As you know, everyone in the United States is now required to have health insurance, or pay a penalty. And as an employer, you also know that individuals must be able to prove that they maintained health coverage in 2015, either through their employer or by acquiring other health insurance. Even though you are likely aware of the intricacies of the ACA & how it affects your employees, it’s still a good idea to communicate this new step to them to avoid misunderstandings or undue worry.
Your employees don’t need to be tax attorneys, but they should learn about their own responsibilities and what they can expect from you and their insurance carrier. This proof of insurance involves IRS Forms 1095-C and 1095-B:
Form 1095-C simply documents the months employees were offered health insurance in 2015, as well as in future years. If the employer is considered an applicable large employer with 50 or more full-time and/or full-time equivalent employees, then the employer has until March 31, 2016 to prepare and deliver Form 1095-C to all fulltime employees.
Form 1095-B provides data on the employee (and potentially family members) enrolled in coverage, and will be sent directly to the employee from the insurance carrier, or included in Form 1095-C if their employer is self-insured.
Both employers and health insurance carriers are responsible for providing the IRS proof that coverage is provided to employees.
Initially, these 2015 forms were to be sent to employees by January 31, 2016. However, the IRS provided an extension, so that employers and insurance providers now have until March 31, 2016 to deliver these reports. For this reason, it’s important to let your employees know that they may not have the hard documents in hand when working with their tax preparer, but that’s okay!
Reassure your employees that they can self-report to the IRS, identifying the months they received health insurance coverage. Then, once they receive the forms, encourage them to retain the forms for their records in the event of a future audit.