ACA Reporting – Helping Employees Understand Their Obligations

Healthcare and TaxesMy family loves that I have an HR background. Over the years I’ve helped with such things as preparing for job interviews, salary negotiations and helping to understand their benefit plans, so it came as no surprise when one of my nieces asked me to help her understand the Affordable Care Act (ACA) tax forms and the effect they will have on her tax filing.

As I was helping my niece with her concerns, I realized many employees probably have similar questions, particularly in light of the extended deadlines this year. While not required, employers taking advantage of the extension should consider communicating the delay in sending employees their statements and let them know that these forms, while helpful, are not necessarily required to complete their individual tax returns.

As a refresher, beginning this year, many employers have to comply with the ACA’s annual health care reporting requirements. This includes filing reports with the IRS and sending statements to employees about their coverage. The employee statements, originally due to employees by January 31, provide employees with information to use when completing their tax returns. The due date for providing the employee statements was extended to March 31 for this year only, leaving employees with questions as to what impact the delay has on their tax filings.

The IRS prepared Questions and Answers about Health Care Information Forms for Individuals, some of which are summarized below. These can serve as a handy communication tool for employers and can be used to help address employee’s questions and concerns.

Q.        Will I receive any tax forms to help me complete my 2015 tax return?

A.        Yes. Early in 2016, you should receive forms providing information about the health care coverage you were offered in the previous year, and the duration of such coverage. These forms are also provided to the IRS. You will receive this information on either Form 1095-B or 1095-C.

Q.        When will I receive my Form 1095-B or 1095-C?

A.        For 2016, the deadlines for employers and health insurance issuers providing these forms was extended to March 31, 2016.

Q.        Can I file my tax return if I have not received my tax form?

A.        Yes. While the information on these forms might help you prepare your tax return, you do not have to wait for either Form 1095-B or 1095-C to file your tax return.

Q.        Are there other forms of documentation I can use as proof of health insurance coverage?

A.        Yes. Examples of other forms of documentation you can use to prove your insurance coverage include:

  • Insurance cards;
  • Explanation of benefits;
  • Form W-2 or payroll statements reflecting health insurance deductions;
  • Records of advance payments of the premium tax credit; and
  • Other statements indicating that you, or a member of your family, had health care coverage.

Q.        How will I receive my tax forms?

A.        You will receive your tax forms either by hand delivery, by mail or electronically if you consented to electronic delivery.

Q.        What do I need to do with the form I receive?

A.        Use the information on the form to verify that you, and if applicable, your spouse and dependents had minimal essential coverage for each month during the year. If you and your family members:

  • Were covered for the entire year, you may check the full year coverage box on your tax return.
  • Did not have coverage for one or more months of the year you may either claim an exemption or pay an individual shared responsibility payment.

Have you been receiving questions from employees about Forms 1095-B and 1095-C and the impact on their tax filings? Did you take proactive steps to help employees understand how the extended deadlines might affect them? Please leave a comment below to let us know.

 

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