Healthcare Reform

Affordable Care Act Reporting Requirements

The Affordable Care Act (ACA) imposes reporting requirements on employers and plan sponsors that will assist the Internal Revenue Service in determining compliance with two ACA mandates:

1. The Employer Mandate - the requirement that large employers offer full-time employees affordable health coverage that meets minimum value requirements (reported on Forms 1094-C and 1095-C)
2. The Individual Mandate - the requirement that individuals and their dependents obtain minimum essential health coverage, or MEC (reported on Forms 1094-B and 1095-B)

Failure to comply with the Employer Mandate may result in the employer being subject to IRS penalties.

Enacted in December 2017, the Tax Cuts and Jobs Act (TCJA) reduced the individual mandate penalty to zero for tax year 2019 and subsequent years. This means that individuals no longer have to pay a federal penalty as a result of not having MEC. However, penalties for not having MEC may apply in certain states.

Individual Mandate Forms

The IRS tax form 1095-B, required for the Individual Mandate, must be provided to employees covered by a health plan regardless of employer size. The Individual Mandate forms (Forms 1094-B and 1095-B) will be filed with the IRS by the Medical Trust or, in the case of fully insured medical plans, the insurance carrier. Therefore, neither your organization nor organizations within your group that participate in Medical Trust plans are responsible for filing the Individual Mandate forms.

Note, however, that small employers that sponsor a health reimbursement arrangement (HRA) may be required to prepare and file forms 1094-B and 1095-B for their employees. If you sponsor an HRA, please review Notice 2015-68 and consult your tax advisor.

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