ACA and tax-related reporting

Find ACA and tax-related reporting guidance for the School Employees Benefits Board (SEBB) Program

Affordable Care Act (ACA) guidance

This section contains general information about legal and tax matters. The information is not legal or tax advice and should not be treated as such. You should not rely on this information as an alternative to obtaining legal or tax advice from a licensed attorney or tax specialist. We encourage you to consult with your legal or tax advisors on all aspects of the Affordable Care Act and how it impacts you as a unique employer.

Most employers must electronically file ACA Forms with the IRS beginning in 2024.

Employers who are required to file 10 or more of any tax form must send Forms 1094 and 1095 to the IRS electronically beginning in 2024 (for 2023 Forms 1095). Learn more about this requirement.

Employer shared responsibility

Employer shared responsibility provisions were added under Internal Revenue Code section 4980H by the Affordable Care Act. Under these provisions, certain employers (called applicable large employers or ALEs) must either offer health coverage that is “affordable” and that provides “minimum value” to their “full-time” employees (and offer coverage to the full-time employees’ dependents), or potentially make an employer shared responsibility payment to the IRS.

Whether an employer is an ALE depends on the size of its workforce. In general, employers employing 50 or more full-time employees including full-time equivalent employees are ALEs.

Large employers must report offer of coverage information

Applicable large employers (ALEs) are required to report information about whether they offered coverage to employees and if so, information about the offer of coverage. ALEs are required to send this information to the IRS and employees. IRS uses this information to determine whether an ALE owes a payment under the employer shared responsibility provisions.

All employers must report self-insured (Uniform Medical Plan) coverage

All employers that offer “self-insured” health coverage have information reporting responsibilities to IRS. SEBB Uniform Medical Plans are self-insured coverage. Under IRS regulations, employers who participate in SEBB (a multiple employer organization) are considered plan sponsors that are responsible for reporting self-insured enrollment of employees and former employees, and their enrolled dependents to both IRS and employees (and former employees).

Note: SEBB organizations typically only use Forms 1094-B and 1095-B if they are not considered a “large” employer that reports using Forms 1094-C and 1095-C.

Most employers must electronically file ACA Forms with the IRS

Beginning in 2024 (for 2023 Forms 1095), employers who are required to file 10 or more of any tax form must send Forms 1094 and 1095 to the IRS electronically. Previously, the electronic filing requirement was for employers filing 250 or more forms.

The IRS “aggregation of returns” rule means that all Forms 1094, 1095, 1099, W-2 (and others) go into the count of ten, so even employers with very few employees may need to electronically file forms.

The new regulations continue to permit the IRS to grant exceptions to the electronic filing requirements in cases of undue hardship. If approved, the employer can continue to file on paper. To apply for a hardship waiver, employers can file IRS Form 8508. The IRS asks employers who are applying for a waiver to file Form 8508 at least 45 days before the due date of returns.

How does HCA support your IRS reporting requirements?

Annual enrollment data reports

To complete Internal Revenue Service (IRS) 2023 Form 1095 reporting, your SEBB organization will need SEBB medical enrollment data. HCA provides this data annually by [SECURE] email on or before January 10th of each year (for the prior year).

Sometimes, enrollment data we provide may later change due to additions (e.g., retroactive enrollment), changes (e.g., corrections to previously keyed data), or deletions (e.g., retroactive termination). When this occurs, we will provide an amended data file that describes any changes to data previously provided.

Who at your SEBB organization will receive enrollment data files?

Enrollment data files are sent to the contact person designated by your SEBB organization. Near the end of each year (before sending enrollment data), we will confirm contact information by email.

Enrollment data supporting documents

  • Medical Enrollment Data Dictionary
    • This document describes the layout of enrollment data files. The first page provides a simple record layout, file type, file naming convention, and data distribution schedule. The following pages provide definitions of all data fields.
  • SEBB Highlighted Instructions for Sample Amended EG Files
    • This document provides color-coded crosswalks between SEBB Sample Full Year EG File records and SEBB Sample Amended EG File records.
  • SEBB Sample Full Year EG File
    • A sample .txt data file with three scenarios:
      • Jonathan Q Public – An enrolled employee who retired at the end of February 2023
      • Jane A Doe – An enrolled employee who added a spouse to coverage effective October 1, 2023
      • Sheila S Newby – An enrolled employee whose coverage began in December 2023
  • SEBB Sample Amended EG File
    • A sample .txt data file that provides examples of four common scenarios where previously provided 2023 enrollment data record(s) would be amended by new 2023 enrollment data record(s). In all cases when an amended record is provided, it replaces the previously provided record.
  • Opening a TXT file in Microsoft Excel
    • Instructions on how to open a “pipe-delimited” .txt file in Microsoft Excel. To practice, open the “Sample Full Year EG File.”

Enrollment data report webinar

A recorded webinar is available, which will help introduce you to both the Form 1095 reporting requirements and the enrollment data supporting documents. The webinar was provided in advance of 2020 reporting, so references to the tax year are dated, but the information is still relevant through tax year 2023 reporting.

Other guidance documents
  • IRS Form 1095 Matrix 
    • This document describes which Form 1095, if any, a subscriber or employee should receive.
Notifications of missing Taxpayer Identification Numbers (TINs)

A Taxpayer Identification Number (TIN) can be a Social Security number (SSN), an Individual Taxpayer Identification Number (ITIN), or an Adoption Taxpayer Identification (ATIN).

In certain circumstances, a subscriber is permitted to enroll eligible dependents using a "temporary SSN" (e.g., 999-99-0001). SEBB My Account assigns a temporary SSN in this format when a TIN is not available. The intent is for enrolled dependents to be able to access coverage without delay when the dependent’s SSN is not available at the time of enrollment.  Temporary SSNs are not intended to be used permanently instead of a dependent's valid SSN and should be corrected as soon as possible.

In other cases, an SSN may be keyed that is simply invalid (e.g., all 9 numbers the same, invalid range of numbers) and should be corrected as soon as possible.

Missing TIN impact on Form 1095 reporting

Temporary and invalid SSNs should not be used on Forms 1095 because they are not the dependent’s valid SSN.  IRS considers these "missing TINs". Regulations instruct employers to use a dependent's birth date instead of a "missing TIN". Using a birth date instead of a valid SSN may result in IRS penalty assessments (for submitting an incomplete Form 1095).

Resolving missing TINs

Given the risk of IRS penalty assessments, employees should be encouraged to provide valid SSNs for all dependents enrolled under a temporary or invalid SSN as soon as possible.

Periodically, we ask SEBB organizations to reach out to employees who have a dependent enrolled under a temporary or invalid SSN to request a valid TIN. When this occurs, the SEBB organization will receive an informational email asking the organization to generate a temporary dependent DDN report by the following process:

  • Log in to SEBB My Account.
  • Select the Reports tile from the Admin Dashboard or select the tab titled Reports.
  • In the "Select a report" dropdown menu, select the "Dependents With Temporary SSNs By District” report.
  • In the "Organization Name" dropdown menu, select the desired organization (applicable if you have credentials for more than one SEBB organization). 
  • Enter an "Effective State Date" value of 01/01/2020 and an "Effective End Date" value of the current date. 
  • Select the “Run report” button.

For any identified records, the organization should contact the subscriber, request the valid SSN for the listed dependent, and update the dependent record per your usual process.

In a small number of cases, the identified subscriber may be a former employee. It is important to reach out to former employees to solicit the valid SSN to ensure information used for Form 1095 reporting is as accurate as possible. If the former employee transferred to a different SEBB organization or terminated and was later hired at a different SEBB organization, you may need to request assistance from Outreach & Training staff to update the dependent’s SSN.

Health Benefit Exchange (HBE) notifications

An employer shared responsibility penalty is only triggered if a “full-time” employee who wasn’t offered medical coverage enrolls in coverage through an HBE and receives a health insurance premium tax credit.

When an employee applies for HBE coverage and is determined eligible for a health insurance premium tax credit, the HBE will notify the employer in writing. The organization who receives this letter should verify that SEBB eligibility was determined correctly for the employee (the employee may or may not be eligible for SEBB coverage; just verify that the organization’s determination was accurate). If employer-sponsored coverage was offered to the employee, the organization should follow up with the HBE (to let them know employer coverage was offered) and the employee (to let them know the employer will be contacting the HBE and that they may not be eligible for the premium tax credit due to the employer offer of coverage).

Tax-related guidance

The following sections contain information and guidance for the reporting of employer-sponsored medical and dental costs on employee W-2 Forms and for correcting tax issues related to nontax qualified dependents enrolled in SEBB benefits.

Reporting the cost of employer-sponsored health care on IRS Form W-2

Federal requirements for reporting on W-2s

Federal law requires reporting of employer-sponsored medical, dental, and vision costs on employee W-2 Forms. Employers are required to determine and report three numbers:

  1. Employee contributions toward medical, dental, and vision insurance premiums.
  2. The cost of employer-sponsored medical, dental, and vision care.
  3. The cost of employer contributions and optional employee contributions through payroll deduction to a Health Savings Account (HSA) (if employee is enrolled in the UMP High-Deductible Plan).

The Health Care Authority (HCA) provides the following information to SEBB organizations, for each employee, in early January each year for SEBB organizations to create their W-2s for that year:

For Box 12-DD, the full amount of the cost of health care

  • The amount provided will reflect the number of months the employee was enrolled (e.g., employee enrolled in coverage for 6 months, amount will reflect 6 months).
  • For Box 12-W, the full amount of any employer contribution (both the monthly amount and the one-time SmartHealth incentive, if the employee earned it) made to an HSA for an employee in the UMP High-Deductible Plan
    • The information we are not able to provide is the employee contributions to the HSA through payroll deduction.

HCA's W-2 information does not include anything related to other payroll deductions a SEBB organization is performing such as employee health insurance premiums for box 14, tobacco and spousal premium surcharges, FSA contributions, and DCAP contributions.

W-2 data files in SEBB My Account

W-2 data files become available in early January each year and can be downloaded from the Data Depot in SEBB My Account. The W-2 file name contains your SEBB organization's agency code (e.g., A600Zxx_recon.csv) and is in Excel format.

The W-2 file layout guide can be used to understand the information provided in the W-2 file. Review this example showing a W-2 data file before and after the layout guide specifications have been applied. 

Yearly IRS Form W-2 reporting guidance

The W-2 reporting guidance provides SEBB organizations with the calculations to complete the IRS Form W-2 reporting of health care. Use the guidance provided below along with your SEBB organization's W-2 data file, found in SEBB My Account, to report the cost of employer-sponsored health care coverage on IRS Form W-2: 

Tax issues related to nontax qualified dependent insurance

Employees adding a dependent who does not qualify as a dependent for tax purposes under IRC Section 152, as modified by IRC Section 105(b), will have additional taxable income, which needs to be taxed and reported.

Examples of dependents who do not qualify include: 

  • State-registered domestic partner
  • State-registered domestic partner's child

Employees with dependents who do not meet the Section 152 definitions may continue to make premium contributions for their own insurance coverage with pretax payroll deductions but contributions for the dependents must be deducted on a posttax basis.

When adding a dependent who does not qualify as a dependent for tax purposes to their employer-sponsored insurance, employees are required to complete and submit the Declaration of Tax Status form to their benefits administrator. The IRS provides information on how to determine a dependent’s tax status. The employee may use the Worksheet for Determining Support in IRS Publication 501, available at on the IRS website, to assess whether a dependent qualifies as a dependent for tax purposes.

The Health Care Authority (HCA) recommends that employees enrolling nontax qualified dependent, review their tax status declaration annually during the SEBB annual open enrollment period. The declaration requires the employee to anticipate the dependency status of their dependent for the upcoming year.

The annual resources below provide additional guidance for the employer, examples of status changes, and instructions for making corrections. 

Contact

For questions about ACA and Form 1095:

For questions about reporting the cost of employer-sponsored health care on IRS Form W-2:

Outreach & Training
HCA Support
1-800-700-1555

For questions about tax issues related to nontax qualified dependent insurance:

Direct questions to your legal or tax advisor. Employees with questions should be directed to the IRS website or to their tax advisor.