On March 5, 2014 the U.S. Department of the Treasury and the Internal Revenue Service (the “Departments”) released advanced copies of the final regulations implementing the ACA reporting requirements for employers and insurers under Internal Revenue Code (“Code”) §6055 and §6066. These final regulations are set to be published in the Federal Register today. To recap the proposed regulations addressing the reporting requirements, Code §6055 requires insurers, self-insured plan sponsors, and certain other entities to report regarding their provision of “minimal essential coverage.” Further, Code Section §6056 requires applicable large employers (ALEs) to report certain details of the coverage they offer to their full-time employees. Among other things, §6055 reporting will be used to determine whether the individual mandate penalties should be assessed, and §6056 reporting will be used to determine whether employer mandate penalties should be assessed and whether subsidies are available to employees obtaining coverage on the Exchange. These requirements are effective for plan years after December 31, 2014, but the regulations provide relief from penalties for the first year of reporting as long as employers make a good faith effort to comply.
A representative of the Departments stated that the purpose of these final reporting rules is to “…significantly streamline and simplify information reporting while making it easier for employers and insurers of all sizes to provide the quality, affordable health coverage that every American deserves.” While only time will tell if these rules will achieve the desired result of facilitating employer and insurers in providing health coverage, such entities should be encouraged that the new guidance has finally been issued that does streamline and provide much needed details on these reporting requirements.
The final regulations contain many subtle and intricate points, and as such, not every aspect can be addressed in this alert. However, the following are some key provisions from these regulations to assist employers and/or insurers in preparing for 2015:
Streamlined Reporting Form
- Employers subject to the reporting requirements will use one consolidated form (Form 1095-C) to complete both their reporting to the IRS and their employees under Code §6055 and §6056, as applicable. This form will save certain employers (i.e. those that offer self-funded health plans) from duplicating their reporting efforts.
- Employers that sponsor self-insured health plans will need to complete both sections on this new form for complete information reporting.
- Employer that sponsor fully insured health plans will only need to complete the top section of the combined form related to Code §6056.
- Of course, employers with less than 50 full-time employees are still exempt from the shared responsibility provisions and these reporting requirements.
- Insurers and other such providers of health coverage will use a separate form (Form 1095-B) to fulfil their reporting requirements under Code §6055.
- Issuers do not need to report on enrollees in the Exchange as the Exchange will already provide such enrollees’ coverage information.
- However, issuers will still need to report on SHOP coverage as Exchanges are not required to report on coverage obtained through the SHOP.
- The regulations provide specific rules regarding electronic distribution of the statements to employees. Most notably, the regulations require that employee consent and other requirements must be met prior to the employer furnishing these statements electronically.
Streamlined Reporting Information
- The final regulations refer to ALEs that provide a “qualifying offer” of health coverage to their full-time employees. A “qualifying offer” is an offer made to one or more full-time employees for minimum essential coverage that provides minimum value at an employee cost for employee-only coverage not exceeding 9.5 percent of the Federal Poverty Level (about $1,100 in 2015), combined with an offer of coverage to the employee’s family.
- Employers that provide a “qualifying offer” to their full-time employees are afforded a break from the previous guidance that would require all employers to report detailed employee-specific information monthly.
- For employees who received a qualifying offer for all twelve months of the year, employers will only have to report the names, addresses, TINs and the fact that they received this offer for the full year. In addition, employers can provide these employers with this simplified report or a standard statement that they received this qualifying offer for the year.
- For employees who received a qualifying offer for less than twelve months, employers will be able to simply enter a code on the reporting form for any month(s) this offer was made.
- The reporting process will be phased in. In 2015, employers that can certify that they made a qualifying offer to at least 95% of their full-time employees (and their families) can use an even simpler reporting method. For 2015, these employers can use the streamlined method outlined in 2(a) above for their entire workforce, even for those not receiving a qualifying offer for the entire year. Employers utilizing this process can provide their employees with standard statements that include the possibility for obtaining premium tax credits.
- Employers are also given the option of including in their report employees who might be full-time, rather than identifying which employees are actually full-time. However, utilizing this option comes with a cost as such employers will have to certify that they offered affordable, minimum value coverage to at least 98% of their employees.
- Employers are not required to submit certain information that has been determined to not be relevant to individual taxpayers or the IRS to administer the premium tax credit and the employer mandate, or that is already provided at the same time through other means (e.g. the length of any waiting period and the reporting of the months, if any, during which any of an employee’s dependents were covered under the plan, among other things).
Please contact your AssuredPartners NL benefit team if you have questions or need assistance with these or other compliance matters.