IRS Issues Proposed Rules for Employer Information Reporting Under the Affordable Care Act

Author: Tracy Morley, XpertHR Legal Editor

September 11, 2013

The Internal Revenue Service (IRS) issued two proposed rules to implement the information-reporting requirements for insurers and certain employers under the Affordable Care Act (ACA). The first rule pertains to minimum essential coverage (MEC) reporting requirements under Section 6055 of the Internal Revenue Code (Code). The second rule pertains to Section 6056 of the Code and addresses information-reporting requirements for large employers subject to the employer mandate, regarding the health coverage offered to full-time employees.

Reporting Requirements

Information Reporting of Minimum Essential Coverage requires employers, insurers and any other entity that provides MEC to file an annual return with the IRS containing information on each individual to whom MEC has been provided during the year. This reporting requirement will help the IRS determine whether individuals are covered under MEC, and will also be used to help determine if an individual is eligible for a premium tax credit due to the lack of MEC.

Information Reporting by Applicable Large Employers on Health Insurance Coverage Offered Under Employer-Sponsored Plans requires every applicable large employer (ALE) subject to the employer mandate to annually report the terms and conditions of the health care coverage offered to employees. This reporting requirement will help the IRS determine whether ALEs are complying with the employer mandate provisions of the ACA, and will also be used to help determine if an individual is ineligible for a premium tax credit because he or she has adequate coverage offered by his or her employer.

Proposed Rules

The proposed rules describe a variety of options to potentially streamline information reporting, such as:

• Replacing Section 6056 employee statements with Form W-2 reporting on offers of employer-sponsored coverage to employees, spouses and dependents.
• Eliminating the need to determine whether particular employees are full-time if adequate coverage is offered to all potentially full-time employees.
• Allowing employers to report the specific cost to an employee of purchasing employer-sponsored coverage only if the cost is above a specified dollar amount.
• Allowing self-insured group health plans to avoid furnishing employee statements under both section 6055 and section 6056 by furnishing a single substitute statement.
• Limited reporting for certain self-insured employers offering no-cost coverage to employees and their families.
• Permitting health insurance issuers to forgo reporting under section 6055 on individual coverage offered through a Marketplace because that information will be provided by the Marketplace.
• Permitting health insurance issuers, employers, and other reporting entities under section 6055 to forgo reporting the specific dates of coverage (instead reporting only the months of coverage), the amount of any cost-sharing reductions, or the portion of the premium paid by an employer.

The IRS is inviting stakeholders to submit comments on the proposed rules through November 8, 2013, and will consider the public comments when developing the final reporting rules.

Once the final rules are issued, employers and other affected entities are encouraged to voluntarily comply with the information-reporting requirements in 2014 in preparation of the employer mandate and associated reporting requirement that take effect in 2015.