Overall, the employer has the obligation to count and report on union employees. To begin with, though, there is no specific exemption under the employer mandate for union members. Therefore, the question becomes whether the union members constitute “employees” under the common law standard. Because an employer typically controls the hours the union members work as well as pays wages to the union members, union members will likely be considered employees of the employer as opposed to the union. As such, an employer must include those union members in their employee count when determining the applicability of the employer mandate.
Moreover, if the employer mandate applies, the employer must provide all full-time union employees (and their dependents) minimum essential coverage that is both affordable and of minimum value (or pay a penalty). In considering the employer mandate, it is important to remember those obligations rest with the employer, not the plan, so the employer will be required to comply regardless of which plan options are currently offered (and regardless of how those plan options, including employer contribution levels, were negotiated). In other words, the employer mandate applies regardless of any collective bargaining agreements (CBAs) that may be in place.
That said, the employer is responsible for the same filing requirements on Forms 1094-C and 1095-C to the IRS (as well as distributing a Form 1095-C statement to each full-time employee), regardless of whether those employees are receiving benefits from a union plan or not. So, if the workers are common law employees of a certain employer, then the employer mandate liability and reporting responsibilities lie with that employer.
However, the employer would not have a Section 6055 reporting responsibility for these employees. If they are enrolled in a fully insured union plan, the carrier will provide covered union participants with a Form 1095-B. If the union plan is self-funded, the union will provide covered participants with a Form 1095-B.
With regard to the Form 1095-C reporting requirements, the final rules state that the administrator of a multiemployer plan may complete the individual 6056 reports for the employees covered by the CBA and eligible for the multiemployer plan. In other words, the union may complete Form 1095-C for its covered members and that would satisfy the employer’s obligation in regards to those employees. However, the employer would still be responsible for the Form 1095-C on non-union employees and the Form 1094-C transmittal on all employees. Keep in mind that the union is not obligated to help and may refuse.
So, if the multiemployer plan/union fails to complete or refuses to complete the Form1095-Cs, that is their right to do so and the employer would have to complete them for the union employees.
That said, the employer could require, as part of their CBA with the union, that the union give them a certification regarding the type of coverage that is being offered to the union employees, including whether or not the coverage meets minimum value and is considered affordable. The employer would then be able to meet its obligations to complete the Form1095-Cs for any full-time employee covered by the CBA even if the specific employee was not offered coverage under the multiemployer plan. Otherwise, the union is not obligated to provide such information to the employer. This may be partly the reasoning behind why the IRS provided a code for line 16 of Form 1095-C entitled “multiemployer interim rule relief (2E).”
Under this “multiemployer interim rule relief,” which is in place for the 2016 calendar year for reporting done in early 2017, the employer will not be subject to a penalty with respect to a full-time union employee if the employer, pursuant to a CBA, is required to make a contribution to a multiemployer plan (and that plan is offered to employees and their dependents, provides minimum value and is affordable). This rule has the effect of basically treating the multiemployer plan as an offer of coverage from the employer (even though the plan is technically sponsored by the union or other employee group). Of course, as mentioned above, the employer would still need to know the type of coverage that is being offered to the union employees, including whether or not the coverage meets minimum value and is considered affordable.
That said, the union employee's Form 1095-C will look a little different because the employer can likely rely on the reporting code relating to multiemployer plan relief. In that case, the employer reports in Part II of Form 1095-C code 1H (no offer of coverage) in line 14, leaves line 15 blank, and then enters code 2E in line 16. It may seem somewhat counterintuitive to enter code 1H (no offer of coverage), since the employer is treated as having offered coverage via the union plan, but using code 2E in line 16 indicates to the IRS that although there is no formal offer of coverage, the union plan is sufficient to avoid penalties for failing to offer coverage. To clarify, although the employer reports no offer of coverage, code 2E tells the IRS that the employee was covered under the CBA and therefore the union plan is sufficient for the employer to avoid any employer mandate penalties.
In summary, it is ultimately the employer’s responsibility to complete Form 1095-C for the union employees and their Form 1095-C statement may be slightly different than those for non-union employees.