Are You Ready? Large Employer Tax Reporting to Both the IRS and Employees


As VP of Sales and Marketing at a DC Metro area Employee Benefits firm where we are dedicated to research and awareness of all aspects of Employee Benefits, my team and I have studied, compiled and simplified (to the extent possible) the complex IRS reporting requirements.

The IRS recently released final forms and instructions for Section 6055 and 6056 reporting. Additionally, the IRS released Publication 5196, Understanding Employer Reporting Requirements of the Health Care Law in order to help employers prepare for reporting in 2016. Along with these publications was the ruling that Applicable Large Employers (ALEs) must track relevant reporting information beginning January 2015. It is with these IRS notices that we analyzed and created this report. While we are all licensed brokers and consultants, this article is in no means a substitute for a licensed tax professional (CPA and/or tax attorney). However, there are so many forms, deadlines, definitions and instructions out in the stratosphere many employers feel lost in the new world of insurance and how it can severely impact corporate plans and budgets. One of our key intentions is to create a community of well-informed HR and Benefits professionals.

Here are some helpful FAQs regarding employer reporting to make sure you are ready!

The BIG Question… Who is required to report?

Applicable large employers (ALEs) must report to the IRS information about the health care coverage, if any, they offered to full-time employees and their dependents.

Even if an ALE with at least 50 but fewer than 100 full-time employees (including full-time equivalents) is eligible for the transition relief for 2015 from the employer shared responsibility provision, the ALE is still required to complete the information reporting for 2015.

Am I a large employer?… Who is considered an applicable large employer (ALE)?

The definition of an ALE is rather complex and requires a closer look at the types of employees an employer employs. In general, an employer is considered an ALE if it employed during the preceding calendar year or a continuous six-month period in 2014, 50 or more full-time or full-time equivalent employees. Full-time equivalent employees take into account part-time and seasonal employees’ hours. Independent contractors are not included in the FTE calculation. Furthermore, certain owners and leased employees can be excluded from the employee count.

The OTHER BIG Question, Why?… What will reporting accomplish?

This information reporting is integral to the administration of the employer shared responsibility provisions (employer penalties) because it provides information to the IRS about the health coverage, if any, an employer offers to its full-time employees. Information reporting is also integral to the administration of the premium tax credit. Any employee who does not enroll in an employer plan (but instead enrolls in coverage at the Health Insurance Marketplace) needs information on the employer’s offer of coverage, including the cost of coverage, to determine whether that individual is eligible for a premium tax credit.

So, WHAT do I do?… What form must be furnished to full-time employees?

ALEs must furnish to employees a statement (Form 1095-C) that includes the same information provided to the IRS. Employees may use this information to determine whether, for each month of the calendar year, they may claim a premium tax credit on their individual return.

Do I have a deadline?… When to report?

ALE members must file Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, and Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, with the IRS annually, no later than February 28 (March 31 if filed electronically) of the year immediately following the calendar year to which the return relates. This is the same filing schedule applicable to other information returns commonly filed by employers, such as Forms W-2 and 1099.

Also, ALE members are required to furnish a statement to each full-time employee that includes the same information provided to the IRS, by January 31 of the calendar year following the calendar year for which the information relates.

Do I have a estimated timeline?… How long will it take to file the new forms?

The time needed to complete and file the new forms will vary depending on each employer’s circumstance. In general, the Department of Treasury has determined that it will take approximately four hours to complete Form 1094-C and 12 minutes for each Form 1095-C. As a reminder, a Form 1095-C is used to report information about each full-time employee. If you employ 100 full-time employees, that’s 20 hours needed to complete 100 1095-Cs.

Hopefully this information can gain some traction and help employers that are unsure of their requirements. We will be publishing again soon with more Are You Ready? series articles to make sure we do our part to update and inform.

Learn more about how we can help with your reporting requirements.