Under the Affordable Care Act (ACA or health care reform law), U.S. citizens and legal residents must have basic health insurance or face a penalty. This basic insurance is called minimum essential coverage (MEC). Many people already get coverage that counts as MEC through their employers. Those who don’t have it may have to pay a penalty to the Internal Revenue Service (IRS). It’s called the individual shared responsibility payment. The penalty starts with the 2014 tax year and will be due when tax returns are filed in 2015.
What this means for group members When group employees file their personal 2014 federal income tax returns in 2015, they’ll see a new box to check to state whether they had health care coverage all year. If they didn’t have coverage, even for part of the year, they may owe a penalty. If they don’t pay the penalty, the IRS will deduct it from any refund they’re due.
Reporting for fully insured (FI) group business Starting in 2016, employers, insurance companies and others who provide MEC will be required to report who’s covered with them to the IRS. This is called Minimum Essential Coverage Reporting, or IRS Code Section 6055 Reporting, and it will take place each year. This is how the federal government will make sure people have MEC. It’s also how the IRS will determine who may owe a penalty for not having coverage.
As required by the law, insurance companies will file the 1095-B form for fully insured groups and send a copy to the plan members. When the carriers send the IRS reports, they will list all individuals covered under a group’s plan by their Social Security numbers (SSNs).
Reporting for self-funded group business Self-funded or Administrative Services Only (ASO) groups are responsible for filing their own reports, called 1095-C, starting in 2016. They also are responsible for getting the SSNs from workers and their dependents. They can hire a third party to do the reporting for them, but the employer is responsible for the report being complete and correct. We will not act as the third party for ASO groups and will not file the report for a fee.
There will be fines for ASO employers who don’t file their yearly reports. As long as they file a report in 2016, they won’t be fined for that first year if some information is incorrect or incomplete. An example of this would be wrong or missing SSNs or dates of birth. If this happens, they will have to file a corrected report.
ASO employers will also need to send a Statement of Minimum Essential Coverage to each worker who has information reported on themselves or their dependents. They can deliver statements by mail, email (in accordance with IRS requirements*), or in person. Instructions have to be given for how to get and print the statement, and have to include IMPORTANT TAX RETURN DOCUMENT AVAILABLE in all capital letters. This must be the subject line if sent by email.
regarding Statements of Minimum Essential Coverage, see page 11 of Department of the Treasury, Internal Revenue Service, Information Reporting of Minimum Essential Coverage, section 1.6055-2 Electronic furnishing of statements
