In an abundance of caution, MSRS encourages employers to file IRS Form 1095 for  terminated employees under age 65 who had an HCSP balance during the previous tax year.

While the HCSP is not specifically addressed in the Affordable Health Care Act (ACA), the plan is similar to a Health Reimbursement Arrangement (HRA). We use provisions of the law that affect HRAs as guidance to determine if the HCSP must be reported. Based on our review and interpretation of the ACA, an HCSP account may be considered minimum essential coverage (MEC) for terminated/retired employees.

Employers are encouraged to consult with a tax or legal professional to determine if they believe (as we do) that HCSP is minimum essential coverage for retired or terminated employees and therefore, reportable. To learn more, see ACA Reporting FAQs.

 

What this means to employers

The IRS requires retiree-only HRAs to be reported, so it is likely the IRS may require employers to report the HCSP for any month(s) a terminated or retired employee had an HCSP account balance.   

Employers may not be required to report the HCSP for:

  • Active employees. HCSP is not likely to be considered minimum essential coverage because an active employee cannot access their account balance.

  • Former employees covered by employer-sponsored health insurance (employer does not have to report HCSP separately if they report the health insurance). 

  • Medicare-eligible employees (age 65 or over). 

 

At employer's request, MSRS will provide data needed to fulfill reporting requirements required by the IRS.

Please review this section carefully to learn about requesting information and what MSRS will and will not provide.

  • Email payroll.support@msrs.us request the data.

  • Reports will be available the later part of December. This timeline allows us to collect all the necessary data you need to prepare 1095 forms. Please do not ask for a report to be sent to you any earlier.

  • MSRS will load an Excel spreadsheet on PSC (our recordkeeper's payroll system).

  • Only payroll or HR contacts who have PSC login credentials will be able to view/download the report. If you do not have access to PSC, please provide the name of the payroll or HR contact who should receive the report.

  • It may take several weeks for MSRS to prepare the spreadsheets and load on PSC, so please plan accordingly to ensure you meet reporting deadlines.

To learn more, see ACA Reporting FAQs.
 

MSRS will provide:

  • Names of ALL of your employees, both active and terminated up to their 65th birthday. Note: Although we believe you only have to report for terminated employees, we don't always receive the termination date from the employer.

  • Employee SSN & date of birth.
    Exception:This confidential information will not be included if report is emailed to you.

  • Months during current calendar year there was an HCSP account balance of $5 or more (or $500 or $1,000, if specified by the employer).

  • Termination date, if any. 

  • To learn more, see ACA Reporting FAQs.

MSRS will not provide:

  • Advice on how to complete the 1095 form. Employer should consult a tax or legal professional.

  • Employee's address or HCSP account balance. Data Privacy laws prevent us from sharing this information.

  • Names of employees age 65 or older (Medicare-eligible employees do not have to be reported).

  • Spouse/dependents. We do not consider them to be "covered individuals" because they cannot access the account on their own. The account is tied to the employee's name and SSN.

  • Names of employees who died prior to the current tax year or their survivors who inherited the account.