ACA Reporting Requirements—Part One

Depending on their employee insurance benefits and their size, cities may need to comply with new reporting requirements under the Affordable Care Act.
(Published Dec 21, 2015)

The Affordable Care Act (ACA) has left many human resources professionals and benefits managers feeling confused and frazzled. With new legislation comes increased compliance reporting responsibilities. Among those, the reporting requirements for Internal Revenue Codes 6055 and 6056.

This article is intended to help you understand the difference between the two reports and who is responsible for reporting. A separate article, ACA Reporting Requirements—Part Two, outlines the forms to use, how to file, deadlines, and more.

Section 6055: Minimum essential coverage
Section 6055 requires insurers, self-insured health plan sponsors, certain governmental agencies, and any other entity that provides “minimum essential coverage” (MEC) to report information on that coverage to the IRS and to covered individuals.

In general, most employer group health plans qualify as MEC. The reporting is intended to assist the IRS in determining which individuals have complied with the individual mandate and have obtained MEC.

Section 6056: Coverage by applicable large employers
Section 6056 requires “applicable large employers” (ALE) to report information about group health plan coverage offered to their full-time employees to the IRS. Employers are considered to be an ALE if they have more than 50 full-time equivalent employees. Full-time is generally defined as working 30 hours or more per week.

The 6056 reporting is intended to assist the IRS in determining which employers have complied with the ACA’s employer shared responsibility mandate. The reporting will also help the IRS in determining who is eligible for premium tax credits.

Is your city an ALE?
When trying to determine whether or not your city is an ALE, it is important to have a uniform methodology for counting hours. This is especially pertinent when it comes to volunteers, including volunteer firefighters, and elected officials. It is important to review the list of job duties and estimate the amount of time that would be spent in total.

Hours of service do not include hours worked as a “bona fide volunteer.” Bona fide volunteers include any volunteer who is an employee of a government entity or an organization that is exempt from taxation.

For on-call employees, you will be required to use one of the reasonable methods for crediting hours of service for any on-call hour for which:

  • Payment is made or due.
  • The employee is required to remain on-call on your premises.
  • The employee’s activities while remaining on-call are subject to substantial restrictions that prevent the employee from using the time effectively for the employee’s own purposes.

Reporting obligations at a glance
The following overview is designed to help you determine your reporting obligations, if any.

Table: ACA Reporting Obligations

Access more information from the Arthur J. Gallagher website

Read the current issue of the Cities Bulletin

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