Final Rules on Health Coverage Reporting Requirements
April 16, 2014
In March, the IRS released final regulations on the reporting requirements of the Affordable Care Act (ACA) that take effect in 2015. These reports are intended to provide the IRS with information necessary to administer other ACA mandates. According to the IRS, the final information reporting rules are intended to be as streamlined, simple and workable as possible, consistent with effective implementation of the law.
The final regulations apply for calendar years beginning after Dec. 31, 2014. This date reflects the one-year delay provided in IRS Notice 2013-45. However, the IRS is encouraging voluntary compliance for 2014.
Section 6055 Reporting – requires health insurance issuers, self-insured plan sponsors, government agencies that administer health insurance programs and any other entity that provides minimum essential coverage (MEC) to report information concerning the type and period of coverage offered to employees and their family for the purposes of administering the ACA’s individual mandate. Sec 6055 Final Regulations
Section 6056 Reporting – requires large employers to provide information to the IRS about the type of health coverage offered to their full-time employees for purposes of the employer “play or pay” mandate. Large employers are those that had, on average, at least 50 full-time employees (including full-time equivalent employees) during the preceding calendar year. Small employers, those with fewer than 50 full-time employees, are exempt from the section 6056 reporting requirements. This section also requires employers to provide information to employees so they can determine whether they are eligible for a premium tax credit if they purchase health insurance through the exchange. Sec 6056 Final Regulations
Responding to widespread requests, the final rules provide a single, consolidated form that employers, who self-insure will use to report their data, to simplify the process and avoid duplicative reporting. The final rules also provide other simplified reporting options applicable to all large employers.
Filing Deadlines – Reporting the required information to the IRS will be similar to the current Form W-2 reporting. Electronic filing will be required if the employer files at least 250 returns. Employers must file their forms annually by February 28 (March 31 if filed electronically). Employers will be filing these forms for the 2015 calendar year by March 1, 2016 (Feb. 28th being a Sunday) or March 31, 2016 (if electronic). The employee statements for each calendar year, required under both section 6055 and 6056, must be furnished to full-time employees by Jan. 31 and can be provided electronically with the employee’s consent. Employers will be subject to penalties for failing to timely file the returns or provide statements to employees.
The IRS will continue to develop the forms and the online systems necessary for reporting the required information. However, due to the complexity of these new rules and the amount and level of data required, employers should take action now to become familiar with these rules and ensure their internal systems will be able to collect the data needed to complete the returns.
Those that wish to voluntarily comply with the information reporting requirements in 2014 should do so in accordance with the final regulations. This means that reporting entities should provide both section 6056 and section 6055 information, if applicable, on a single form.
According to the IRS, real-world testing of reporting systems and plan designs, built in accordance with the final regulations, through voluntary compliance for 2014 will contribute to a smoother transition to full implementation for 2015.
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