Affordable Care Act Mandates Year End Reporting for 2015 and Penalties for 2016

For 2015, the Affordable Care Act (ACA) requires mandatory reporting to the IRS and employees for Employers with 50 or more full time equivalent employees. Form 1095-C will be used to provide employees with information about the health insurance coverage offered to them. An employee that receives this form from an employer should provide it to their tax preparer in order to correctly calculate any penalty or credits associated with mandatory health coverage required for every individual.

Form 1095-B would be provided to an individual by their insurance company or if their employer is self-insured. Form 1095-A is issued by the health insurance exchanges. These two forms serve as proof of qualifying health insurance coverage, the individuals that were covered and the months that each was covered during the calendar year. These forms should be provided to your tax preparer.

All three forms, Form 1095-A, 1095-B and 1095-C must be provided to the individual by February 1, 2016. This may be the first time you’ve seen these forms as they were not mandated in 2015 for the 2014 tax year. The exchanges provided these forms last year, but in some cases, the taxpayer had to login to their exchange account and print out Form 1095-A as it was not mailed to the individual.

The penalties for large employers (over 50 full time equivalent employees) was not enforced for 2015. However, beginning in 2016, these penalties will be enforced and they can be very severe (up to $2,000 per full time employee not covered.)

If you have any questions about the definition of the terms used or what needs to be done to implement your required reporting, please contact us at 1-866-287-9604 and we will be glad to provide you additional information about complying with these very complex ACA mandates.

Posted by Tim Eldridge, CPA