IRS’s Guide to ACA Compliance for Applicable Large Employers

In 2016, the Affordable Care Act has issued reporting requirements for applicable large employers. Becauseblog_4_image of
special circumstances, the IRS recently drafted a guideline for employers to clear up any questions in order to remain in compliance.

Applicable large employers are classified as employers with 50 or more full-time employees or full-time equivalent employees. These employers must report if a full time employee was offered minimum essential coverage providing minimum value and if they accepted minimum essential coverage. The ACA has required applicable large employers (ALEs) to use Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and Form 1095-C, Employer-Provided Health Insurance Offer and Coverage for its reporting requirements.

Here is some guidance issued by the IRS:

  1. An ALE is not obligated to report if they do not have full-time employees. However, if an ALE sponsors a self-insured health plan in which any employee, spouse, or dependent is enrolled, then reporting is necessary. All ALEs must file Forms 1094-C and 1095-C whether or not they have full-time employees. Forms 1095-C to all full-time employees regardless of whether they were offered coverage during the year.
  2. There is difference in reporting when an ALE reports for separate divisions and when ALEs are part of a controlled group. Employees working for multiple divisions must receive aggregated information on a single Form 1095-C. Employees must receive a separate Form 1095-C for full-time employment with each ALE in the controlled group.
  3. Under the qualifying offer method of reporting, ALEs are allowed to furnish a simplified employee statement to employees receiving qualifying offers for all 12 months of the year. The IRS guidance confirms that ALEs may not use simplified statements for employees who actually enroll in the ALE’s self-insured plan.
  4. Forms 1095-C may be delivered to employees in any manner permitted for delivery of Forms W-2.
  5. When reporting offers of coverage on Part II of Form 1095-C, ALEs may indicate that an offer of coverage was made for a month only if the offer would have provided coverage for every day of the month. Similarly, if a terminating employee’s coverage ends before the end date of the month of termination, the ALE must report that no coverage was offered for that month. However, when reporting coverage information under Part III of Form 1095-C, an employee should be reported as having coverage if the employee is enrolled on any day of the month.
  6. ALEs that sponsor self-insured plans should report enrollment information for non-employee COBRA beneficiaries. Qualifying beneficiaries electing COBRA independently from the employee must receive separate forms, while those who receive COBRA due to an employee’s election should be included on the same form that is provided to the employee.
  7. A COBRA offer made due to termination of employment is reported as an offer of coverage only if the former employee enrolls in COBRA coverage and the employee’s cost of coverage reflects the COBRA premium for the lowest-cost, self-only coverage providing minimum value. Conversely, a COBRA offer made to an active employee due to a reduction of hours must be reported as an offer of coverage on Form 1095-C even if the employee declines COBRA coverage.


Having the ability to track and manage the required data should be happening now. These forms will be used to enforce employer penalties, individual mandate, and tax credit eligibility rules under the ACA. To keep you in compliance, Ashton Benefits will track and manage all the necessary forms and data through our online portal. Your company will have all the required forms in one place, for each and every employee, without the hassle of filing cabinets and paper forms.

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