The Affordable Care Act (ACA) requires certain employers to report health insurance coverage provided to their employees. This reporting is for informational purposes only and does not mean that the employee will be taxed on the value of employer-provided insurance.
There are two different types of reporting:
Employers of any size that provide group health insurance to their employees must report the value of that insurance on Form W-2 in Box 12 with Code DD. The reported amount should include the total paid by both the employer and the employee.
The employer can choose whether to also report dental and/or vision insurance premiums. Amounts paid to a health savings account (HSA) or medical reimbursement flexible spending account (FSA) should not be reported on the Form W-2. More information is available on the IRS website.
Form W-2 is generally due by January 31 for the previous calendar year.
Forms 1094-C and 1095-C
Employers with 50 or more full time equivalent employees are considered “applicable large employers” or ALEs. These employers are responsible for reporting health insurance offers and coverage on Forms 1094-C and 1095-C.
Form 1095-C is provided to each employee and reports the following information:
• The employee’s name, Social Security number, and address
• The employer’s contact information and FEIN
• A coverage code indicating whether the employee was offered health insurance coverage and the months of coverage
• The employee’s share of the coverage cost under the lowest cost, minimum value plan offered by the employer for each calendar month
• The applicable safe harbor code under the employer shared responsibility or employer mandate penalty
Form 1095-C can be provided by the insurance company issuing coverage under a fully insured health insurance plan or by the employer that provides self-insured health plan coverage.
Form 1094-C provides an employee summary is used to transmit employee Forms 1095-C to the IRS.
Form 1094-B and 1095-B
An employer that provides self-insured health coverage but is not an ALE should file Forms 1094-B and 1095-B to report employees who enrolled in the employer’s self-insured health plan.
These forms must be provided by February 28 (if filing on paper) or March 31 (if filing electronically) following the calendar year to which the return relates.
For More Information
These reporting rules can be complex, and this article provides just a quick overview of the requirements. For more information, please contact your Mize payroll professional or see the IRS instructions for Forms 1094 and 1095.