IRS Announces Simplified Employer Health Care Coverage Reporting

Editor: Alistair M. Nevius, J.D.

Regulations

The IRS released final regulations to implement simplified reporting requirements under the Patient Protection and Affordable Care Act (PPACA), P.L. 111-148, which requires employers to report health care coverage information under Secs. 6055 and 6056 starting in 2015 (T.D. 9660 and T.D. 9661).

On the same day, the Department of Health and Human Services (HHS) released several PPACA-related standards, including an additional two-year grandfathering period for certain health plans in the small group and individual health insurance markets that do not meet the act’s minimum coverage requirements. The extension applies to policy years beginning on or before Oct. 1, 2016. The new HHS rules also extend next year’s open enrollment period by a month to Feb. 15, 2015.

Sec. 6055 requires providers of minimum essential coverage and providers of coverage through an employer’s group health plan to report information that will allow taxpayers to establish, and the IRS to verify, that the taxpayers were covered by minimum essential coverage and their months of enrollment during a calendar year.

Sec. 6056 requires applicable large employers (generally employers with 50 or more full-time employees) to report to the IRS information about the coverage they offer to their full-time employees and requires them to furnish related statements to employees.

The IRS says that only 4% of employers will be subject to the reporting requirements because they have 50 or more full-time employees. To reduce the reporting burden for these employers, the final rules provide for combining reporting under both Secs. 6055 and 6056 on one form. Employers that are subject to the employer mandate and are self-insured will complete both halves of the form; those that are not self-insured will complete only the top half.

Under a simplified option for employer reporting in the final rules, employers that provide a “qualifying offer” to any of their full-time employees will be allowed a simplified alternative to reporting monthly, employee-specific information on those employees.

The rules also do not require certain information to be reported that would not advance the purpose of the reporting requirements, such as reporting the amount of the employer’s share of total costs or of any premium tax credit or cost sharing paid.

Both sets of regulations apply to calendar years beginning after Dec. 31, 2014.