Reminder: Form W-2 Cost of Coverage Reporting
Large employers must report the cost of group health coverage provided to employees on Form W-2. The requirement applies to employers that filed 250 or more Forms W-2 in 2020. Employer aggregation rules do not apply for this purpose. In other words, the number of Forms W-2 is calculated separately without consideration of controlled groups. Indian tribal governments, sponsors of self-funded church plans, and employers contributing to a multiemployer plan are exempt from the Form W-2 reporting requirement.
Clients with PPI-billed, fully-insured medical coverage and online billing access can download a Cost of Coverage Report that displays medical cost information by month, based on each member's medical plan enrollment.
Reminder: Upcoming IRC 6055 and 6056 Reporting Deadlines
Employers that were ALEs in 2020 must comply with IRC Section 6056 reporting in early 2021. Specifically, ALEs must complete and distribute a Form 1095-C to full-time employees by March 2, 2021 (the IRS changed this from January 31, 2021). The form should detail whether the employee was offered minimum value, affordable coverage during 2020. The forms may be mailed, electronically delivered or delivered by hand (although proof of delivery in some manner is recommended).
If an employer sponsored a self-insured plan during 2020, it must comply with Section 6055 reporting in 2021. Self-insured employers with 50 or more FTEs must complete Section III of Form 1095-C detailing which months the employee (and any applicable spouse and dependents) had coverage under the employer’s plan. If the self-insured employer has fewer than 50 FTEs, it must complete and distribute a Form 1095-B with such information. Again, the forms must be delivered to employees by March 2, 2021.
Employers must also file the forms with the IRS by March 1, 2021 (as February 28, 2021, falls on a Sunday), if filing by paper, and March 31, 2021, if filing electronically. Those that are filing 250 or more forms are required to file electronically. Lastly, the employer is required to file the transmittal Form 1094-C (if filing Forms 1095-C) or Form 1094-B (if filing Forms 1095-B).
As a reminder, the IRS recently provided penalty relief for employers that will allow them to forego distributing the Form 1095-B to individuals. This comes after the IRS accepted comments on the necessity of the Forms 1095-B now that the individual mandate penalty has been zeroed out. If employers post a notice on their website that the document is available upon request, and fulfil any such request within 30 days, then they will not have to distribute the Forms 1095-B to covered individuals. But keep in mind that there is no such penalty relief for Form 1095-C.
FAQ: What are the benefits compliance implications of lifestyle spending accounts?
This material was created by PPI Benefit Solutions to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The service of an appropriate professional should be sought regarding your individual situation. PPI does not offer tax or legal advice. "PPI®" is a service mark of Professional Pensions, Inc., a subsidiary of NFP Corp. (NFP). All rights reserved.