2015 ACA IRS Filing Requirements: Are You Prepared?

By: Kimberly Flett, CPA, QPA, QKA
Senior director, Compensation and Benefits

Under the Affordable Care Act (ACA), most taxpayers must have health insurance or pay a penalty. The IRS relied on good faith when individual taxpayers verified they had minimum essential healthcare coverage on the 2014 Form 1040. Beginning in the 2015 tax year, however, in order to determine proof of coverage and satisfy the employer mandate, employers with more than 50 full-time equivalent employees (Applicable Large Employers, or ALEs) must submit informational reports to the IRS that summarize details about the healthcare benefits provided to employees. What do restaurant operators need to know to be sure they are in compliance?
Understand which forms must be furnished to employees and the IRS.

These forms—known as 1095-B or 1095-C, depending on the size of the employer and type of coverage offered—need to be distributed to employees by March 31, 2016. ALEs must distribute Form 1095-C to employees regardless of whether they offer fully insured or self-funded insurance plans. On the other hand, employers with self-funded plans and less than 50 employees must issue Form 1095-B. Insurance carriers also must issue form 1095-B for all fully-insured employees. The IRS will use the forms to determine not only whether an individual has coverage, but also if their employer has met their obligations under the ACA.
Form 1094-B and Form 1094-C are the transmittal forms that employers must submit to the IRS by either May 31, 2016 or June 30 (if the electronic filing requirement is met). Additionally, employees who purchased a healthcare plan on an exchange will receive Form 1095-A.
Know which employees are subject to the reporting requirement.

The ACA reporting requirements can be complex for restaurants. Full-time employees (defined under the ACA as working 30 hours or more weekly) must be reported on the 1095-B or 1095-C series forms whether or not insurance is offered or chosen by the employee. Variable-hour employees determined to be full-time during a specified measurement period and part-time employees with coverage must also be reported. Compliance can be complicated when there are a number of employees who fluctuate between full and part-time working hours and are not covered by insurance. Missing an offer of coverage for an employee who should otherwise be eligible can trigger a penalty for employers under the ACA.

Become familiar with how the information must be organized and reported.
Coverage information, such as dependents, type of coverage and costs, are listed by month in the informational reports employers must provide. Providing a complete and accurate summary may be difficult in situations where employees are hired, terminated or experience a qualified change in status, such as marriage or divorce, mid-year.
It is essential to consult with both a tax advisor and a legal and benefits expert to determine compliance with the ACA reporting requirements. Ultimately, the responsibility lies with the plan sponsor to ensure the insurance carrier is providing the necessary forms and to complete the employer filing requirements, as well. If employers have not prepared for the 2015 filing year, action must be taken soon.
If you’re in the Cleveland area, join us January 20 as I host BDO’s Cleveland Restaurant CFO Roundtable.  For more information, click here.
Have questions about the ACA reporting requirements? Contact Kimberly Flett at kflett@bdo.com, and be sure to keep up with the Practice's latest thoughts by following us on Twitter at @BDORestaurant.