This is the second installment in the six-part series (Part 1) regarding new rules that the United States Department of Treasury and the Internal Revenue Service (IRS) issued for the enforcement of the information reporting provisions for insurers and certain employers under the Affordable Care Act (ACA).

The ACA will begin to be enforced in 2015. The government will use reports from providers of minimum essential coverage and applicable large employers to enforce the individual and employer mandates, and to administer premium tax credits. When health insurers and plan sponsors file taxpayer information with the IRS, they must also provide a copy to the taxpayer, along with the health insurers’ and/or plan sponsors’ own contact information (name, address and phone number). The information from health insurers will enable taxpayers and the IRS to verify whether taxpayers were provided minimum essential coverage during the tax year. The coverage reports from providers of minimum essential coverage and from applicable large employers (generally employers with 50 or more full-time or full-time equivalent employees in the prior year determined on a controlled group basis) are required under the Internal Revenue Code (IRC), Section 6055.

Simplified option for employer reporting

For employers that provide a “qualifying offer” to any of their full time employees, the final rules provide a simplified alternative to reporting monthly, employee-specific information.

  • A qualifying offer is an offer of minimum value coverage that provides employee-only coverage at a cost to the employee of no more than approximately $1,100 in 2015 (9.5 percent of the Federal Poverty Level), combined with an offer of coverage for the employee’s family.
  • For employees who receive qualifying offers for all 12 months of the year, employers are required to report only the names, addresses and taxpayer identification numbers (TINs) of those employees and a declaration that the employees received a full-year qualifying offer. Employers will also give the employees a copy of the simplified report or a standard statement indicating that the employee received a full-year qualifying offer.
  • For employees who receive a qualifying offer for fewer than all 12 months of the year, employers will be able to simplify reporting to the IRS and to employees for each of those months by entering a code indicating that the qualifying offer was made.
  • To provide for a phase-in of the simplified option, employers certifying that they have made a qualifying offer to at least 95 percent of their full-time employees (plus an offer to the employees’ families) will be able to use an even simpler alternative reporting method for 2015. Those employers may use the simplified, streamlined reporting method for their entire workforce, including any employees who do not receive a qualifying offer for the full year. Those employers will provide employees with standard statements relating to the employees’ possible eligibility for premium tax credits.
  • The final regulations grant employers the option of not identifying in the report which of its employees are full-time. Instead, employers may simply include those employees who may be full-time. To take advantage of this option, the employer must certify that it offered affordable, minimum value coverage to at least 98 percent of the employees about whom it is reporting.

Reporting requirements take-aways

Employers, insurers and other reporting entities must report information including: 

IRS, Section 6055 requirements

  • Information about the entity providing coverage, including contact information
  • Which individuals are enrolled in coverage, with identifying information and the months for which they were covered

IRS, Section 6056 requirements

  • Information about the employer offering coverage (including contact information and the number of full-time employees)
  • For each full-time employee, information about the coverage (if any) offered to the employee, by month, including the lowest employee cost of self-only coverage offered

Streamlined information

In the interest of streamlining, the final rules omit data elements in the statute that are not necessary to understanding coverage offered and provided. These include (but are not limited to):

  • The length of any waiting period
  • Employer’s share of the total allowed costs of benefits provided under the plan
  • The amount of advance payments of the premium tax credit and cost-sharing reductions