ACA Forms Due to Employees by March 31; Potential Need to Appeal Marketplace Employer Notices on the Horizon
By Hugo P. Rojas
March, May and June Employer Affordable Care Act (ACA) Reporting Deadlines
The revised deadline for employer ACA reporting is just around the corner. By the end of the month (March 31, 2016), employers required to report health care coverage offers must furnish a statement to employees who worked 130 hours or more in at least one month in the 2015 calendar year. These employees should receive a completed IRS Form 1095-C or 1095-B, as applicable. Thereafter, employers have until May 31, 2016 (or until June 30, 2016, 2016, if filing electronically) to submit copies of these forms to the IRS, together with transmittal Form 1094-C or 1094-B. As summarized in our prior Alert, the specifics of which IRS form must be furnished to employees depends upon the coverage type, the size of the employer, and whether or not the employer is affiliated, or under common ownership with, other employers.
Because this is the first year that full-time employees will be receiving a Form 1095-C, communication with employees about the forms can be helpful. Issuing the forms also presents an opportunity to mention the company’s overall ACA compliance strategy or approach.
Failing to comply with these deadlines for furnishing and filing the ACA reporting forms could expose employers to significant fines. The penalty per form, originally $100, has now increased, to $260, and total maximum penalties have increased to $3,178,500 per year. These penalties are completely separate from the so-called pay or play penalties (also known as employer mandates).
Coming Soon: Marketplace Employer Notices
Beginning this spring, the Healthcare.gov Marketplaces, including Federally-Facilitated Marketplaces (covering states without state-sponsored exchanges, like Wisconsin), will begin to send notices to employers whose employees have received an government-subsidized Marketplace health insurance. Marketplaces will be mailing the employer notices in batches. It has been announced that the first batch of Notices is expected to be issued in the spring of 2016. Additional batches of notices will be mailed throughout 2016.
Importance of Prompt Employer Review (and Appeal, if Appropriate)
Because employee receipt of a Marketplace subsidy can trigger the assessment of pay or play penalties on a company, employers should carefully review these Marketplace-issued employer notices. If you, as an employer, know that you offered ACA-compliant coverage to an individual, but you receive notice that such individual received a Marketplace subsidy, you should appeal the notice by proving that the employee was offered coverage meeting ACA standards. This can avoid the improper assessment of pay or play penalties on the company. Because there is only a 90-day appeal window, however, time is of the essence in reviewing (and appealing) Marketplace employer notices.
If an employer’s appeal is successful, the Marketplace will send a notice to the employee recommending that he or she correct the relevant enrollment application to indicate access to, or enrollment in, employer-offered coverage. The notice to the employee will further explain that failure to ensure a correct application can result in tax liability for the employee.
Employers should be well on their way to completing the IRS Form 1095-C (or 1095-B) statements due to employees by March 31. Employers must ensure that duplicates of these forms are then transmitted, as required, to the IRS by the applicable May or June deadline.
It is also time for employers to prepare in advance for receipt of the Marketplace employer notices. Specifically, employers should be developing a process for handling the notices, including confirming whether notices are received for any employees who were offered workplace health coverage. If a notice is received for an employee who was eligible for workplace insurance, the employer must protect itself by appealing such notices.
If you have any questions about ACA reporting requirements, deadlines, penalties, or the Marketplace employer notice appeals process, please contact your Davis & Kuelthau attorney or the author, Hugo P. Rojas at 414.225.1413 / firstname.lastname@example.org.