Form W-2 Cost of Coverage Reporting
Large employers must report the cost of group health coverage provided to employees on the Form W-2. The requirement applies to employers that filed 250 or more Forms W-2 in 2015. 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 tribes, self-funded church plans and employers contributing to a multi-employer plan are exempt from the Form W-2 reporting requirement.
The cost of coverage includes employer and employee contributions for: Major medical, dental and vision (when combined with medical), employer contributions to a health FSA, on-site medical clinics and employee assistance programs (if a COBRA premium is applicable for former participants) and prescription drug coverage. The coverage is reported in Box 12 with code DD.
The 2016 Forms W-2 must generally be distributed to employees by Jan. 31, 2017.
IRS Information »
IRC Sections 6055 and 6056 Reporting
Applicable large employers (ALEs—those with 50 or more full-time employees including equivalents, or FTEs) in 2015 must comply with IRC Section 6056 reporting in 2017. Specifically, ALEs must complete and distribute a Form 1095-C to full-time employees by March 2, 2017. The form should detail whether the employee was offered minimum value, affordable coverage during 2016. 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 in 2016, it must comply with Section 6055 reporting in 2017. 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, 2017.
Employers must also file the forms with the IRS by Feb. 28, 2017, if filing by paper and March 31, 2017, if filing electronically. Those that are filing 250 or more forms are required to file electronically. Lastly, the employer is required to a file the transmittal Form 1094-C (if filing Forms 1095-C) or Form 1094-B (if filing Forms 1095-B).
Form 1094-C »
Form 1095-C »
Forms 1094-C and 1095-C Instructions »
Form 1094-B »
Form 1095-B »
Forms 1094-B and 1095-B Instructions »
Medicare Part D Disclosure to CMS
As a reminder, employers who sponsor a group health plan that provides prescription drug coverage to Medicare Part D eligible individuals must disclose to CMS on an annual basis whether the coverage qualifies as creditable or non-creditable. The disclosure is due no later than 60 days after the beginning of each plan year. Thus, for calendar year plans, the disclosure is due March 1, 2017.
CMS Disclosure Form »
CMS Guidance »
If you would like additional information on any of these requirements, please contact your advisor. NFP has many helpful resources including whitepapers, learning modules and recorded webinars.