This comes as a surprise to many, but YES – if you are an employer with 50+ employees (or full time equivalent employees), you must complete ACA Reporting to the IRS (forms 1094 and 1095).

But I’m Fully Insured . . . My insurance carrier will take care of this right?   No!

You might have thought that your insurance carrier was going to take care of this, but they only report the portion that they are required to report as an insurance carrier. Employers still have additional responsibilities.

The easiest way to think about this is by considering what the Affordable Care Act accomplished:

  • Individual Mandate – all US citizens must now have health insurance or pay a penalty
  • Employer Mandate – all large employers (50+ employees) must offer coverage and that coverage must be affordable
  • The IRS is in charge of making sure these things happen.

So how does the IRS make sure that an individual did have health insurance and doesn’t owe an individual tax penalty?

This is accomplished through the IRS receiving specific forms from the various places that an individual could have coverage:

  • The exchanges send the IRS the ‘A’ Forms (1095A)
  • The insurance carriers send the ‘B’ Forms (1095B)
  • Self insured employers must complete the entire 1095-C (part I, II & III)
  • Fully insured employers must complete Form 1095-C, parts I (employee demographic information) & II (employees offer & coverage month-by-month),  while your insurance carrier (BCBS, Humana etc) will issue a separate 1095-B (covered individuals or belly buttons covered on the plan month-by-month.

How does the IRS make sure each large employer (a) offered coverage and (b) that the coverage was affordable?

This is accomplished through the IRS receiving a completed form 1095 by ALL LARGE EMPLOYERS.  Specifically, part II of form 1095-C is used to accomplish this task. So yes your employees will need be receiving TWO 1095s. 1095-B will be issued by your carrier showing coverage on a month-by-month basis. Another 1095 will need to be completed by you the employer (1095-C) with part I & II completed. These forms are due at the same time as form W-2. The chart below will outline all possible scenarios.

IRS 1095 Tax Coverage Scenarios

To avoid confusion, large employers that are fully insured might consider communicating with covered employees to clarify that the employee should expect to receive two forms (Form 1095-B from the insurer and Form 1095-C from the employer) for the same coverage period.

If an employer is fully insured, what documents do part-time employees covered on health plans need to receive?

Employers are required to supply Form 1095-C to part-time employees only when the part-time employee is covered on the plan and when the plan is self-insured. See the chart below that outlines all possible scenarios.

IRS Form 1095 reporting for employers

So as you can see this is not something that will be fulfilled by insurance carriers, and the penalties for not filing are substantial.  (IRS Fines)

Contact us today. We have tools to automate this entire process and generate all the forms for you. If your self-insured you have additional requirements that we can automate as well.