New IRS Reporting Rules: Start Preparing Now

Posted by Christopher K. Bao, Esq, Compliance Manager on July 6, 2015 at 10:00 AM


For most companies with more than 50 employees, 2016 will bring significant new Internal Revenue Service (IRS) employer reporting requirements.

The goal of the IRS: To ensure that your employees maintained health insurance coverage in 2015, in addition to ensuring that certain employers offer coverage to full-time employees, as mandated by  the Affordable Care Act (ACA).

Preparation is the key to managing this additional workload brought on by the ACA for your HR, Finance and Payroll teams.  Planning is critical if you want to avoid a potentially big penalty. Employers may be fined up to $1.5 million for failing to report the proper information to the government.

By January 31, 2016, employers are required to report to an employee (and the government) as to what months the employee was offered coverage, in addition to other information related to the coverage, to the employee and the government.  An employer must also transmit this information (along with other information regarding the offer of coverage to all of their employees) electronically to the government by March 31, 2016 (paper transmittals will be due one month earlier). 

Based on our discussions with HR managers, many companies are still in the preliminary planning stages, with no finalized plans. Now is the most opportune time to consider a solution and we have one in mind –MMA Marketlink from Barney & Barney / MMA West. We’ll cover that below.

New IRS Forms

The ACA created new reporting requirements for insurance providers and employers.

  1. Providers of insurance are required to file with the government all individuals that are covered under its plan.  This information will be used by the government to check whether an individual is enrolled in medical coverage, thereby avoiding penalties under the Individual Mandate.
  2. Companies considered an Applicable Large Employer (ALE) will also be required to report to the government that they have complied with the ACA’s requirement to offer health benefits to employees.  The government will use this information to check whether an employer is subject to any penalties under the Employer Mandate.  

To verify that information, the IRS created two series of Forms:

IRS Forms 1094-B and 1095-B (B series Forms)

Employees (and individuals) who are citizens or legal residents in the United States must be enrolled in medical coverage, as proscribed by the ACA, or suffer a penalty. Form 1094-B notifies the government of the entity that issues insurance, and 1095-B confirms who is enrolled in that insurance provider’s coverage.

IRS Forms 1094-C and 1095-C (C series Forms)

Form 1094-C is a transmittal to the government by a company, summarizing information about the company, and whether it offered coverage to substantially all of its Full-Time employees.  This is essentially a cover sheet and will be attached to all of the company’s 1095-Cs.  This Form is due by March 31, 2016 (or one month earlier if the Form is not filed electronically). 

Form 1095-C explains to each full-time employee, and the government, the coverage that was offered to them, and whether their coverage met certain requirements, including whether the plan was “affordable” to them, and whether it provided Minimum Value.  It may also designate whether the employee was enrolled in the company’s health benefits. This Form will be due to each employee by January 31, 2016.

Employers will be fined $100 per day for each 1095-C form that has not been provided to their employees.

Managing A New Workload

The new reporting requirement will create a substantial new burden on employers because employee information needed to populate the 1095-C Form is often spread across separate technology platforms including payroll, benefits administration systems, and employee hour tracking. Many companies don’t have a sophisticated software system to aggregate all of the data points necessary to satisfy the employer reporting requirements efficiently.

Given the employer reporting requirements, companies with high turnover or seasonal employees should consider streamlining the distribution and collection of employee hours.

The MMA MarketLink Solution

Using technology to meet the reporting requirements is the most effective way to manage all of the administrative paperwork.

Over the past year, Marsh & McLennan Agency has developed MarketLink, a technology solution to help companies achieve that objective.

One component of the robust MarketLink solution will enable organizations to do the following:

  • Track and calculate Variable Hour / Part Time / Seasonal Employee hours through their measurement periods
  • Automatically notify HR if employees are gaining full-time status or losing coverage as a result of their hours of service during their measurement period
  • Aggregate payroll data, benefits information, and time/attendance
  • Prepare and transmit all 1094-C and 1095-C Forms for employers
  • Provide employers with a snapshot of where their organization stands as it relates to full-time and part-time employees
  • Collect data on different types of employee leave (paid, unpaid, special unpaid) and incorporate that information into an employee’s measurement period

MarketLink can be delivered as a company-branded, private label solution.

The new IRS reporting rules under the ACA demands that companies plan carefully. For those that do, the challenge of the reporting requirements can be managed effectively with Marketlink – to help avoid the potential of significant penalties to employers.

To learn more about IRS Reporting, please download our latest Legal & Compliance Seminar webinar recording.

For more information about MarketLink, please contact Maddie Altschuler, 858.587.7472,

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Topics: Employee Benefits, Health Care Reform, Legislative Compliance

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