ALE Reporting Rules Under W-2 Transitional Relief
Question: We’re an applicable large employer (ALE) under the Affordable Care Act (ACA) and as defined under Internal Revenue Code Section 4980H. As an employer that files fewer than 250 Forms W-2, we haven’t been reporting cost-of-coverage information on our employees’ W-2s per available transitional relief. Do we nonetheless have to report under Section 6056?
Answer: Yes. As we’ll explain further, the transitional relief from W-2 reporting that you’ve been following doesn’t extend to Sec. 6056 reporting.
The ACA requirement to report the aggregate cost of employer-sponsored health coverage in box 12 on Form W-2 became effective beginning in 2012 (that is, with Forms W-2 due in January 2013). Under transitional relief, and until the issuance of further guidance, an employer isn’t required to report for any calendar year if the employer was required to file fewer than 250 Forms W-2 for the preceding calendar year.
For purposes of this transitional relief, the employer’s size is determined without the application of any aggregation rules. Thus, there’s no requirement to apply the controlled group rules under Section 414 for this purpose.
Required to Report
There is no similar relief under Sec. 6056. ALEs are subject to Sec. 6056 reporting (requiring information about the coverage offered to full-time employees and dependents), regardless of size. In other words, even smaller ALEs must report using Forms 1094-C and 1095-C.
Generally, an ALE is an employer who employed (along with members of its controlled group) an average of at least 50 full-time employees (including full-time equivalent employees) during the preceding calendar year. Thus, if you’re an ALE for 2016, you must report under Sec. 6056 in early 2017 even if you’re exempt from reporting cost information on Form W-2.
Note that an ALE’s size is relevant for determining the Sec. 6056 filing method. Electronic filing with the IRS is required for ALEs who file at least 250 Forms 1095-C in a calendar year. ALEs filing fewer than 250 Forms 1095-C during the calendar year may choose to file on the prescribed paper form, but are permitted (and encouraged) to file the returns electronically.
For ACA purposes, there are many details that come with being an ALE. Work with your professional advisors to not only avail yourself of transitional relief when available, but also stay in compliance with all other rules.
If you have questions about applicable large employer rules, please contact Ron Present, Partner and Health Care Industry Group Leader, at firstname.lastname@example.org or 314.983.1358.