Treasury and IRS Propose Rules for Affordable Care Act Information Reporting

The Treasury Department and the Internal Revenue Service have issued proposed regulations to implement the information reporting requirements for insurers and certain employers under the Affordable Care Act. 

The ACA provides for information reporting by insurers, self-insuring employers and other parties that provide health coverage. It also provides for information reporting by employers that are large enough to be subject to the employer shared responsibility provisions regarding the health coverage they offer their full-time employees.

The regulatory proposals come amid an ongoing dialogue that the Treasury and the IRS say they have been engaging in with representatives of employers, insurers, other reporting entities and individual taxpayers. Other stakeholders who have been providing input include plan sponsors, many of whom already offer their full-time workforce coverage far exceeding the minimum employer shared responsibility requirements. Nearly 95 percent of employers with more than 50 full-time employees already offer coverage to their employees, the Treasury and the IRS noted.

The proposed rules, which were issued last Thursday, describe a variety of options to potentially reduce or streamline information reporting, such as replacing Section 6056 employee statements with Form W-2 reporting on offers of employer-sponsored coverage to employees, spouses, and dependents. The proposals would also eliminate the need to determine whether particular employees are full-time if adequate coverage is offered to all potentially full-time employees.

They would also allow employers to report the specific cost to an employee of purchasing employer-sponsored coverage only if the cost is above a specified dollar amount. 

In addition, the proposed regulations would allow self-insured group health plans to avoid furnishing employee statements under both Section 6055 and Section 6056 of the Tax Code by instead providing a single substitute statement. They would also limit reporting for certain self-insured employers offering no-cost coverage to employees and their families.

In addition, the proposed rules would permit health insurance issuers to forgo reporting under Section 6055 on individual coverage offered through a health insurance marketplace, also known as an health insurance exchange, because that information will be provided by the marketplace.

In addition, the proposed rules would permit health insurance issuers, employers and other reporting entities under Section 6055 to forgo reporting the specific dates of coverage (instead reporting only the months of coverage), the amount of any cost-sharing reductions, or the portion of the premium paid by an employer.

The statute calls for employers, insurers and other reporting entities to report, among other things:

•  For Section 6055:
o    Information about the entity providing coverage, including contact information.
o    A list of individuals with identifying information and the months they were covered.

• For Section 6056:
o    Information about the applicable large employer offering coverage (including contact information for the employer and the number of full-time employees).
o    A list of full-time employees and information about the coverage offered to each, by month, including the cost of self-only coverage.

The Treasury and the IRS are inviting stakeholders to submit comments on the Section 6055 and 6056 proposed rules through early November. They said the public comments will be taken into account in developing final reporting rules.

Once the final rules have been published, reporting entities will be encouraged to voluntarily implement information reporting in 2014 (when reporting will be optional), in preparation for the full application of the reporting provisions in 2015.  Real-world testing of reporting systems in 2014 will contribute to a smoother transition to full implementation in 2015.

The proposed regulations for insurance providers under Section 6055 can be viewed here. The proposed regulations for employers under Section 6056 can be viewed here.

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