Proposed Regulations Issued on PPACA Reporting for Employers & Insurers
Posted in: Employee Benefits
The Internal Revenue Service has issued proposed regulations that address employer and insurer reporting requirements under the Patient Protection and Affordable Care Act (PPACA). The proposed regulations address two specific reporting requirements: provision of minimum essential coverage and certification of compliance with the employer shared responsibility rules.
Minimum Essential Coverage
Entities that provide minimum essential coverage must file an annual return with the IRS and furnish a written statement to covered employees. For fully-insured group health plans, the insurer will be responsible for the reporting requirements. In the case of a self-insured group health plan, the employer will be responsible. The annual return and statement must include the following information:
- name, address and EIN of insurer or employer;
- name, address and SSN of covered employee;
- name and SSN (or date of birth) of covered dependents;
- months covered (an individual is considered covered for the month if covered at least one day in the month); and
- contact phone number for insurer or employer and policy number (employee statement only).
The insurer is also required to include the name, address and EIN of the employer sponsoring plan and whether coverage is offered through the Small Business Health Options Program (SHOP). Reporting is not required for supplemental coverage (e.g. health reimbursement arrangements).
This information will be reported on new Form 1095-B, which must be provided to covered employees by January 31 and filed with the IRS by February 28 or March 31 if filed electronically. Electronic filing is required if 250 or more returns of any type are filed with the IRS. The statement to the covered employee may be sent via first class mail or electronically with affirmative consent.
Employer Shared Responsibility
Each employer who is part of a control group that is subject to the employer shared responsibility requirements (i.e. the employer mandate) must provide to full-time employees and to the IRS information about the offer of employer-sponsored health coverage (or lack thereof). The annual return and the written statement to employee must include the following:
- name, address and EIN of employer;
- name/phone number of employer’s contact person;
- certification as to whether employer offered full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage, by calendar month;
- months of the year that coverage was available;
- full-time employee’s share of lowest cost monthly premium (employee-only coverage) for coverage providing minimum value, by calendar month;
- number of full-time employees for each month of calendar year; and
- name, address and SSN of each full-time employee and months covered.
The information will be reported on new Form 1095-C, which must be provided to full-time employees by January 31 and filed with the IRS by February 28 or March 31 if filed electronically.
These reporting requirements will be mandatory for health coverage offered in the 2015 calendar year (with employee statements due by January 31, 2016 and the IRS returns due February 28, 2016 or March 31, 2016 if filed electronically). The IRS is encouraging voluntary compliance for health coverage offered in 2014 once the regulations are finalized. The IRS has also indicated that simplified or combined reporting options are being explored to minimize duplication and the reporting burden and has asked for comments on certain items. Large employers who are subject to the employer mandate and employers of any size who offer a self-insured plan should begin working with payroll and IT professionals to understand the reporting requirements and to determine how the required data will be accumulated and by whom. Since reporting is done on a calendar year basis, employers with non-calendar year plans will need to combine information from two separate plan years.
Failure to comply with these new requirements can result in penalties, including $30 to $250 per return for failure to file complete information by the due date and up to $100 er statement for failure to furnish a complete statement to employees. Penalties can be excused for reasonable cause.