This blog was last updated on July 30, 2021

The new tax information reporting requirements under the Affordable Care Act (ACA) are expected to affect many businesses. For those businesses that are self-insured, they are anticipated to have some of the heaviest reporting responsibilities given that they fall under the new ACA reporting requirements as both a large employer and an insurer.

There are two sections within the new ACA tax reporting requirements that impact self-insured employers: Internal Revenue Code (IRC) section 6055 – coverage reporting – and IRC 6056 – large employer reporting. Under the former, health coverage providers are mandated to report to the IRS on the entity providing coverage and their enrolled individuals. This information also has to be sent to the individual members who are covered (via Form 1095-B). The tax reporting requirement, section 6056, obligates employers with 50 or more full-time employees to annually report to the IRS the health care coverage information for each employee and their dependents. They are also required to provide this information via a form (1095-C) to their employees.

Since self-insured employers fall under both of these requirements, they are expected to have unique challenges:

1. Given that they are classified as both large employers and insurance providers, they will have to fulfill the obligations of both those titles. This means filing more tax information than those companies that only qualify as one of these entities. Luckily, the IRS published a new, single consolidated reporting form, which includes a top and bottom portion: The top is for section 6056 reporting and the bottom for section 6055 reporting.
2. Likely, there will be a need for self-insured employers to work with or purchase new administrative services from their insurance provider to complete their reporting.
3. Internal staff will need to be designated to manage the new reporting requirement. This could mean reallocation of current staff, department changes or a need for additional staff to ensure the new tax compliance requirements do not strain the company.
4. There is also a new information security element to consider. Reporting to the IRS and individuals presents a new avenue for sensitive information to be breached, and self-insured companies will need to adjust their risk-mitigation strategies.
5. These employers will also need to consider employee education regarding ACA reporting requirements. This can include explanations regarding the tax forms employees will receive, the purpose of those forms and the need to report that information during year-end tax filing.

For more updates regarding the ACA, visit Convey.com.