The Affordable Care Act (ACA) created new reporting requirements under Internal Revenue Code (Code) sections 6055 and 6056. Under these new reporting rules, certain employers must provide information to the IRS about the health plan coverage they offer (or do not offer) to their employees.
The additional reporting is intended to promote transparency with respect to health plan coverage and costs. It will also provide the government with information to administer other ACA mandates, such as the large employer shared responsibility penalty and the individual mandate.
This Legislative Brief provides a summary of ACA’s information reporting requirements under Code sections 6055 and 6056.
The Code sections 6055 and 6056 reporting requirements were set to take effect in 2014. However, on July 2, 2013, the Treasury Department announced that it will provide employers with an additional year to comply with these health plan reporting requirements. Thus, the Code sections 6055 and 6056 reporting requirements will become effective in 2015. The first returns will be due in 2016 for coverage provided in 2015.
On July 9, 2013, the IRS issued Notice 2013-45 to provide transition relief for 2014 for the Code sections 6055 and 6056 information reporting requirements. Under the transition relief, employers are encouraged to voluntarily comply with the reporting requirements for 2014 once the IRS issues reporting rules, which are expected this summer. However, compliance with the reporting rules is completely optional for 2014 and no penalties will be applied for failing to comply.
|Type of Reporting||Affected Employers||Required Information||Effective Date|
|Code § 6056 – Large employer health coverage reporting||Large employers (at least 50 full-time employees, including full-time equivalents)||Terms and conditions of health plan coverage offered to full-time employees (helps the IRS administer the ACA’s shared responsibility penalty for large employers)||Delayed until 2015|
|Code § 6055 – Reporting of health coverage by health insurance issuers and sponsors of self-insured plans||Employers with self-insured health plans||Information on each individual provided with coverage (helps the IRS administer the ACA’s individual mandate)||Delayed until 2015|
Large Employer Health Coverage Reporting (Code § 6056)
Large employers subject to the ACA’s shared responsibility provisions must file a return with the IRS that reports the terms and conditions of the health care coverage provided to the employer’s full-time employees for the calendar year. Related statements must also be provided to employees.
An employer qualifies as a “large employer” under the ACA’s shared responsibility provisions if it employed on average at least 50 full-time employees, including full-time equivalents, on business days during the preceding calendar year.
The IRS will use the information that employers report to verify employer-sponsored coverage and administer the ACA’s shared responsibility provisions for large employers. The ACA’s shared responsibility provisions impose penalties on large employers that do not offer affordable, minimum value coverage to their full-time employees and dependents. The ACA’s employer penalties were set to take effect on Jan. 1, 2014, but they have been delayed until 2015.
The large employer’s return must include the following information:
- The employer’s name and employer identification number (EIN);
- The date the return is filed;
- A certification of whether the employer offers its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan;
- The number of full-time employees for each month during the calendar year;
- The name, address and taxpayer identification number (TIN) of each full-time employee employed by the employer during the calendar year and the months (if any) during which the employee and any dependents were covered under the eligible employer-sponsored plan during the calendar year; and
- Any other information required by the IRS.
Most employer-sponsored health plans will qualify as minimum essential coverage. The ACA broadly defines “minimum essential coverage” to include both insured and self-insured group health plans, as well as plans with grandfathered status under the ACA. However, minimum essential coverage does not include specialized coverage, such as coverage only for vision care or dental care, workers’ compensation, disability policies, or coverage only for a specific disease or condition.
In addition, large employers that offer the opportunity to enroll in minimum essential coverage must report:
- The duration of any waiting period with respect to the coverage;
- The months during the calendar year when coverage under the plan was available;
- The monthly premium for the lowest-cost option in each enrollment category under the plan; and
- The employer’s share of the total allowed costs of benefits provided under the plan.
Large employers must also provide each full-time employee with a written statement that includes the information relating to that employee (and dependents) that is required to be reported on the IRS return. The statement must be provided to full-time employees by Jan. 31 following the calendar year for which the information was required to be reported to the IRS.
In Notice 2012-33, the IRS requested comments on how to implement this employer reporting requirement. It is expected that future guidance will address how to coordinate this reporting requirement with similar ones, such as the return required under Code § 6055, to minimize duplication. For example, under the ACA, the IRS may allow a large employer with an insured health plan to agree with the issuer that issuer will include the information required under Code § 6056 with the return and statement provided by the issuer under Code § 6055.
Reporting of Health Coverage for issuers and self-insured plans (Code § 6055)
The ACA requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs and any other entity that provides minimum essential coverage to file an annual return with the IRS reporting information for each individual who is provided with this coverage. Related statements must also be provided to individuals.
For employers with insured group health plans, it is anticipated that future IRS regulations will make the health insurance issuer, and not the employer, responsible for this health coverage reporting.
The IRS will use the information from the returns to implement the ACA’s individual mandate (that is, the requirement that individuals obtain acceptable health insurance coverage for themselves and their family members or pay a penalty). The ACA’s individual mandate goes into effect in 2014.
The return must include the following information:
- The name, address and TIN of the primary insured and each other individual covered under the policy or plan;
- The dates each individual was covered under the policy or plan during the calendar year;
- If the coverage is health insurance coverage, whether the coverage is a qualified health plan (QHP) offered through an Exchange;
- If the coverage is a QHP offered through an Exchange, the amount of any advance payment of the premium tax credit or of any cost-sharing reduction for each covered individual; and
- Any other information required by the IRS.
In addition, if health insurance coverage is through an employer’s group health plan, the return must contain the following information:
- The name, address and EIN of the employer maintaining the plan;
- The portion of the premium (if any) to be paid by the employer; and
- Any other information the IRS may require to administer the ACA’s small employer health care tax credit.
The entity required to file the IRS return must also furnish a written statement to each individual listed on the return. The statement must be provided by Jan. 31 following the calendar year for which the information was required to be reported to the IRS.
The IRS may allow for a return or written statement required under this health insurance coverage reporting provision to be coordinated with the reporting requirement for large employers under Code § 6056. In Notice 2012-32, the IRS requested comments on this reporting requirement, including how to coordinate and minimize duplication of the ACA reporting.