The Affordable Care Act (ACA) added two new reporting requirements that might affect you. We asked Laverne Wingfield from Ullico Casualty Group to summarize the details.*
Under Section 6055 and 6056 of the tax code, the IRS requires employers and health plans to report information about which individuals had or were offered minimum essential coverage during each month of the prior tax year. The new reporting requirements allow the IRS to administer the ACA's individual and employer mandates.
Section 6055 applies to plan sponsors or anyone who issues "Minimum Essential Coverage." This includes multiemployer plan sponsors, health plan issuers, government employers, and employers who sponsor self-insured group health plans.
Section 6056 applies to "Applicable Large Employers" (ALE), with an average of at least 50 full-time employees on business days during the previous calendar year.
Under Section 6055, the plan sponsor has the reporting obligation. For multiemployer plans, that usually means that the Board of Trustees or its designee must fulfill the reporting obligation.
Under 6056, the ALE has the reporting obligation, but a third party administrator, third party designee, or the plan administrator may report for the ALE.
Section 6055 is first effective for coverage provided in 2015. This means health coverage providers will file information returns with the IRS in 2016, and will furnish statements to individuals in 2016, to report coverage information in calendar year 2015.
Section 6056 is first effective for coverage offered (or not offered) in 2015. An ALE employer must file information returns with the IRS and furnish statements to employees beginning in 2016, to report information about its offers of health coverage to its full-time employees for calendar year 2015.
Although the IRS has not yet issued the final forms and instructions to be used by plan sponsors and ALEs to fulfill the necessary reporting obligations under Section 6055 and 6056, it is anticipated that the following information will be reported:
If a third party is reporting on the employer's behalf, the name, address and TIN of the third party.
Section 6055 Reporting (Health Plan)
Section 6056 Reporting (Employer)
The deadline to file the forms with the IRS is February 28 (or March 31 if filing electronically) of the year immediately following the calendar year to which the return relates Individual statements must be provided by January 31 after reporting year.
The IRS may impose a penalty of $250 per return not to exceed $3 million for the calendar year for failure to file a correct filing reported under Section 6055 or Section 6056.
For failure to timely furnish a correct individual statement to full-time employees required under Section 6055 or Section 6056, the IRS may impose penalties of $100 per statement not to exceed $1.5 million for the calendar year.
Your Ullico/Markel Fiduciary Policy provides coverage for these and other penalties, subject to any sub-limits specified in your policy and other policy terms and applicable law.
Director, Claims, Ullico Casualty Group Inc.
Laverne Wingfield is a seasoned insurance claims professional with more than two decades of experience managing and adjusting a wide range of exposures. Since joining Ullico in 2004, Ms. Wingfield has worked on all aspects of claims adjudication and risk management for both the Fiduciary and Union Liability lines.
Ms. Wingfield is a member of the Professional Liability Underwriting Society and holds Adjuster licenses in more than 30 states. She graduated from the University of Maryland, College Park with a Bachelor of Arts in Hearing and Speech Sciences and earned a Master of Arts in Legal and Ethical Studies from the University of Baltimore.
A special thank you to John Long, Partner at the Law Firm of Cavanagh & O'Hara (Springfield, Ill.) This article is for basic information purposes only and should in no way be construed as tax or legal advice. Trustees of multiemployer plans should rely on the advice of their tax advisor or fund counsel for changes required by the ACA and other federal laws.
*Sources: www.irs.gov/Affordable-Care-Act/Questions-and-Answers-on-Information-Reporting-by-Health-Coverage-Providers-Section-6055; www.irs.gov/Affordable-Care-Act/Employers/Questions-and-Answers-on-Reporting-of-Offers-of-Health-Insurance-Coverage-by-Employers-Section-6056; www.irs.gov/uac/About-Form-1094-C; www.irs.gov/uac/About-Form-1095-C