The IRC section 6055 and 6056 reporting requirements are mandatory under the Affordable Care Act compliance. The federal government requires the submission of proof of minimum essential coverage to all employees and as to whether you have to pay penalties for the uninsured employees either a part of the year or the whole year. The IRS based on the submission of data by you through the required forms will judge as to whether your business is compliant with ACA.
In case it is found that you have failed to comply with the ACA employer reporting requirements you may be penalized up to $200 per return.
To make sure of compliance, you need to follow these 5 foolproof steps to be able to prepare the reports.
Establishing the measurement of the ongoing employee
Ongoing employees are those who have remained employed with you through one full period of standard measurement. Such employees are entitled to coverage during the stability period if they have accumulated 1,560 hours of service during the preceding 12 month period which is the standard measurement. Hence the standard stability periods are those periods of time every year where the ongoing employees are eligible for the coverage. It is better to plan the enrollment periods to match the insurance plan period.
Classify the type of employees
An employee becomes an ongoing employee after the standard measurement period. The employee till such time falls under any one of the four categories explained below:
- Full-time Employees – Employees who average 130 hours of service per month are defined as full-time employees by ACA.
- Part-time Employees – Employees who failed to meet the above-mentioned requirement fall under this category.
- Variable Employees – Those employees whom the employer cannot determine as either full time or part time on the date of hiring, they come under this category. It is the most confusing category, and the agencies have a complicated set of rules to determine this status which includes 10 different factors that are to be used to determine.
- Seasonal Employees – They are the employees expected to work for six months or less in a year during the same period every year. (Some allowances where the season is longer than 6 months do exist)Prepare for reporting
Sections 6055 and 6056 are added by ACA to the Internal Revenue Service code, Forms 1094 and 1095 are a part of these codes. The employer essentially will be reporting on both full-time employees and also a statement for each full-time employee. To do this, the employer will require knowing the employee’s status on a monthly basis.
Reviewing of all plan documentation
As and when the government regulation necessitate changes as to how the employers offer their plans, the employers must review and amend them.
Prepare for the future
The Government will continue to issue new regulations from time to time based on many factors, and the requirements can vary. Ensuring that the changes are well understood and implemented form a part of compliance.
Conclusion
Under ACA compliance 6056 reporting requirements are to be followed meticulously and failure to do this can result in penalties up to $200 for each form. Following the above-explained 5 foolproof steps, you can prepare well for the reporting requirements.
