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).
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.
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:
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:
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.
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.
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
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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.