Many municipal and other governmental entity types have been surprised by the fact that their Designated Governmental Entity has not reported all of the necessary information to the IRS as they assumed would happen. Under the Affordable Care Act (ACA), Applicable Large Employer (ALEs) must report to the IRS on the type of plans that were offered to their employees, the costs of these plans, and who was covered under the plan. For some governmental groups (we will call these ‘primary’) they might have a separate governmental entity that has some of their employees covered and who have agreed to perform the ACA reporting on behalf of the ‘primary’ group.
Example: A school district has all of their teachers covered under the State medical plan, but all other staff covered under a separate plan. The State has told the school district that ‘we will perform the reporting for you’. This is normally very misleading to the school district because the State health plan normally only intends to report to the IRS who was covered under the medical plan, and NOT the offer of coverage.
For those of you familiar with ACA reporting, the State health plan in this instance normally will report medical plan enrollment but NOT report the other necessary Offer of Coverage that shows up in lines 14, 15 and 16 of form 1095-C. The end result is that the school district has not reported fully to the IRS and are now subject to penalties.
So what can you do ….
#1. If you have a Designated Governmental Entity that is performing some of your reporting, you need to ask them if they are reporting for the Enrollment on the plan, OR ALSO the offer of coverage. Understand it is unlikely they will report the Offer of Coverage.
#2. If the DGE is only reporting enrollment, they will complete that on form 1095-B.
#3. The underlying school district in our example still must complete forms 1095-C on these teacher employees, sections 1 and 2.
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