The Affordable Care Act (ACA) continues to remain a game-changer. In 2016, many employers will first report certain health coverage enrollment and eligibility information about their employees and dependents beginning with the 2015 calendar year. Depending on the employer’s type of health benefits product and the calculation of full-time employees, the insurer and/or the employer is responsible for producing and distributing certain forms to the IRS and employees/ policyholders.
As a business owner, do you know what’s required of you regarding insurance reporting?
At Minnesota Health, we can walk your through some top-level factors so you understand the reporting requirements as they relate to the insurance product you have. We can also help you feel confident in calculating full-time employees as viewed by the IRS for reporting purposes.
For starters, if you’re an employer, the sections to review regarding these new requirements are sections 6055 and 6056. A few terms you should understand going into a review for your particular business include: Minimum Essential Coverage (MEC) and Applicable Large Employer (ALE).
MEC (Minimum essential coverage)
Minimum essential coverage is qualifying health care coverage an individual must have to meet the individual shared responsibility requirement (Individual Mandate) under the Affordable Care Act (ACA). If you need to brush up on MEC or get a good intro to the variety of types of coverage and confirm where your employer-offered insurance falls, check out the IRS’ chart of what qualifies and what doesn’t here.
If you’re offering group health insurance coverage for employees under a self-insured group health plan for employees, COBRA coverage or retiree coverage, for example, those all qualify as minimum essential coverage. This means the 6055 and 6056 reporting requirements apply to your business.
ALE (Applicable Large Employer)
Next you’ll want to determine where you fall size-wise. This is where the term ALE or Applicable Large Employer, comes into play. Applicable large employers that are subject to the employer shared responsibility provisions under section 4980H are required to report under section 6056. The IRS states that an applicable large employer is an employer that employed an average of at least 50 full-time employees on business days during the preceding calendar year.
A full-time employee generally includes any employee who was employed on average at least 30 hours of service per week and any full-time equivalents (for example, 40 full-time employees employed 30 or more hours per week on average plus 20 employees employed 15 hours per week on average are equivalent to 50 full-time employees). For more specifics on the employee count determination, see #5-12 here.
If there’s no question in your mind that you are under 50 employees, you’ll want to see the information for small businesses here.
Who’s Responsible?
Specific IRS Forms are first due in early 2016 and the responsibility for producing the required forms differs based on the type of product. For fully-insured products, the insurer is responsible for producing and distributing the forms insured group plans sponsored by non-ALE’s and for insured individual market (off-exchange) plans. For self-insured products, the employer is responsible for producing and distributing the forms (regardless of size).
We Can Help You Navigate it All!
With the continued complexities of insurance coverage and reporting, Minnesota Health can be your trusted source for understanding reporting requirements. We find it helpful to talk with our clients on an ongoing basis or at the onset of change. Those of you we haven’t yet talked with, who have concerns and questions, we welcome an exploratory conversation. Our goal is to help you frame how you’re required to handle reporting come early 2016. Make that game-changing call to us today at 651.348.7220!