IRS Issues New Q&As on Section 6056 Reporting

The Affordable Care Act (ACA) created new reporting requirements under Internal Revenue Code Section 6056. These new reporting rules require applicable large employers (ALEs) subject to the ACA’s employer shared responsibility rules to report information to the Internal Revenue Service (IRS) on the health coverage offered to full-time employees. Related statements must also be provided to individuals.

The IRS recently released new Questions and Answers on Section 6056 reporting using Form 1094-C and Form 1095-C.  The updated Q&As clarify existing requirements under Section 6056, and provide additional guidance on specific aspects of reporting that had not been addressed previously.

The employer shared responsibility rules impose penalties on ALEs that do not offer questionaffordable, minimum value coverage to their full-time employees and dependents. The ACA’s employer penalty provisions apply to many ALEs, effective January 1, 2015.

Under Section 6056, each ALE must generally file a separate Form 1095-C for each of its full-time employees and a transmittal on Form 1094-C for all of the returns filed for a given calendar year with the IRS.  These forms must be filed regardless of whether the ALE offers coverage, or whether the employee enrolls in any coverage offered.

The items addressed by the Q&As include specific issues related to:

  • Reporting Offers of Coverage and Other Enrollment Information. The Q&As address specific employment situations and explain how employers should report in those situations. The Q&As highlight the specific Offer of Coverage and Safe Harbor codes that should be used in these situations, as well as how to complete the various parts of Forms 1094-C and 1095-C. In addition, the Q&As address certain issues when reporting information for new hires and terminated employees.
  • Reporting Offers of COBRA Coverage. Notably, the Q&As provide clarification and examples for reporting offers of COBRA coverage in a number of situations. Previously, the IRS had not issued much guidance with respect to reporting for COBRA coverage, which left many of these issues largely unclear. The Q&As address reporting COBRA coverage both for terminated employees and for ongoing employees who experience a reduction in hours.
  • The Authoritative Transmittal. The Q&As provide more detailed information on the Authoritative Transmittal. In general, each ALE must file a single Authoritative Transmittal Form 1094-C containing the aggregate employer-level data for the ALE (meaning the total number of full-time employees and the total number of employees of the ALE for each calendar month, regardless of whether a Form 1095-C is transmitted with that Form 1094-C).
  • Alternative Methods of Reporting. The Q&As address reporting under the Qualifying Offer Method (including the Transition Relief for 2015) and the 98 Percent Offer Method. These alternative methods of reporting allow eligible ALEs to provide less detailed information than under the general method of reporting.
  • Reporting for Governmental Units. The Q&As clarify Section 6056 reporting for Governmental Units that are using a Designated Government Entity (DGE) to report on their behalf. A governmental unit may report under Section 6056 on its own behalf or may appropriately designate another person or persons to report on its behalf. A person may be appropriately designated to file the return and furnish the statements under Section 6056 on behalf of the ALE if the person is part of or related to the same governmental unit as the ALE.