6055 and 6056: ACA Reporting by the Numbers

If you have been keeping up on healthcare reform, you may have heard the numbers 6055 and 6056 and wondered what they meant. If you haven’t heard of them, rest assured: you will. The numbers actually refer to Internal Revenue Service (IRS) code sections. Those code sections require certain data to be reported to the IRS. The best way to break down each section is to ask the 5 W’s: Who, What, When, Where, Why.

Who needs to report?

6055: “Every person who provides minimum essential coverage to an individual during a calendar year.” 26 U.S.C. § 6055(a)

  • Minimum Essential Coverage – coverage under an eligible employer-sponsored plan (any plan offered within a small or large group market). 26 U.S.C. § 500A(f)(1)(B)-(2).
  • Per IRS guidance, eligible employer-sponsored coverage is either:
    • A self-insured group health plan offered by an employer, or
    • Group health insurance offered by an employer that is:
      • A governmental plan;
      • A plan or coverage in the small or large group market within a state, or
      • A grandfathered health plan offered in a group market.
  • “An employer that sponsors an insured health plan (a health plan that provides coverage by purchasing insurance from a health insurance issuer) will not report as a provider of health coverage under section 6055. The health insurance issuer or carrier is responsible for reporting that health coverage.” – IRS Questions and Answers on Information Reporting by Health Coverage Providers (Section 6055), answer 8.
  • For self-insured employer plans, the plan sponsor – typically the employer – is responsible for compliance with 6055. However, the plan sponsor of a self-insured employer plan could also be:
    • An association, committee or board of trustees who establish and maintain a multi-employer plan;
    • An employer organization or union that maintains the plan, or
    • Each employer participating in a Multiple Employer Welfare Arrangement.

6056: “Every applicable large employer required to meet the requirements of [the employer mandate] during a calendar year.” 26 U.S.C. § 6056(a).

  • ALEs must offer (50+ Full Time Equivalent employees) full-time employees opportunity to enroll in minimum essential coverage plan.
  • Employer responsibility, so if employer needs data from carrier (ex., coverage codes or covered life SSN’s, employer should specifically request that data from the carrier or check carrier reports / statements).

What needs to be reported?

 6055:

  • Forms 1094-B (transmittal) and 1095-B (return). Instructions for completing the forms can be found here. The forms themselves are still officially in “draft” status. But it is safe to assume the final versions will look substantially similar and require the following information:
    • Name, Social Security Number (“SSN”), date of birth and mailing address of the “responsible individual”;
    • Identifying origin of the policy;
    • Name, Employer Identification Number (“EIN”) and mailing address for employer sponsoring the plan;
    • Name, EIN and mailing address for the provider of coverage;
    • Names, SSNs, dates of birth and coverage information for all covered individuals.
  • “Every person required to make a return under [6055] shall furnish to each full-time employee whose name is required to be set forth in such return [. . .] a statement showing” the name and address of the person required to make the return and the contact information for that person, along with the information shown on the return with respect to that individual. 26 U.S.C. § 6055(c)(1).
    • The IRS has interpreted this as requiring the employer to provide a copy of the 1095 B form to the person for whom it was created. Although the statute only requires copies to be provided to full-time employees, the best practice is to provide a copy to each person – full-time, part-time, retiree or COBA participant.

6056:

  • Forms 1094-C (transmittal) and 1095-C (return for each employee). Again, these forms are drafts, but give a good indication of the information that will be required. Reporting for 6056 is a bit more complex because employers are required to complete a Form 1095-C for each full time employee.
    • Name, SSN, and mailing address for each employee;
    • Name, EIN, mailing address and phone number for the employer;
    • Detailed, month-by-month codes for the offer of coverage made to each employee;
    • Name, SSN, date of birth and coverage dates for each covered individual under the plan.
  • “Every person required to make a return under [6055] shall furnish to each full-time employee whose name is required to be set forth in such return [. . .] a statement showing” the name and address of the person required to make the return and the contact information for that person, along with the information shown on the return with respect to that individual. 26 U.S.C. § 6055(c)(1).
    • Again, the IRS has interpreted this as requiring the employer to provide a copy of the 1095 C to the employee for whom it was created. Again, best practice is to provide a copy to each employee for whom a form was generated, rather than only full-time employees.

When do you report?

6055 and 6056:

  • Reports are due the year immediately following the year in which coverage is offered or provided.
  • Since the employer “mandate” was delayed from 2014 to 2015, the IRS has also provided Transitional Relief for 2014. IRS Notice 2013-45.
  • Under the Transitional Relief, employers are encouraged to voluntarily comply with 6055 and 6056 by filing on or before February 28, 2015 (or March 31, 2015 if filing electronically). However, employers will not be subject to any penalty for failing to voluntarily comply.
  • Plan sponsors and ALEs will be required to fulfill their reporting requirements under both sections by filing on or before February 29, 2016 (or March 31, 2016 if filing electronically).
  • Employers must furnish the required statements to full-time employees on or before January 31 of the year immediately following the year in which coverage is offered or provided. In 2016, however, January 31 falls on a Sunday. Accordingly, the IRS has stated that employers must furnish the employee statements on February 1, 2016, the next business day.

Where do you report to?

6055 and 6056:

  • Reports must be filed just like all other tax forms. If filing by paper, the address to which reports must be sent on the employer’s principal place of business. For most Mid-Western states (Missouri, Illinois, Indiana, Kansas, Oklahoma, Iowa, Nebraska, and others), reports must be addressed to:

Department of the Treasury
Internal Revenue Service Center
Kansas City, MO 64999

  • If filing electronically, employers and carriers can use the IRS efile system. The IRS plans to release additional information about how to use the efile system in IRS Publication 5165, which is expected sometime in 2015.
  • Note: if the employer or carrier is filing 250 or more reports, they must file electronically.

Why are these reports necessary?

  • Failing to comply with IRS requirements is generally a bad idea that can have direct and indirect consequences.
  • Direct consequences: Sections 6055 and 6056 state that anyone providing incomplete or inaccurate information is subject to penalties under sections 6721 and 6722. Accordingly, for each incorrect form, the IRS can impose a penalty of $100, or $250 for intentional violations.
  • Indirect consequences: The reporting provisions are designed to ensure compliance with the ACA’s requirements. Under the ACA, the ALEs must offer minimum essential coverage to at least 70% of its full-time employees or face a $2,000 per employee penalty in 2015. Beginning in 2016, ALEs must offer minimum essential coverage to at least 95% of their full-time employees. Furthermore, if the coverage offered by the employer is unaffordable, the employer is subject to a $3,000 per employee penalty. Those fines, however, may be the tip of the iceberg. An IRS audit is time-consuming and expensive, regardless of the outcome, which could reveal other violations resulting in additional penalties.
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