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HB Counsel Client Alert – It’s the Most Wonderful Time of the Year for Reporting


It’s the Most Wonderful Time of the Year for Reporting

The beginning of fall season brings treats like football games, pumpkin-flavored everything, brightly colored leaves, caramel apples, and a bevy of reporting requirements for employee benefit plan sponsors.  Alright, so the reporting requirements may feel more like tricks than treats! This alert outlines several disclosure and reporting requirements that plan sponsors should be mindful of during this time of the year to avoid those tricky penalties.


Medicare Part D Notice

The Medicare Part D Notice describes whether a group health plan’s prescription health coverage is “creditable coverage” under Medicare Part D.

The Notice must be provided to all Medicare eligible participants at initial enrollment and by October 15th annually.

The disclosure obligation applies to all plan sponsors that provide prescription drug coverage, even those that do not offer prescription drug coverage to retirees.  Medicare Part D, which became effective in 2006, is a federal program to subsidize the cost of private prescription drug plans.​

Medicare Part D eligible individuals who fail to maintain creditable coverage for a period of 63 continuous days or more will face a late enrollment penalty when they eventually enroll in Medicare Part D.


Form 5500 Reporting

The Department of Labor (“DOL”) requires annual Form 5500 reporting, and applicable schedules, for large plans with 100 or more participants at the beginning of the plan year and small funded plans subject to ERISA (certain other exemptions may apply).  Form 5500 is a compliance, research, and disclosure tool for the DOL and source of information and data for other Federal Agencies and Congress.

Form 5500 must be filed electronically by the last day of the 7th month following the end of the plan year (a two and half month extension of time is available if Form 5558 is timely filed with the Internal Revenue Service (“IRS”) before the Form 5500 due date).

For calendar year plans that obtained an extension for filing, the Form 5500 due date is October 15.

The maximum penalty for failing to file Form 5500 is $2,140 per day that the Form 5500 is late.


Summary Annual Report (“SAR”)

The SAR is a narrative summary of the Form 5500 that must be provided to plan participants.  The SAR is due automatically to participants within 9 months after the end of the plan year; or two months after the due date for filing Form 5500 (with an approved extension).

For calendar year plans that obtained an extension for filing Form 5500, the SAR is due to participants by December 15.

Although there are no specific penalties for failure to distribute SARs, participants and beneficiaries may bring suit to enforce any provision of ERISA.  Plan administrators may also be liable for a penalty of up to $110 per day for failure to respond to a participant’s request for an SAR.


Information Reporting of Employer-Sponsored Coverage 

The Affordable Care Act (“ACA”) requires Applicable Large Employers (“ALEs”) to provide written statements of health coverage provided.  ALEs must provide statements to employees and former employees who were full time employees during the reporting period utilizing IRS Form 1095-C.

ALEs must use Form 1094-C to report required information about whether or not the employer offered affordable minimum essential health coverage (“MEC”) and enrollment in minimum essential health coverage for eligible employees.  Form 1094-C transmits Form 1095-C to the IRS.

ALEs are responsible for furnishing employees and former employees with a Form 1095-C by Thursday, January 31, 2019.  Employers are responsible for filing copies of Form 1095-C, along with Form 1094-C to the IRS by Thursday, February 28, 2019, if filing by paper, or Monday, April 1, 2019,[1] if filing electronically[2] (same as Form 1094-C).

In late September 2018, the IRS released final 2018 forms and instructions for reporting.  Employers may now access the final forms and instructions and begin preparation of 2018 reporting to ensure timely reporting.

The penalty for not filing an information return with the IRS generally is $260 for each return.  The penalty for providing an incorrect statement to employees/enrollees is $260 for each erroneous statement.  In most cases, the total penalty for all reporting failures cannot exceed $3,193,000 per calendar year, although if violations are due to “intentional disregard,” the $260 penalty can increase to $530 per failure, and there is no cap on the total penalty amount.[3]

Correcting a reporting failure within 30 days of the due date reduces the penalty amount; therefore, if a reporting failure is identified, it should be corrected as soon as possible.


W-2 Reporting of Employer-Sponsored Health Coverage

The ACA requires all employers[4] providing applicable employer-sponsored coverage during a calendar year to report the cost of the employer-sponsored health care coverage on employees’ Form W-2.

Employers that are subject to this requirement should report the value of the health care coverage in Box 12 of the Form W-2, with Code DD to identify the amount.

Employers must furnish Form W-2s to employees and former employees by January 31.

Violations of the ACA’s W-2 reporting requirements are subject to existing rules on filing Forms W-2.  Failure to comply with the W-2 reporting requirements may result in penalties ranging from $30 to $250 per Form W-2.


Disclosures in Open Enrollment Materials

While notices to participants are not specifically required during an employer’s annual open enrollment period, employers often include required annual notices in open enrollment materials to satisfy disclosure obligations.  It is important, during this time of the year, to review what annual disclosure and reporting obligations may apply to your group health plan(s) and determine when and how these annual notices should be distributed to participants.  Compliance with the various dates and deadlines may be tricky, so it is important to give these requirements attention and dedicated time for completion.


The content herein is provided for educational and informational purposes only and does not contain legal or tax advice.  Please contact our office if you have any questions regarding what disclosure and reporting requirements apply to your employee benefit plans.

Dated:  October 23, 2018


[1]   The regular due date, March 31, falls on a Sunday in 2019.  IRS instructions are for employers to file on the next business day, which is Monday, April 1.

[2]   ALEs that file 250 or more information returns with the IRS must file the returns electronically.

[3]   Note that the above penalty amounts are subject to indexing, and these numbers reflect the penalties for those returns and statements that were due in 2017.

[4]   An exemption to the W-2 reporting requirement exists for the following:

  • small employers (employers that were required to file fewer than 250 Forms W-2 for the preceding calendar year);
  • employers that contribute to a multiemployer plan (i.e., a collectively bargained plan governed by a board);
  • Federally-recognized Indian tribal governments;
  • tribally chartered corporations wholly-owned by a federally recognized Indian tribal government;
  • self-insured plans that are not subject to COBRA (e.g., a self-insured church plan); and
  • governmental plans maintained primarily for members of the military and their families.