As has been widely discussed since its enactment in 2010, the Affordable Care Act (ACA) imposes new penalties on individuals who do not have health care coverage and on certain large employers who do not offer health care coverage to their employees (and their dependents). In order to assist the IRS in the enforcement of these new mandates, the ACA also imposes new reporting requirements on employers. On March 5th, the IRS published rules regarding the new reporting requirements, which are effective for the 2015 calendar year.
Summary of Reporting Requirements
The new reporting requirements are contained in Sections 6055 and 6056 of the Internal Revenue Code. In order to allow individuals to document that they have health care coverage and the IRS to verify such coverage, Section 6055 requires insurers and sponsors of self- insured coverage to provide information concerning the coverage to the individuals and to the IRS.
Similarly, Section 6056 requires employers with 50 or more full-time employees (determined in accordance with IRS rules) to provide employees with information so that they can determine whether they can receive a “premium tax credit” if they purchase insurance from a health care exchange. Section 6056 also requires such employers to report to the IRS information concerning health care coverage including:
- A certification as to whether the employer offered its full-time employees and the dependents the opportunity to enroll in “minimum essential coverage” and
- Additional specific information about the employees who are offered coverage and the coverage offered.
Method of Reporting
Reporting under these new requirements will be similar to the reporting of W-2 information where individual statements are provided to each employee on form W-2 and the W-2s are accumulated and summarized on Form W-3. Employers who sponsor self-insured health care plans and who are therefore required to report under both sections 6055 and 6056 will be permitted to file a combined report. There are additional simplification options that are available under certain circumstances. Electronic reporting is required for employers who have more than 250 employees for whom individual reports are required.
Action to be taken
Although reports will not be required until early in 2016, in order to ensure that the required information is captured in 2015, employers should begin working with their plan administrators and service providers to determine how they will comply with these new reporting requirements.