The Affordable Care Act (ACA) requires health insurance issuers, self-insured health plan sponsors, government agencies that administer government-sponsored health insurance programs and any other entity that provides minimum essential coverage (MEC) to report information on that coverage to the IRS and covered individuals. This requirement is found in Internal Revenue Code section 6055.
On Sept. 5, 2013, the IRS released proposed rules on the section 6055 reporting requirements. These rules are proposed to apply beginning in 2015, with the first returns due in 2016 for coverage provided in 2015. In 2014, employers are encouraged to voluntarily comply with the reporting requirements; however, compliance is completely optional for 2014 and no penalties will be assessed for failing to comply.
These reporting requirements are intended to provide the IRS with information necessary to administer other ACA mandates, such as the large employer shared responsibility penalty and the individual mandate.
Entities Subject to Section 6055 Reporting
Reporting entities include health insurance issuers, self-insured plan sponsors, government-sponsored programs and other entities that provide MEC.
Health insurance issuers are responsible for section 6055 reporting for all insured coverage except:
- Coverage under certain government-sponsored programs (such as Medicaid and Medicare) that provide coverage through a health insurance issuer; and
- Coverage under QHPs through the individual market Exchange.
To avoid collecting duplicate or unnecessary information, the proposed rules provide that issuers are not required to submit section 6055 information returns for coverage under a QHP through an individual market Exchange. The Exchange will provide the necessary information to the IRS and the individual. However, issuers must report on QHPs in the small group market enrolled in through the Small Business Health Options Program (SHOP), because the Exchanges will not be reporting information on these plans.
The proposed rules identify the sponsor and reporting entity for various types of self-insured arrangements (for example, the joint board of trustees for a multiemployer plan). For these purposes, section 414 employer aggregation rules do not apply. Accordingly, a self-insured group health plan or arrangement covering employees of related corporations is treated as sponsored by more than one employer and each employer must report for its employees. However, one member of the group may assist the other members by filing returns and furnishing statements on behalf of all members.
Reporting entities are permitted to use third parties to facilitate filing returns and furnishing statements to comply with section 6055 reporting requirements. However, these arrangements do not transfer the potential liability for failure to report.
The proposed rules provide that section 6055 reporting is not required for health savings accounts (HSAs), because these plans are not MEC. Additionally, reporting is not required for arrangements such as health reimbursement arrangements (HRAs) that supplement MEC.
In Code section 6056, the ACA also requires large employers subject to the pay or play rules to report to the IRS and covered individuals information on the health care coverage offered to full-time employees. For large employers with self-insured health plans that are subject to both section 6055 and section 6056 reporting, separate reporting is required under the proposed rules. However, the proposed rules include provisions that reduce duplicative reporting and otherwise simplify reporting. For example, substitute forms and statements to individuals are permitted, which may allow self-insured health plans to furnish a single substitute statement to covered individuals for both sections 6055 and 6056.
In addition, the proposed rules provide that the IRS is considering permitting applicable large employers with self-insured plans that provide mandatory, minimum value coverage to employees and offer that coverage to spouses and dependents, all with no employee contribution, to forgo providing section 6056 statements to those covered employees. Because the section 6055 return would provide the individual taxpayers with information to accurately file income tax returns, and would provide the IRS the necessary information, the IRS is considering whether, for those employees, the employer could file and furnish only the return required under section 6055 and include a code on the employees’ Forms W-2.
Information Required to be Reported
The proposed rules provide that the section 6055 information return must include:
- The name of each individual enrolled in MEC;
- The name and last known address of the primary insured or other related person (for example, a parent or spouse) who submits the application for coverage (the responsible individual);
- The TIN and months of coverage for each individual who is covered under the policy or program; and
- Other information specified in forms, instructions or published guidance.
For employer-provided coverage, the proposed rules require reporting the name, address and EIN of the employer maintaining the plan and whether coverage was enrolled in through the SHOP.
The proposed rules do not require reporting the portion of the premium paid by an employer, the specific dates of coverage, the amount of any cost-sharing reductions, or the amount of advance payments on QHP coverage through the individual market Exchange.
Although TINs are required for section 6055 reporting, the proposed rules provide transition relief, where reporting entities that make reasonable efforts to collect TINs but do not receive them will not be subject to penalties for failure to timely and accurately report. In general, a reporting entity acts responsibly in attempting to solicit a TIN if, after an initial, unsuccessful request for a TIN (for example, at the time of enrollment), the reporting entity makes two consecutive annual TIN solicitations. A penalty may be imposed if the reporting entity fails to make the two additional solicitations.
Additionally, the proposed rules allow reporting entities to report date of birth if a TIN is not available. This alternative should not be used, however, unless the reporting entity has made reasonable efforts to obtain the information by requesting that a covered individual provide the TIN.
Time and Manner of Filing
Under the proposed rules, section 6055 information returns may be filed electronically, and may be made on:
- Form 1095-B or another form the IRS designates; or
- A substitute form, as long as it complies with IRS procedures or other guidance.
Section 6055 information returns must be submitted to the IRS with a transmittal form, Form 1094-B. These forms will be made available in draft form at a later date.
Reporting entities must file the section 6055 information return with the IRS by February 28 (or March 31, if filed electronically) of the year following the calendar year in which they provided MEC.
Statements Furnished to Individuals
Reporting entities must also furnish a statement to the covered individual providing:
- The policy number and the name, address and a contact number for the reporting entity; and
- The information required to be reported to the IRS.
The proposed rules permit substitute statements that comply with applicable requirements, as long as the required information is included. A substitute statement that includes the information required by both sections 6055 and 6056 in a single statement may be permitted by future guidance.
The proposed rules permit electronic delivery of statements to individuals if the recipient consents. The proposed rules also permit furnishing only one statement per address.
Statements furnished to individuals under section 6055 are not required to disclose their complete TINs.
Employers that do not comply with the filing and statement furnishing requirements of section 6056 may be subject to penalties for failure to file a correct information return and failure to furnish correct payee statements.
However, the proposed rules provide relief from penalties for errors in reporting, or a failure to report, due to reasonable cause. Reduced penalties will apply for corrections of errors in reporting under section 6055 that are not due to reasonable cause.
Request for Comments
The IRS has requested comments on a number of provisions. Comments can be submitted for a period of 60 days after the proposal is published in the Federal Register. A hearing on the proposed rules will be held on Nov. 19, 2013.
Please contact Business Benefits Group for more information on the ACA’s employer reporting requirements.
Source: Internal Revenue Service