Get Your Processes In Place Now For Sec. 6055/6056 Reporting, HighRoads Warns Employers

Now is the time to put processes in place to comply with Code Sec. 6055 and Code Sec. 6056 reporting requirements, said presenters at a recent HighRoads webinar, especially since the penalties for noncompliance or inaccuracies are steep.

The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs, and other entities that provide minimum essential coverage to file annual returns reporting information for each individual for whom such coverage is provided. This is known as “Sec. 6055 reporting.”

The ACA also requires applicable large employers (ALEs) – generally employers with at least 50 full-time employees, including full-time equivalent employees – to file information returns reporting the terms and conditions of the health care coverage, if any, provided to full-time employees (FTEs). This is known as “Sec. 6056 reporting.” The presenters of the “Employer Shared Responsibility Reporting Requirements: A Sense of Urgency for Large Employers” explained that reporting is done on Forms 1094-B, 1095-B, 1094-C and 1095-C. Forms 1094-B and 1095-B are for health insurance issuers or carriers providing minimum essential coverage, and Forms 1094-C and 1095-C are for employers with 50 or more full-time employees. Forms 1095-B and 1095-C must be furnished to individuals by February 1, 2016, and those forms, plus Forms 1094-B and 1094-C must be filed with the IRS on or before February 26, 2016, unless they are filed electronically, in which case they are due by March 31, 2016.

Stiff penalties. The penalties for inaccurate/untimely filing of payee statements is $100 per required return plus $100 per statement, although the IRS is not imposing penalties for 2015 returns and statements sent in 2016 if a reporting entity can now evidence of its good-faith efforts to comply with the requirements, the presenters explained. As an example of what noncompliance could cost, they pointed out that an employer with 15,000 employees could incur statement penalties of $100 X 15,000 plus inaccurate filing penalties of $100 X 15,000, for a grand total financial risk of three million dollars.

Therefore, they said, employers should gather information and data and put processes in place now so they will be ready to report on provided coverage for 2015. Know where to obtain necessary data elements, and who in your organization might have required information, they advised. Things and people to identify include systems that will be used as data sources, a person with the technical capability to calculate affordability and generate reports, and someone to distribute statements to participants. Communications for providing context and setting expectations for employees should also be crafted, they added.

Employers’ benefits administrators should provide eligibility, contribution, and enrollment data. Employers should also have either a consultant or actuary provide minimum-value/minimum-essential coverage certification. Early preparation is especially important because, as the presenters noted, the existing forms are unclear with respect to requested information and there is insufficient space allotted for complete answers to some complex questions. The forms also straddle both benefits administration and tax reporting, which the presenters feel means that the forms present unique challenges.


Visit our News Library to read more news stories.