Health Reform Questions – Full-Time Employee Determination & Reporting

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Health Reform Questions – Full-Time Employee Determination & Reporting

Question:  My client has under 100 full-time and full-time equivalent employees for 2015.  It meets all of the requirements for the transitional relief and does not have to comply with the employer mandate until its renewal on October 1, 2016. It employs a number of variable hour employees.

 Does it have to determine which of these variable hour employees are full time for any purpose for 2015?

Answer:  Yes.  For 2015, health care reform requires applicable large employers  to report to the IRS by either February 28, 2016 or March 31 2016  (if filed electronically) whether they offer their full-time employees and their employees’ dependents the opportunity to enroll in “minimum essential coverage,”  under an eligible employer-sponsored plan on a Form 1095-C.  

Employers must also provide a copy Form 1095-C to their full-time employees for calendar year 2015 by February 1, 2016. 

For reporting purposes for 2015, an applicable large employer (ALE) is defined as an employer for any calendar year who employed (along with members of its controlled group) an average of at least 50 “full-time employees” (including full-time equivalent employees) on business days during the preceding calendar year, as provided in Code Section 4980H(c)(2)(C)(i) and Treasury Regulations Section 54.4980H-1(a)(16).

So if an employer has variable hour employees, it must determine which of them are full-time employees to provide them with a copy of Form 1095-C or be penalized.  If an employer does not provide a copy 1095-C to any full-time employee, it will be penalized $100 for each  failure  under Code Section 6722 and another $100 for not filing it with the IRS under Code Section 6721.

For 2015, the IRS may waive the above penalties if the employer can show good faith compliance with the reporting requirement.