The Affordable Care Act (ACA) includes a number of new reporting requirements that employers must meet. This means employees are receiving new forms– and, naturally, they have questions.
Note: On December 28, 2015, in Notice 2016-04, the IRS extended the information reporting due dates for insurers, self-insuring employers, other health coverage providers, and Applicable Large Employers (ALEs). Employers subject to the Affordable Care Act’s 2015 information reporting requirements were given extra time to give these forms to employees and file them with the government. Originally, Forms 1094-B, 1095-B, 1094-C and 1095-C were required to be filed with the IRS if filing electronically, by March 31, 2016. That deadline has been extended to June 30th, 2016.
Here are some of the most common questions we’ve seen with the most straightforward answers we can provide:
- What new health care tax forms can employees expect to receive?
Situations vary, but employees can expect one or more forms providing information about their health care coverage from the previous year. This could include:
- Form 1095-A, which will be received by all employees who enrolled in coverage through a Health Insurance Marketplace.
- Form 1095-B, which is furnished by health insurance companies, small self-insuring employers, and other minimum essential health coverage providers.
- Form 1095-C, which is provided by Applicable Large Employers (ALEs), defined as organizations with 50 or more full-time (or equivalent) employees.
- What are these forms for?
The information on these forms verifies that the employee, his or her spouse, and any dependents had the minimum essential health coverage for each month during the prior tax year. They are, in effect, the employee’s “proof of insurance.” This information can then be reported on federal income tax returns (such as form 1040).
Note that employees who did not have minimum essential health coverage may be liable for an individual shared responsibility payment.
- What should employees be looking for on these forms?
These forms are largely for information and reporting purposes. Still, it would be wise for employees to verify that the information on them is correct. For example:
- Recipient’s name, Social Security Number, and Date of Birth
- Any similar information about employee’s spouse or dependents
- Months the employee had coverage
- How much was paid via a tax credit in advance to the insurer
- Should these forms be attached to individual income tax returns?
No. Although the information is used to complete federal income tax returns, the forms themselves should not be attached or sent to the IRS. The issuers of the forms (e.g., employers or health insurance companies) are required to send the information to the IRS separately. Employees should keep the forms for their records along with other important tax documents.
- Can employees file their tax returns even if they have not received these forms?
Yes. Employees should file their individual income tax returns promptly, with or without the forms. It is the responsibility of the employer to provide the forms, but this does not excuse individuals from filing in a timely manner. (Other forms of documentation can be used to verify coverage in a pinch such as insurance cards, an explanation of benefits, or a W-2 that reflects health insurance deductions.)
- If employees have a question, should they try to contact the IRS?
They can, but that is not the preferred step. The form is produced by the employee’s company, health insurance company, or a Health Insurance Marketplace so they would be in a better position to answer any questions.
If you are an ALE, you can find more information about your reporting obligations and the necessary forms on the IRS’s dedicated page for this topic.