Employer Reporting under Health Reform — How Much Is Too Much, IRS Wants to Know

Beginning in 2014, employers that sponsor health plans will have to watch closely if any employees qualify for a premium tax credit, triggered whenever the employer-sponsored coverage is unaffordable, or does not provide minimum value.

On April 26, the IRS requested comments on how to determine whether a health plan provides “minimum value.” It did so in three separate notices: Notices 2012-31, 2012-32 and 2012-33.

IRS in Notice 2012-31 proposed giving insurers and group health plans three options for determining minimum value.

• An actuarial value (AV) calculator that would allow an employer-sponsored plan to enter claims data, information about the plan’s benefits, coverage of services and cost-sharing terms to determine whether the plan provides minimum value. Such a calculator will be made available by the U.S. Department of Health and Human Services (HHS) and the Treasury Department. This is suggested as an option for self-insured and large-group insured group plans.
• Checklists developed by the agencies would provide a simpler way to ascertain that employer-sponsored plans provide minimum value without any calculations or help from an actuary. If the employer-sponsored plan’s terms are consistent with or more generous than any one of the safe harbor checklists, the plan would be treated as providing minimum value.
• A certification by a certified actuary may be required in instances where a plan has “nonstandard” features. Employers would first use an AV calculator, then engage a certified actuary to make adjustments.

Comment on Reporting Burdens

Also for policies starting Jan. 1, 2014, insurers and self-insured employer plans will be required to submit to the IRS information on each covered life for whom minimum essential coverage is provided. According to IRS in Notice 2012-32, plan sponsors and insurers will have to report:

1. names, addresses and taxpayer identification numbers;
2. the dates each individual was covered under minimum essential coverage; and
3. whether coverage was offered through an exchange.

The agency requests comments on questions including: (1) how to determine when an individual’s coverage begins and ends; and (2) how to minimize duplication in reporting.

All large employer plans will have to report to the IRS information on: (1) premiums; (2) waiting periods; (3) whether or not they offer minimum essential benefits; (4) the percentage of the premium they pay; (5) and other details — for every plan they sponsor. Notice 2012-33 requests comments on how to make this more palatable. Comments must be submitted by June 11, 2012.