Why the self-insured complications?

Question:

Why is reporting on self-insured health plans so complicated?

Answer:

Employers who offer self-insured (sometimes called self-funded) health plans have the added ACA obligation of reporting as if they were the insurance carrier.

  • For self-insured employers large enough to be subject to the ACA coverage mandate, this reporting is done on Part III of Form 1095-C.
  • For self-insured employers not large enough to be subject to the ACA coverage mandate, this reporting is done on Form 1095-B.

Reporting on these forms is what the IRS will use to validate compliance with the ACA individual mandate.

But it’s not just 1095 reporting that employers offering self-funded plans need to worry about.

  • In their second quarter Form 720 submission, they will have to pay a fee for lives covered during the plan year.
  • They may also have to submit IRS Form 5500 annually, to describe the type of benefit being offered.

 

This Q&A was first published by ACA Insights' Helen Karakoudas on September 28, 2016 in a LinkedIn Pulse article titled "In the world of ACA compliance, every day should be Ask a Stupid Question Day."