Hi, I’m Patrick, and I work for the IRS.
The Affordable Care Act includes reporting requirements for employers related to health care coverage.
As an employer, there are a few things you need to know to make sure your organization is ready for these annual requirements.
Before you do anything else, you need to know if you’re an applicable large employer, also known as an ALE.
You’re an ALE if you averaged 50 or more full-time employees, including full-time equivalents, in the previous calendar year.
A full-time employee for any calendar month is an employee who has, on average, at least 30 hours of service per week during the calendar month or 130 hours of service per month.
If you have fewer than 50 employees, but you’re part of a group of related employers, sometimes called an aggregated group, you could also be considered an ALE.
That’s because the ALE status for the combined group applies to each of the employers that form the group.
Now, if you’re not an ALE, you aren’t subject to these reporting requirements unless you provide self-insured health coverage to your employees.
If this is your situation, go to irs.gov/aca and click “employers” for more details.
If you are an ALE, you’re required to report information to the IRS and to individuals about health coverage you offered.
To do this, you’ll need to track some information throughout the year. Each month, you need to track what kind of health coverage was offered to each full-time employee, their spouse and dependents.
You also need to track the amount of the required employee contribution for the lowest-cost, self-only coverage option offered to each full-time employee.
You’ll need this information the following calendar year to prepare Forms 1095-C, which you will file with the IRS and send to your employees.
Form 1095-C will show information about your employees and the health coverage you did or did not offer.
Be sure to check each year for the reporting deadlines.
Weekends and other factors can affect these dates.
And, the deadlines differ depending on whether you file the forms electronically or on paper.
There are a few other things you need to know about the process for filing information returns.
One, just like other year-end forms you already file with the IRS, the most common being Form W-2, you’ll file Forms 1095-C with a transmittal form.
That’s Form 1094-C.
And two, if you’re filing 250 or more information returns to the IRS, you’re required to file them electronically, using the Affordable Care Act Information Returns program, or AIR for short.
Last, when you file returns using AIR, you will use a different process than you might use for other year-end returns.
So be sure to visit the ACA Information Returns, or AIR, page on IRS.gov for details.
Now, if you are an ALE, you also may be subject to an employer shared responsibility payment.
This payment applies if at least one full-time employee receives the premium tax credit and one of the following situations applies to your organization:
You didn’t offer coverage to your full-time employees and their dependents.
Or, you offered coverage that was not affordable.
Or, the coverage didn’t provide minimum value to your full-time employees and their dependents.
To learn more about any of these topics, visit irs.gov/aca.