ACA Reporting – Do you need to include individuals on your plan who are covered under COBRA?

The Affordable Care Act (ACA) requires employers to consider COBRA coverage in the new required reporting under Internal Revenue Code sections 6055 and 6056, beginning in the first quarter of 2016 to report coverage provided in 2015.

The 6055 reporting applies to all employers offering group health coverage and requires that an information return (the 1094-B and the 1095-B) must be furnished to each Applicable Employee by January 31 every year. A copy of these returns must be filed with the IRS by the end of February, using a single transmittal form.

The 6056 reporting only applies to large employers (with 50 or more full-time employees and full-time employee equivalents

Who Is Responsible for Reporting COBRA Participants under Code 6055 and 6056?

Small Employer (under 50 FTE) is only obligated to report under 6055 (and not 6056).

For fully-insured plans, the insurance carrier is responsible for reporting COBRA coverage under reporting Code Section 6055 (the information that must be furnished to participants under your plan).

For self-insured plans, the Plan Sponsor (employer) must report the COBRA qualified beneficiaries (as well as the employees) who are enrolled in its group health plan under 6055. The information which must be reported includes the name and SSN of each enrolled COBRA qualified beneficiary and the names and SSNs of any other family members who are enrolled, along with which months of the calendar year they are enrolled. The TPA that processes your self-funded claims should be able to provide the data a plan sponsor needs for filing.

Large Employer (50 or more FTE) obligated to report under 6055 and 6056

For Code 6056 reporting obligations for large employers, if the employer offers a fully insured health benefit, the final 6056 instructions removed the requirement to report an offer of COBRA on Form 1095-C made to a former employee upon termination, even if/when the employee enrolled in that coverage. The requirement remains to report an offer of COBRA that is made to an active employee due to a reduction in hours.

For self-insured plans, the Plan Sponsor (employer) must report the COBRA qualified beneficiaries (as well as the employees) who are enrolled in its group health plan under 6055. The information which must be reported includes the name and SSN of each enrolled COBRA qualified beneficiary and the names and SSNs of any other family members who are enrolled, along with which months of the calendar year they are enrolled. The TPA that processes your self-funded claims should be able to provide the data a plan sponsor needs for filing.

As your COBRA administrator NEO can assist self-insured employers by providing a report of current COBRA participants and any covered dependents that will assist with the data collection process. However, it is likely we will not be able to provide all the data needed for filing for individuals that have coverage through COBRA. The ACA reporting requirements have evolved this past year and the requirements for reporting COBRA coverage for ACA do not align with the data required for the administration of COBRA. For example, we do not have Social Security Numbers for all dependents, and in many cases the date of birth is missing or inaccurate.

Don’t Go at it Alone

The rules governing ACA compliance are complicated and will continue to see additional modifications. Given the complexity of ACA compliance and the potential cost for missing the mark, it is wise to seek professional guidance. Consult with your payroll, benefits and tax professionals for more information about the law or for assistance with filing Forms 1094-B, 1095-B, 1094-C and 1095-C.

For more information on the ACA and COBRA requirements, click on the links below:

Q&A about Information Reporting by Employers on Form 1094-C and Form 1095-C