Affordable Care Act Reporting Requirements

Are you up to speed on the mandates, penalties and new reporting requirements for individuals and businesses? If you’re a business that employs fewer than 50 people, you may not be aware of (or even understand) the punitive business provisions that do not apply to the roughly 96% of business owners like yourself.

How do Mandates/Credits Affect Me?

Businesses with fewer than 25 employees, can qualify for a credit of up to 50% in 2015, if you meet the following requirements:

  • Have fewer than 25 full-time employee equivalents (FTEs)
  • Not be a member of a controlled group with more than 24 FTEs
  • Have average annual wages for FTEs less than $50,800 (inflation adjusted)
  • Pay 50% or more of the cost of employer offered qualified health plan (QHP)
  • Offer QHP through a SHOP Exchange (for years after 2013)
  • Have not previously claimed the credit in two consecutive years (after 2013)

For businesses with 50 or more employees, the penalties are phased in: To be subject to a penalty in 2015, you must have employed 100 full-time and full-time equivalent employees in 2014. In 2016, that number drops to 50 full-time and full-time equivalent employees in 2015.

What you need to know about reporting employee health care benefits

The Affordable Care Act (ACA) means a new set of tax forms for business owners, and it’s now a requirement to report the types and extent of coverage being offered to employees. While 2014 was an optional year for reporting, that all changes for 2015 as the ACA’s reporting and coverage mandates will be enforced, and business owners like yourself need to understand exactly what is required.

Sage 50 can help you track and report health insurance information and the required 1094 and 1095 forms are expected to be available in time for year-end reporting in Sage 50 Pro, Premium and Quantum editions 2014 or higher.

Form W-2

You must report the cost of health care coverage under an employer-sponsored group health plan in box 12 using code DD.  The amount should include both the portion paid by the employer as well as the portion paid by the employee. This requirement has been in effect since 2012 and was meant to provide employees useful and comparable consumer information on the cost of their health care coverage. Sage 50 allows for easy reporting employer-paid health insurance on W-2 forms.  

Section 6055

Insurers, government agencies and employers of any size who sponsor self-insured group health plans must use forums 1094-B be and 1095-B to report the minimum essential coverage they provide to the IRS and to all covered individuals

Section 6056

Any applicable large employer regardless of whether it’s a tax exempt or government entity must use forms 1094-C and 1095-C to report the health insurance coverage offered to the IRS and to their full-time employees

Understanding all of the rules associated with the Affordable Care Act can be confusing. The good news is that incorrect filings will not be penalized for calendar year 2015 filing (reported in 2016) if you file on time and make a good faith effort to comply.