Employers employing 50 or more full-time employees during the year are “large employers” and are therefore subject to the employer mandate (also called the “Pay-or-Play” provision) within the Patient Protection and Affordable Care Act (“PPACA”). In order to avoid penalties under the employer mandate, large employers must offer minimum essential coverage to most of their full-time employees, and the coverage must be affordable and must provide minimum value. (All of these terms are included within the employer mandate portion of PPACA.) In order for the government to monitor the provision of minimum essential coverage to individuals that is affordable and provides minimum value, certain reporting is required by the Internal Revenue Service.
On March 10, 2014, the U.S. Department of the Treasury released two separate final rules regarding information reporting required under PPACA. The reporting is required under two separate Internal Revenue Code sections, and the final rules are intended to simplify and streamline the information reporting process that will be required of insurers and many plan sponsors.
Internal Revenue Code Section 6055
Section 6055 of the Code dictates the requirements for the annual reporting of minimum essential coverage by the entities who provide that coverage, including private employers, government employers and other sponsors of self-insured group health plans, insurance companies, and governmental units that provide coverage under a government-sponsored program (Medicare or Medicaid). The Section 6055 information return reports contact and other information about the entity providing coverage and the individuals enrolled in the coverage, including identifying information and the months for which they were covered.
In addition, Section 6055 directs a reporting entity to provide a statement to each responsible individual listed in the Section 6055 information return that includes the reporting entity’s contact information and the information reported in the Section 6055 return regarding the responsible individual and the other covered individuals.
Internal Revenue Code Section 6056
Section 6056 of the Code governs the annual reporting requirements for large employers who are required to report on health coverage under Pay or Play mandate. Among the items reported in the Section 6056 return is information about the employer offering coverage (including contact information and the number of full-time employees) and for each full-time employee, information about the coverage (if any) offered to the employee on a monthly basis, including the lowest employee cost of self-only coverage offered under the large employer plan.
In addition, Section 6056 requires that a large employer provide a statement to each of its full-time employees that includes the name, address, and EIN of the large employer and the information reported in the employer’s Section 6056 return with respect to that full-time employee.
Deadlines for Reporting
Issuing Statements to Responsible Individuals and Full-Time Employees:
A statement must be furnished annually to each responsible individual (under Section 6055) or full-time employee (under Section 6056), as applicable, on or before January 31 of the year immediately following the calendar year to which the statement relates. The first statement must be furnished by February 1, 2016 (January 31, 2016 falls on a Sunday).
Reporting to the Internal Revenue Service:
The Section 6055 and Section 6056 annual returns, as applicable, must be filed with the IRS no later than February 28 (March 31 if filing electronically) of the year immediately following the calendar year to which the return relates. The first reporting must be filed with the IRS no later than March 1, 2016 (February 28, 2016 falls on a Sunday) or March 31, 2016, if filed electronically.
Special Reporting Rule for Employers with 50-99 Full-Time Employees:
Although large employers with at least 50 full-time employees but fewer than 100 full-time employees can qualify for transition relief from the employer mandate (which will delay the imposition of penalties under the employer mandate until 2016), they are still required to file a Section 6056 information return for 2015. In the Section 6056 return the employer is required to certify that it meets the special eligibility requirements for that transition relief.
Combined Form Reporting
The final rules streamline reporting under both code sections on one combined form in order to avoid duplication of information conveyed to the IRS. In the top half of the form large employers will report the information required by Section 6056. The bottom half of the form will be used by employers who sponsor self-funded plans; insurers and government program sponsors will also report Section 6055 information.
Simplified Employer Reporting in Connection with a Qualifying Offer
Additionally, the final rule offers a simplified reporting option where the employer makes a “qualifying offer” available to any full-time employee. An employer qualifying offer:
- Is an offer of minimum value coverage that provides employee-coverage at an annual cost to the employee of no more than 9.5 percent of the Federal Poverty Level (about $1,100 in 2015); and
- That also offers coverage to the employee’s family. (Please note that there is no requirement that the family coverage fall within 9.5 percent of the Federal Poverty Level).
For employees receiving a “qualifying offer” for all 12 months within the year, the employer will only be required to report the names, addresses, and taxpayer identification numbers of employees who received the “qualifying offer.” The employer will also provide the employees in this category a copy of the simplified IRS reporting.
There is also provision for simplified reporting for employees who receive a “qualifying offer” for fewer than all 12 months of the year. In that case, for each month that the employee receives the offer, the employer will enter a specific code on the filing.
If an employer certifies that it has made a “qualifying offer” to at least 95 percent of its full-time employees, then those employers will be able to use the simplified reporting method for all employees within the company, including employees who do not receive the “qualifying offer” for the full 12 months during the year. Employers using this streamlined reporting will be required to provide employees with reminders that they may be eligible for premium tax credits.
Further simplification is available if the employer certifies that it offered affordable, minimum value coverage to at least 98 percent of the employees included in the report. In that case, the simplification allows the employer to omit the identification of each full-time employee and instead merely list the names of all of the employees who may be classified as full-time.
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