Self-insured employers may not have to report the portion of the premium they pay, because that is not needed to determine if an individual is covered by “minimum essential coverage.” That’s one of a number of reporting items removed or reduced in IRS proposed health care reform rules detailing and streamlining reports on coverage offered to group health plan participants.
Two proposed rules — one for insurers, self-funded plans and others that provide health coverage that have to file information under Internal Revenue Code section 6055; and a second for large employers (subject to health care reform’s pay-or-play mandates) that have to file under Code section 6056 — discuss simplifications that would simplify reform-mandated reporting on health coverage. They were put on public display on Sept. 5 and will be officially published on Sept. 9.
- Section 6055 reporting applies to insurers as well as employers that sponsor self-insured group health plans and other entities that provide MEC to individuals.
- Section 6056 reporting is to be provided by large employers (generally, those that employ 50 or more full-time employees).
This information collection is aimed at collecting information necessary for the federal government to administer subsidies for health insurance exchange coverage and to identify employers that have to make “shared responsibility” payments.
Note: It was the government’s failure to have rules on these reports ready in time that led the IRS in Notice 2013-45 to defer these reporting obligations and by extension, to cancel enforcement of the pay-or-play mandate in 2014. Thus, employers have an extra year to comply with the reporting. However, the government is encouraging voluntary 6055 and 6056 reporting in 2014.
Proposed Provisions
The two proposals appear to respond to feedback from employers and others that the reporting as originally envisioned was duplicative, burdensome and not helpful in determining the existence of MEC. Therefore, the rules would lessen burdens where information is available elsewhere or the information required is not helpful.
For instance, under the proposal, insurers selling individual policies would not have to report information on policies sold through state-based insurance exchanges, because the exchanges will already have that information.
The proposed rules would not require reporting the portion of the premium paid by an employer, which the IRS does not need to determine if coverage is minimum essential.
Large employers would need only to report the employee’s share of the lowest-cost monthly premium for self-only coverage, because the cost of self-only coverage is all that is used to determine whether workers are eligible for premium tax credits.
And, when reporting on dependents, sponsors could use birthdates rather than Social Security numbers if they are unable to secure SSNs after reasonable efforts, the proposal states.
The IRS is also considering, and asking for comments on, further simplifications, such as:
- Allowing employers to report status of offers of MEC to employees via Forms W-2.
- Letting employers report the specific cost to employees at zero if coverage costs the employees below a certain amount.
- Allowing large self-insured group health plans to furnish a single statement, instead of both.
- Permitting health insurers, employers, and other reporting entities to forgo reporting the specific dates of coverage, and instead reporting only the months of coverage, bringing the rule in line with the individual mandate.
Background
Previous guidance on the tax code, now being amended in the proposed rule, required employers and others providing group coverage to report under section 6055:
- each individual covered;
- the period during which each enrollee was covered;
- whether the coverage was offered on an Exchange;
- amounts paid through government subsidies (stricken in proposed rule); and
- other data to be determined.
Employers in particular have to provide on the 6055 form:
- their names, addresses and identification numbers;
- the portion of the premium they pay (stricken in proposed rule); and
- information on tax credits for providing coverage they may have obtained.
Further, sponsors of coverage have to provide a written statement to each individual listed as covered, showing the information reported to the IRS for that individual.
Section 6056 Reporting
Applicable large employers must report similar information to the IRS about coverage to help it determine whether the employer might be subject to a shared responsibility penalty and whether an individual is eligible for a premium tax credit. They must report the following under section 6056:
- employer name and employer identification number;
- date the return was filed;
- the number of full-time employees for each month of the calendar year;
- the name, address and taxpayer identification number of each full-time employee and the months during which the full-time employee (or any dependents) were covered under the eligible employer-sponsored plan; and
- certification whether it offers full-time employees and dependents MEC under its health plan. If so, the employer must explain:
o the duration of any waiting period for such coverage;
o months of the calendar year when such coverage was available;
o monthly premium for the lowest cost option in each enrollment category under the plan (changed in the proposed rule); and
o the employer’s share of the total allowed cost of health benefits (changed in the proposed rule).
For more information on health care reform’s shared responsibility rules and reporting requirements, see Chapter 4 of The Health Reform Law: What Employers Need to Know.