Brave new world

In 2015, two new reporting requirements created by the Affordable Care Act will go into effect. The requirements create new obligations for health insurers and employers with 50 or more full-time-equivalent employees.

The new requirements arise under Internal Revenue Code (“Code”) Sections 6055 and 6056, and will be relied on by the Internal Revenue Service (IRS) in administering the individual shared responsibility requirement (i.e., the individual mandate) and the employer shared responsibility requirement (i.e., the employer mandate or the “play or pay” rules).

To this end, Code Section 6055 requires health insurers and employer sponsors of self-insured health plans to report on whom they provide with “minimum essential coverage”—major medical coverage that satisfies the individual mandate. Section 6056 requires employers to report on whom they offer minimum essential coverage and whether the coverage offered is “affordable” and provides minimum value.
 

Minimum essential coverage reporting

The requirements under Code Section 6055 will generally be satisfied using either IRS Forms 1094-B and 1095-B (for insurers that are not also required to report in an employer capacity) or IRS Forms 1094-C and 1095-C (which will be used by applicable large employers subject to Section 6056 to satisfy Section 6055, if self-insured, and Section 6056). These forms will be used to disclose:

• the name, address and employer identification number (EIN) of the entity reporting;
• the name, address and taxpayer identification number (TIN) of the individual who enrolled in the coverage and all other individuals covered by a given policy or plan (a date of birth may be substituted for a TIN in some cases);
• for each covered individual, the months during which he or she was covered by the plan or policy for at least one day; and
• for any employer-sponsored plan, the name, address and EIN of the plan sponsor and whether the coverage is provided through the Small Business Health Options Program (SHOP).
   

The information listed above also must be provided to the individual who enrolled in the plan or policy as must the phone number for a designated contact person and the policy number, if any.
 

Employer-sponsored plan reporting

The requirements under Code Section 6056 apply to “applicable large employer members.” This is the standard used for applying the employer mandate and generally applies to employers that independently employ or belong to a controlled group employing 50 or more full-time-equivalent employees.

Using Forms 1094-C (for employer-level data) and 1095-C (for individual level data), such an employer will report:

• Its name, address and EIN;
• the name and telephone number of a designated contact person;
• the calendar year to which the report pertains (Section 6056 reporting must be provided on a calendar year basis);
• certification, by month, as to whether full-time employees (and their dependents) were offered the opportunity to enroll in an employer-sponsored plan;
• the months during which an employer-sponsored plan was available;
• the employee premium, by month, for the lowest-cost employee-only coverage offered to that employee;
• the employer’s full-time employee count, by month; and
• the name, address and TIN of each full-time employee, by month, and the months each was covered by the plan.
   

Any full-time employees listed on an employer’s return must be provided with a statement showing his or her employer’s name, address and EIN and including all of the information listed above that relates to the individual employee. This requirement may be met by providing the employee with a copy of Form 1095-C. The regulations also provide “alternative methods” for complying with Section 6056.
 

Furnishing the reports

Both new code sections require that information returns be filed with the IRS by the Feb. 28 (March 31 for electronic filers) following the calendar year of the report. Thus, the first reports (for calendar year 2015) will be due in early 2016. Any entity that is required to file 250 or more returns under the new rule will be required to do so electronically.

The individualized statements to taxpayers must be distributed by Jan. 31 following the calendar year of the report. This requirement can be met by mailing the applicable statement to the individual’s last known mailing address. Rules also permit electronic distribution to individuals under specified circumstances requiring the individual’s consent to electronic delivery.

These new requirements are similar to Form W-2 reporting rules. Failures to file correct returns and to furnish correct statements are subject to the same penalty regime that applies to Form W-2. These similarities highlight the importance of dedicating resources to prepare for the new requirements as quickly as possible.

 
Jennifer S. Berman is an attorney specializing in employee benefits with the Holder Law Group LLC in Towson, Maryland. She can be reached at Jennifer. Berman@Holderlaw.com.