirements?
Get organized now, and be prepared to report on the following information:
Basic employer information.
The months during the calendar year for which healthcare coverage was available.
The number of full-time employees for each month during the calendar year.
Whether you, the employer, offered full-time employees and their dependents the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan (by calendar month).
Each full-time employee's share of the lowest-cost monthly premium (self-coverage only) for coverage providing minimum value under an eligible employer-sponsored plan (by calendar month).
The name, address, and taxpayer identification number (TIN) of each full-time employee covered under any such health benefits plans.
See related: A Summary of New Obamacare Tax Forms
In addition to the report filed with the IRS, you will also provide a written statement to covered individuals summarizing the information in the report.
What if We Do Not Offer Employee Healthcare Coverage?
Starting in 2016, all ALEs are required to file the new IRS tax forms.
Additionally, if you are an ALE and you do not offer employees minimum, affordable health insurance coverage in 2015, you may pay an Employer Shared Responsibility tax penalty if/when an employee buys subsidized individual insurance.
However, there is transition relief available in 2015 and some employers with 50-99 FTE employees won’t pay a fee until 2016. Click here to read more about transition relief in 2015.
What are the Reporting Deadlines?
According to the IRS, you may start reporting voluntarily in 2015 for the 2014 plan year, but official annual reporting begins in 2016 for the 2015 plan year.
Starting in 2016, statements should be provided annually to employees by January 31. Forms must be submitted to the IRS by February 28 (March 31 if filed electronically) for the previous calendar year.
Is there a Fee for Non-Compliance?
ALEs may face penalties for not filing informational reporting. However, according to the IRS these fines may be waived for employers that do not file due to reasonable cause. Additionally, the fee may be reduced for errors that are corrected in a timely manner that are not due to reasonable cause.
As Obamacare rolls out, Applicable Large Employers (ALEs) have new reporting requirements. Understanding the healthcare reporting requirements now will help you be more prepared for completing the new IRS tax forms in 2016.
What questions do you have about the new IRS Obamacare healthcare reporting? Leave a question and we’ll help answer.