ACA News & Publications

ACA Pathways: Final Regulations Implementing Employer And Insurer Reporting Requirements Released

March 11, 2014

On March 5, 2014, the Internal Revenue Service (IRS) and the U.S. Department of the Treasury finalized the two proposed regulations on the Affordable Care Act (ACA)'s employer and insurer reporting requirements to provide information to the IRS and to covered individuals about the health plan coverage they offer (or do not offer) to their employees. These requirements are found in Internal Revenue Code (Code) sections 6055 and 6056, and are intended to provide the IRS with information to administer other ACA requirements ‐ in particular, the employer and individual mandates. They will also allow individuals to establish verification of their coverage to determine if they will qualify for a premium tax credit in the Health Insurance Marketplace (Marketplace).

Background: Requirements Of Code Sections 6055 And 6056

Code section 6055 requires health insurance issuers, self‐insured health plan sponsors, government agencies that administer government‐sponsored health insurance programs (for example, Medicare, Medicaid, CHIP or TRICARE), and any other entity that provides minimum essential coverage (MEC), to file an annual report with the IRS about the type and period of coverage offered. Code section 6056 requires all large employers that are subject to the employer mandate to report certain health care coverage information offered to their full‐time employees to the IRS.

Both Code section 6055 and 6056 also require reporting entities to furnish a statement annually to individuals enrolled in MEC (Code section 6055) and full‐time employees (Code section 6056). Among other things, this information will be used to determine whether employees can claim a premium tax credit on their tax returns for coverage purchased through the Marketplace.

Proposed regulations were published on September 9, 2013 that provided guidance on implementing the reporting requirements under Code sections 6055 and 6056, including providing options for potentially simplifying the reporting process. The March 5, 2014 final regulations adopt the proposed regulations, but also make some amendments in taking into consideration comments received with respect to some of these proposed options.

Final Regulations

Key features of the regulations are described below.

Information Reporting Requirements

Specific information required by Code Section 6055 includes information about the entity offering coverage, including contact information, the name and taxpayer identification number (TIN) for each individual enrolled in coverage, and the months for which they were covered. A covered individual's date of birth will also be required, but only if a TIN is not available after reasonable efforts have been made to obtain it.

Specific information required to be reported under Code section 6056 includes the following:

  • Information about the employer offering coverage, including contact information, and the calendar year for which the information is being reported
  • A certification as to whether the employer offered MEC to its full‐time employees (and their dependents), by calendar month
  • The number of full‐time employees by calendar month
  • A list of full‐time employees, along with contact information for each employee
  • For each full‐time employee, the months during the calendar year for which MEC was available, and information about the coverage offered to each, including the employee's share of the lowest cost monthly premium for self‐only coverage providing minimum value that was offered, by month

In an effort to streamline and simplify the reporting process, some of the above information will be reported through the use of indicator codes. In addition, the final rules omit data elements in the statute that are not necessary to understanding coverage offered and provided, including (but not limited to) the following:

  • The length of any waiting period
  • The employer's share of the total allowed costs of benefits provided under the plan
  • The amount of advance payments of the premium tax credit and cost‐sharing reductions

Employers are also given the option to avoid identifying which of its employees are full‐time, and instead to just include in the report those employees who may be full‐time. To take advantage of this option, the employer must certify that it offered affordable, minimum value coverage to at least 98 percent of the employees on whom it is reporting.

In addition, in furtherance of the effort to streamline the reporting process, alternative methods of reporting are available, as described below.

Single Combined Form for Information Reporting to IRS Permitted

The final rules provide for a single, consolidated form that employers will use to report to the IRS and employees under both Code sections 6055 and 6056, thereby simplifying the process and avoiding duplicative reporting. The combined form will have two sections: the top half includes the information needed for Code section 6056 reporting, while the bottom half includes the information needed for Code section 6055.

  • Employers that are large enough to be subject to the employer responsibility provisions and that "self‐insure" will complete both parts of the combined form for information reporting
  • Employers that are subject to employer responsibility but do not "self‐insure" will complete only the top section of the combined form (reporting for Code section 6056). Insurers and other providers of health coverage will report only under Code section 6055, using a separate form for that purpose. Insurers do not have to report on enrollees in the Marketplace, since the Marketplace will already be providing information on individuals' coverage there

Simplified Option for Employer Reporting under Code Section 6056

For employers that provide a "qualifying offer" to any of their full time employees, the final rules provide a simplified alternative to reporting monthly, employee‐specific information on those employees.

  • A qualifying offer is an offer of minimum value coverage that provides employee‐only coverage at a cost to the employee of no more than about $1,100 in 2015 (9.5 percent of the Federal Poverty Level), combined with an offer of coverage for the employee's family
  • For employees who receive qualifying offers for all 12 months of the year, employers will need to report only the names, addresses, and TINs of those employees and the fact that they received a full‐year qualifying offer. Employers will also give the employees a copy of that simplified report or a standard statement indicating that the employee received a full‐year qualifying offer.
  • For employees who receive a qualifying offer for fewer than all 12 months of the year, employers will be able to simplify reporting to the IRS and to employees for each of those months by simply entering a code indicating that the qualifying offer was made
  • To provide for a phase‐in of the simplified option, employers certifying that they have made a qualifying offer to at least 95% of their full‐time employees (plus an offer to their families) will be able to use an even simpler alternative reporting method for 2015. Those employers will be able to use the simplified, streamlined reporting method for their entire workforce, including for any employees who do not receive a qualifying offer for the full year. Those employers will provide employees with standard statements relating to their possible eligibility for premium tax credits

Effective Date

Employers that have fewer than 50 full‐time employees are exempt from the ACA employer shared responsibility provisions and therefore from the employer reporting requirements.

The information returns must be filed with the IRS by February 28 (or March 31, if filed electronically) of the year following the calendar year coverage was offered. The first Code section 6055 and 6056 reporting returns will be due in 2016 for coverage provided in 2015. Reporting for the 2014 calendar year is voluntary.

The individual statements for each calendar year must be furnished to all responsible individuals enrolled by January 31 of the next calendar year. Extensions of this deadline may be available in certain circumstances. The first employee statements (meaning the statements for 2015) must be furnished no later than February 1, 2016 (as January 31, 2016 falls on a Sunday).

The final regulations regarding the Code section 6055 reporting requirements are available at: http://www.gpo.gov/fdsys/pkg/FR-2014-03-10/pdf/2014-05051.pdf

The final regulations regarding the Code section 6056 reporting requirements are available at: http://www.gpo.gov/fdsys/pkg/FR-2014-03-10/pdf/2014-05050.pdf

For More Information
For more information about this ACA Pathways or about any other health care reform-related provisions, please contact your Burnham Benefits consultant or Burnham Benefits at:

Burnham Benefits
949.833.2983
inquiries@burnhambenefits.com



This ACA Pathways is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. The information contained in this ACA Pathways includes emerging health care news from a limited perspective and does not encompass all views. The information was selected from a wide range of sources selected on the basis of their potential impact on employers and/or their employee benefit plans. For more information, please contact Burnham Benefits.

Back to News & Publications