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Northwest OH Legal Blog

Thursday, April 16, 2015

Internal Revenue Code Sections 6055 and 6056 - ACA Reporting and Compliance Overload for Multiemployer Health Plans

When you mention Internal Revenue Code (IRC) Sections 6055 and 6056 to many multiemployer health plan administrators and even contributing employers, they first respond, “We have a whole year before we have to address those regulations!”   The second thing that you may hear is that the contributing employers are not responsible for any reporting associated with IRC Section 6055 or 6056; rather it is the multiemployer plan sponsors that must complete the task.   Hearing both statements reinforces the complexity and misconceptions surrounding the latest mandates and responsibilities for multiemployer plans associated with the Affordable Care Act’s (ACA) latest dip into tax regulations.

The ACA requires two types of reports under Sections 6055 and 6056 of the IRC as a result of the regulations issued by the IRS in March, 2014.  The first report requires that employers, who provide “minimum essential coverage” (MEC) under IRC Section 6055, report on that coverage to every responsible individual that enrolls him or herself as well as his/her dependents in health care (Form 1095-B).  This Form 1095-B will be sent to employees similarly to the way that they receive W-2 Forms.  Once an employee (or a dependent that is covered under the employee’s insurance) can produce this Form 1095-B, they will be exempt from the ACA’s individual mandate tax.  In other words, the Form 1095-B is proof that a taxpayer has qualified health insurance.  This reporting requirement would be the responsibility of the Plan and in most cases with multiemployer plans, the Board of Trustees would be responsible for accumulating data for all of the months that employees are covered, along with the Forms 1095-B and sending them to the IRS, with a Form 1094-B for transmittal.  A checklist of items that must be included on the informational statements sent to employees and the IRS is clarified in the regulations.  The challenge may come to multiemployer plan sponsors once they endeavor to obtain all of this information needed on the 1095-B form which may be found at http://www.irs.gov/pub/irs-pdf/f1095b.pdf.

The second report, with Forms 1094-C and 1095-C filed with the IRS in compliance with IRC Sections 6055 and 6056, determines whether a large employer (more than 50 employees) owes tax to the IRS under IRC Section 4980H for failing to provide affordable health care coverage that provides minimum value to all of its full-time employees.  This burden of proof placed on employers is known as the “employer shared responsibility” (ESR).  This confirmation, that a multiemployer plan provides the required level of coverage to all full-time employees, must also be sent to full-time employees in the form of an annual statement, a Form 1095-C, just like the annual W-2’s and 1095-B statements. 

This is where the ESR report (and who should file it) complexity comes into play for multiemployer health and welfare plans.   It is the responsibility of the contributing employer to file their own reports; however, employers would need to obtain the proper information regarding their full-time employees coverage under the multi-employer plan to do so.  Alternatively, the plan sponsor may prepare the ESR reports on behalf of the contributing employers.  However, the plan sponsor may only file the reports for employees who are members covered under a collective bargaining group.  The contributing employer must file reports for non-bargaining employees.  Therefore, both multi-employer plan sponsors AND contributing employers must file Forms 1095-C and send statements as 1094-C when there are both bargaining and non-bargaining employees in a multiemployer plan. 

How long does a multiemployer plan have to get all of this data together if they take on the task for contributing employers?  What are the deadlines to get statements sent to members and reports sent to the IRS to avoid significant penalties?  Remember, all of this data applies to the 2015 calendar year.  In regards to the 1094-C and 1095-B statements sent to applicable employees, they must reach such employees by January 31, 2015.  Additionally, the MEC and ESR reports, described above, must meet a filing deadline of February 29, 2016 if filed by mail and by March 31, 2016 if filing electronically. 

Will plan sponsors, administrators and contributing employers have sufficient time to get their existing software lined up for IRC Sections 6055 and 6056 reports?  Should Boards of Trustees charge contributing employers for keeping these records even when they are not fully required by law to do so?  Will multi-employer plans be subject to liability if the contributing employers fail to provide them with accurate information regarding covered employees and full-time classifications?  Understanding the reports to be filed with the IRS and sent to plan members is a  good start to answering these types of questions for multiemployer plans. 


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