Employer Tax Filing for ACA Isn’t Required for Tax Year 2014; However, You May Fulfill Information Requests Voluntarily

For the 2014 tax year, the individual mandate of the Affordable Care Act (ACA) requires individuals to report whether they were covered by a health insurance plan providing minimum essential coverage for the full calendar year on their 2014 federal tax return. A penalty is in effect for each month in which an individual didn’t have minimum essential coverage. Because of this, some of your employees may ask for documentation showing that they and their covered dependents maintained minimum essential coverage under the cooperative’s medical plan during 2014.

However, employers and health insurers (except those in the Health Insurance Marketplace) aren’t required to report qualifying health coverage to individual taxpayers until 2016 for the 2015 tax year. While employers aren’t required to provide a statement or documentation for the 2014 tax year, they may choose to do so voluntarily.

Co-op SBC with a letter should suffice as documentation
If your co-op chooses to report qualifying health coverage to employees for the 2014 tax year, your co-op’s summary of benefits and coverage (SBC) document provided by NRECA may be used to verify minimum essential coverage. On page 5, it states that NRECA medical plans provide minimum essential coverage. A letter indicating the months of coverage under your plan may be provided along with the SBC. Current coverage information for employees and dependents enrolled in NRECA benefit plans is available through the Employee Benefit Profile on the Employee Benefits website.

Households with no or partial-year minimum essential coverage
If an individual didn’t have qualifying health coverage for themselves or any dependents for the full calendar year, the IRS asks tax preparers to review client documentation to determine the portion of the year during which the individual and any dependents had qualifying coverage. Tax preparers shouldn’t routinely or automatically advise clients to seek documentation from employers. The IRS advises that a statement or document from an employer indicating health coverage is sufficient proof to substantiate that coverage was in effect for a portion of the year.

Households with full-year minimum essential coverage
When all household members had minimum essential coverage for the full calendar year, indicating compliance is as easy as checking a box on forms 1040, 1040-A and 1040-EZ. No documentation is required. This is the case for individuals enrolled in the NRECA Medical Plan for the full calendar year. However, co-ops can still provide documentation upon request.

More information
The ACA timeline provides a high-level overview of sections 6055 and 6056 tax reporting, including the tax forms that will be used. Stay tuned as we provide more information to co-ops during 2015 on this issue.

If you have more questions about ACA tax reporting, consult your co-op’s tax advisor.

This article is NRECA’s interpretation of IRS and ACA tax guidelines. NRECA isn’t authorized to provide tax advice to co-ops or individuals. Co-ops and individuals should seek confirmation of the information in this article from their tax advisors.