As the January 2016 deadline approaches, union employers must understand that they are responsible for ACA reporting and what information they must provide to the IRS.
The Affordable Care Act (ACA) reporting requirements for employers participating in collectively bargained multiemployer plans were unclear until the IRS released final instructions for the 2015 Form 1095C, which is required to be filed by Applicable Large Employers (ALEs). These instructions shed much needed light on the requirements for ALEs who have employees covered by a collective bargaining agreement and contribute to the related benefit plan.
This new guidance gives union employers a simpler approach to prepare Form 1095-C for the 2015 tax year, but until further guidance is given, they will not know what information they need for 2016 and beyond.
Section 6056 of the ACA requires ALEs to report the number of full-time employees provided with health insurance coverage during the preceding calendar year. Employers that participate in multiemployer plans are not excluded from these reporting requirements. Large employers subject to Section 6056 will be reporting health coverage information on Forms 1094-C and 1095-C beginning in January 2016.
The ACA also requires those who offer minimum essential health care coverage to individuals to provide an annual information return. Insurance companies, small employers offering self-insured plans, and unions are all required to furnish this information on Forms 1094-B and 1095-B.
As the January 2016 reporting deadline approaches, union employers must clearly understand their reporting responsibilities.
Who reports — employer or plan administrator?
The preamble to Section 6056 stated that the multiemployer plan administrators had better access to certain relevant information needed for reporting than the actual employer. It also indicated that a multiemployer plan administrator could prepare Forms 1095-C and 1094-C for applicable large employer’s full-time employees covered by a collective bargaining agreement who were eligible to participate in a multiemployer plan. Many employers believed this meant the multiemployer plan administrator was required to report on behalf of the employer — alleviating the employer of reporting responsibilities.
Further confusion came from the fact that a union employee’s health insurance coverage is generally not available to the employer due to HIPAA privacy standards. Therefore, many union employers were unclear how to report health insurance information about union employees, since the IRS draft instructions for Form 1095-C did not give guidance on how the employer could gather the necessary information.
IRS final instructions provide clarity
On September 16, 2015, the IRS released final instructions, providing union employers clarity on their reporting requirements. The instructions state that if a large employer is offering health coverage to employees through an insurer or a multiemployer health plan, the employer should not complete Form 1095-C, Part III, for those employees.
Additionally, to report offers of coverage for 2015, an employer relying on the multiemployer arrangement interim guidance should indicate that the employer was required to contribute to a multiemployer plan on behalf of the employee for that month and therefore is eligible for multiemployer interim rule relief. (Enter code 1H on line 14 for any month for which the employer enters code 2E on line 16). For 2016 and future years, reporting offers of coverage made through a multiemployer plan may be reported differently.
It is now clear that union employers are responsible for reporting — not the trustees of the multiemployer plan. This new guidance gives union employers a simpler approach to prepare Form 1095-C for the 2015 tax year, however until further guidance is given, they will be unable to determine what information they will need for 2016 and beyond.
The table below summarizes the current reporting responsibility and requirements for employers.
| Employer Size | Reporting Requirements by Employee Type | Employer | Multiemployer Plan Sponsor (e.g., Union or Trustee) |
|---|---|---|---|
| Large employer | Union employee participating in multiemployer plan | Form 1095-C, Parts I and II; and Form 1094-C | Form 1095-B and 1094-B |
| Large employer | Non-union employee participating in fully-insured plan | Form 1095-C, Part I and II; and Form 1094-C | No reporting required |
| Large employer | Non-union employee participating in self-insured plan | Form 1095-C, Parts I, II, and III; and Form 1094-C | No reporting required |
| Small employer | Union employee participating in multiemployer plan | No reporting required | Form 1095-B and 1094-B |
| Small employer | Non-union employee participating in fully-insured plan | No reporting required | No reporting required |
| Small employer | Non-union employee participating in self-insured plan | Form 1095-B and 1094-B | No reporting required |