Final Employer Reporting Regulations Released
On March 5, 2014, the Internal Revenue Service (“IRS”) released the long-awaited final regulations pertaining to how employers and insurance companies will report information to the IRS need to enforce both the Individual and Employer Mandates of the Affordable Care Act (“ACA”). The final regulations provide some welcome relief for employers in the way of simplification, but the final regs still require employers to pay close attention to detail. This communication will attempt to break down the regs into FAQs.
While the reports will not have to be submitted to the IRS until 2016 for 2015 coverage, this will be a significant undertaking for employers so it would be wise for employers to begin now to plan for what items they will need to collect to satisfy their future reporting obligations.
FAQ 1: When will the reporting requirements become effective?
The reporting requirements are effective for coverage provided on or after January 1, 2015, with the first information returns to be filed with the IRS and provided to individuals in early 2016. Employers can voluntarily file for 2014.
FAQ 2: Is there more than one type of reporting?
Yes. The IRS has set forth two different types of reporting. Both types are described below:
Code Section 6055 Reporting
- Applies to all insurers, sponsors of self-insured plans, governmental entities, and other parties;
- Insurers complete on behalf of fully-insured plans;
- Plan sponsors (employers) complete on behalf of self-funded plans;
- Must report information to the IRS for each individual to whom the entity provided minimum essential coverage (“MEC”);
- A statement must be provided to each individual; and
- Primary purpose is to enforce the Individual Mandate.
Code Section 6056 Reporting
- Applies to “large employers” subject to the Employer Mandate;
- Employer completes the reporting regardless of whether fully insured or self-funded;
- Must report information to the IRS about the health care coverage provided to full-time employees;
- A statement must be provided to each individual;
- Primary purpose is to enforce the Employer Mandate; and
- The individual statement is to be used by employees to determine eligibility for the individual premium tax credit.
FAQ 3: What is required for each type of reporting?
The Code 6055 Return
- Name, Address, and Employer Identification Number (EIN) of Reporting Entity;
- Name, Address, Social Security number of the responsible individual (ex: primary insured);
- Name and Social Security number of each individual covered by the plan or policy;
- The months for which each individual was enrolled in coverage or entitled to receive benefits for at least one day; and
- Any other information required by the IRS.
- The report must specify the actual months in which coverage was provided rather than the dates on which coverage began and ended.
The Code 6056 Return
- Name, Address, and EIN of the employer;
- Name and telephone number of the employer’s contact person (can be a designated third party);
- The calendar year for which the information is filed;
- A certification as to whether the applicable employer offered its full-time employees and their dependents the opportunity to enroll in MEC under an employer sponsored plan, by calendar month;
- The months in which MEC was available;
- Each full-time employee’s share of the lowest cost monthly premium (self-only) for coverage providing minimum value by calendar month;
- The number of full-time employees by calendar month;
- The name, address, and Social Security number of each full-time employee (but not dependents or others covered through the employee) during the calendar year and months, if any, during which each employee was covered under the employer’s plan; and
- Any other information required by the IRS.
The 6056 Return will also include “indicator codes” for employers to report:
- Whether coverage provides minimum value and whether employees had an opportunity to enroll their spouses in coverage;
- Whether an employee’s effective date of coverage was affected by a permissible waiting period;
- Whether an employer had no employees during a particular month;
- Whether an employer was a member of an affiliated group, and the name and taxpayer identification number of all other members;
- The designated person to file returns for a governmental agency;
- If an employer is a contributing employer to a multiemployer plan, and whether the employer is not subject to an employer responsibility penalty because of its contribution to the plan;
- If a third party is reporting on behalf of an aggregated employer group, the name, address and identification number of the third party;
- Whether coverage was offered to the employee only, the employee and children only, the employee and spouse only, or the employee, spouse and children;
- Listed reasons why coverage was not offered to an employee;
- Whether coverage was offered to an employee even though the employee was not full-time;
- Whether the employee was covered under the plan; and
- Whether the employer met one of the affordability safe harbors under the Employer Mandate.
A return will have to be filed for each employee with all returns filed together with a transmittal form (similar to a W-2).
FAQ 4: Can 6055 and 6056 reporting be combined for self-insured plans?
Yes. The final regulations permit self-insured employers to satisfy their reporting obligations under both sections by using one single combined form. Insurers will complete the 6055 return on behalf of fully insured plans.
FAQ 5: Do the common ownership/common employer/aggregation rules apply to the employer reporting requirements?
No. Each employer must file a separate reporting even if deemed a common employer for other purposes.
FAQ 6: Is reporting required for supplemental coverage?
No. Reporting is not required for supplemental coverage that is not minimum essential coverage. Examples of supplemental coverage would be Health Savings Accounts, on-site medical clinics, Medicare Part B, wellness programs, Medicare supplement policies, or other excepted benefits.
FAQ 7: Can returns be filed electronically?
Yes. In fact, employers that file more than 250 returns of various kinds annually must file electronically.
FAQ 8: When must returns be filed?
The returns must be filed by February 28 (March 31 if filed electronically) of the year following the calendar year subject to the reporting. These dates apply regardless of an employer’s plan year.
FAQ 9: What about “mid-sized” large employers (50-99 FTEs) that are not subject to the Employer Mandate for 2015?
Mid-sized large employers still must file the 6056 return for 2015, but they may indicate on the form that they are not subject to the mandate.
FAQ 10: What is the “additional statement” that must accompany a 6056 return?
- Applicable large employers must also provide a statement to each of their employees including the name, address, EIN of the employer and the information included in the 6056 return with respect to that employee.
- The statement can use a truncated Social Security number to protect against abuse.
- The statement will either be on a form prescribed by the IRS or a substitute statement devised by the employer that includes the required information.
- The additional statement can be mailed together with the employee’s W-2.
- The statement must be provided by January 31 of each year following a covered year, unless the IRS approves a thirty (30) day extension.
- The statement must be sent to the employee’s last known address.
- It can also be distributed electronically with consent.
FAQ 11: What are some of the administrative simplifications that have been granted since the release of the original proposed reporting rules?
- Employers are not required required to provide detailed information on the length of permissible waiting periods- only whether a full-time employee not offered coverage was within a permissible waiting period;
- Employers will not have to report the employer’s share of total allowed costs of benefits-only whether its coverage met minimum value requirements;
- Employer’s will not have to report the lowest-cost coverage option for each employment category;
- Employers will not have to report on variable hour employees who are in a look-back measurement or administrative period.
FAQ 12: Are there any alternative reporting methods?
Yes. The final rule offers several alternatives to the standard report that can be used by employers.
1. Reporting based on certification of qualifying offers.
An employer can provide simplified 6056 information and a simplified statement for all full-time employees to whom the employer made a “qualifying offer”. If those conditions of a “qualifying offer” are met, then the employee will not be eligible for premium tax credits and the employer has satisfied the Employer Mandate requirements.
2. Reporting based on certification of qualifying offers- FOR 2015 ONLY
An employer that has provided a “qualifying offer” to 95% of its full-time employees and their spouses and dependents may provide each of its full-time employees with a statement informing the employee that they will not be eligible for premium tax credits, if the “qualifying offer” was made to the full-time employees and their spouses and dependents for each of the 12 months of the year, or that they may be eligible for premium tax credits for any months in which a qualifying offer was not made. The statement must also include contact information for the employer.
3. Reporting without separate identification of full-time employees.
An employer that offers affordable, minimum value coverage to at least 98% of its employees, regardless of whether they are full-time or part-time, does not need to determine (for reporting purposes) whether its employees are full-time or part-time and does not need to provide a total count of its full-time employees. If an employee who is not covered applies for premium tax credits, the IRS can query whether the particular employee was covered or not.
FAQ 13: What do the employer reporting forms look like?
We do not know at this time. The IRS has not yet provided sample templates.
FAQ 14: When will the sample forms be available for review?
We do not know at this time. The guidance states that draft forms are being prepared by the IRS and will be released to the public for comment in the near future. The guidance also states that a substitute form that includes all of the required information will be accepted.
Gunn-Mowery and Benecon will continue to monitor this situation and update these FAQs with the release of additional information including links to the forms when they become available. In the meantime, if you would like more information on Health Care Reform, please visit Benecon’s website at www.Benecon.com.
This communication is provided for information purposes only and does not constitute legal advice. It contains only a summary of the applicable legal provisions and does not purport to cover every aspect of any particular law, regulation, or requirement. Depending on the specific facts and location of any situation, there may be additional or different requirements. Please use this communication as a guide and not as a definitive description of your compliance obligations.
¬© 2014 The Benecon Group, Inc. All Rights Reserved.