- posted by Loree Dubois in the Tax Blog
With ACA deadlines approaching, look out for new requirements under ACA sections 6055 and 6056. HR Executives should expect questions and concerns from employees about how the ACA will affect their benefits.
When are the reports due?
Reporting requirements under section 6055 and 6056 do not begin until January 2016 for employees and March 2016 to the IRS but the data required to be reported is based on 2015. Employers should act accordingly; It is best to have the necessary information ready by January 2015. Though the IRS has not released the forms required for this reporting (forms are still in draft format), employers should prepare all their information, and make sure they are practicing appropriate record keeping.
What are the requirements?
For self-insured employers, Section 6055 requires reports filed with the IRS that include information on each individual who received minimum health coverage. Those individuals must complete a statement each year for tax filing purposes that discloses this information by month covered.
Employers must report health coverage provided to full time employees to the IRS under Section 6056. Statements must be sent to employees for this as well.
Perhaps the greatest difficulty involved in this process is that the IRS has not yet released forms for this reporting, so it is difficult for employers to prepare adequately. There are other challenges as well, including:
- Different systems: Collecting all the required data could be difficult as the information could be on different systems administered by different vendors. Employers have to make sure records match up for hours worked, and coverage availability, for example.
- Personal information: Employers could be required to acquire personal information from employees under the new requirements, which employees could find invasive. Questions about Medicaid eligibility and social security numbers for dependents are sensitive pieces of information that employees may be reluctant to release.
Get ahead of the game
It is a good idea for employers to start gathering the relevant information to prepare for the report. To ensure that you are preparing to the best of your ability, make sure to:
- Form a strong working relationship with your broker. Brokers are able to work with companies to ensure that they are developing the appropriate materials to connect with employees and are administering the required compliance.
- Assign leadership to HR. HR execs must ensure that communication and compliance work with vendors is managed properly. Employees will wonder why they are receiving letters, so there should be coordination between HR and vendors and consultants.
As long as employers show that they are complying with the new requirements to the best of their ability, the federal government is expected to be flexible and understanding. The information in this new form will have relevant and necessary information that employees will need to properly file their tax returns. Early preparation for this will ensure that HR executives will have an easy time working with the new reporting process. For more information, contact Loree Dubois, CPA or any member of our Healthcare Services Group.