ACA Reporting—Who’s Filing What Forms and How?

As we’ve pointed out in blog posts over the past few months, ACA reporting is (1) challenging and (2) approaching. We recently asked our members to tell us how well they understand the requirements and how they plan to move forward.

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What Is the Reporting Requirement?

Plan sponsors, employers and health insurers must report to the government (using IRS Forms 1094-B, 1094-C, 1095-B and 1095-C) to show compliance with the ACA employer and individual mandates. Who files what form depends on the organization’s size, if the coverage is insured or self-funded, if minimum essential coverage is offered and if the plan is single employer or multiemployer.

Plan sponsors, employers and insurers with 250 or more forms to file must file electronically with the IRS via the ACA Information Return (AIR) system. Others can submit paper forms but are encouraged to file electronically. For 2015, paper forms are due by February 29, 2016. If filing electronically, the due date is March 31, 2016.

Statements must also be provided to each full-time employee by the end of January. (Because January 31, 2016 is a Sunday, the deadline for this year will be February 1, 2016.)

Are Plan Sponsors Ready?

The reporting requirements can be complicated to understand and implement. Most members responding to our recent survey are at least somewhat far along in understanding the requirements (90%). In gauging their progress and actions, two in five organizations (40%) report being “advanced”—They are successfully collecting the information needed for covered individuals, recording monthly coverage and eligibility, and have developed a plan for reporting to the government and employees. An additional 37% report being at an intermediate stage where they are starting to collect information and records and discussing a plan for reporting. Seventeen percent classify themselves at the beginning stage—They’ve had general discussions about the requirements and forms and have determined whether they must report. Very few (3%) have not yet started discussions.cadillac ssn

As part of the reporting requirement, plan sponsors and employers need to collect dependents’ Social Security numbers. One-third of our survey respondents (34%) told us this collection process is somewhat challenging. One in five organizations (20%) is finding the collection very or extremely challenging. On the flip side, however, one-third (33%) are not finding it challenging. About 6% haven’t yet started collecting numbers.

Three in five organizations (60%) told us they’ll be ready to report to both the IRS and employees by the deadlines. Seven percent anticipate requesting deadline extensions. Three in ten organizations (30%) are not yet sure if they’ll need extensions.cadillac extension

Who Is Handling Employee Reporting?

Self-funded plans may need to report to employees both for minimum essential and applicable-large employer (ALE) coverage—Who handles this reporting varies. Among organizations with self-funded plans, one-quarter (25%) has hired a vendor specifically for this purpose, and another quarter (24%) is relying on internal staff. Sixteen percent are using their regular payroll vendor and 12% their third-party administrator (TPA). One in ten (10%) hasn’t yet decided.

For insured plans, the insurance company reports to employees about minimum essential coverage. ALEs must also report to employees. Among organizations with insured plans, most organizations (23%) will also use their insurance company for ALE reporting to employees. About 18% will use internal staff and 17% will turn to their payroll vendor. Nearly one in ten (9%) has not yet decided.

Who Is Handling IRS Reporting?

As for who is handling reporting to the IRS, many of our corporate respondents will use a vendor hired just for this purpose. Among public employers, the most common plan is to make use of internal staff. Multiemployer health funds will likely use internal staff or turn to their TPA.

What’s Next?

On September 17, the IRS released final reporting forms, so plan sponsors, employers, insurance companies and other vendors can start filling in forms and testing their processes in earnest. Stay tuned to ACA University and ACA Central for updates.

[View the complete ACA Cadillac Tax and Reporting: 2015 Survey Results]

Julie Stich, CEBS
Julie Stich, CEBS
Director, Research at the International Foundation

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