Prepare Now for New Affordable Care Act Reporting Requirements

3/24/2014 Norbert F. Kugele, April A. Goff

New annual reporting obligations under the Affordable Care Act go into effect for 2015.  Although the new reporting won’t actually begin until early 2016, your organization will need to look at (and if necessary, modify) its payroll system in 2014 to ensure that it will be capturing the required information throughout 2015.

Information Reporting on Minimum Essential Coverage:  Under new Tax Code Section 6055, any employer that offers employees a self-insured medical plan (other than a limited list of excepted benefits) will have to file an annual information return with the IRS and provide annual information statements to individuals. If your organization has an insured medical plan, your insurer will be responsible for this particular information return, but you will still have other reporting obligations, as explained below.

If your organization is subject to this reporting requirement, you will need to prepare a report for each employee who is covered under your medical plan. Each report you file with the IRS must include the following:
 
  • The name, address and EIN of the employer sponsoring the plan;
  • The name, address and tax identification number of the employee covered under the medical plan (but you may use date of birth instead of TIN when a TIN is not reasonably available);
  • The name and tax identification number of each individual that the employee is covering under your medical plan (but you may use date of birth when a TIN is not reasonably available);
  • The months during which each individual was covered for at least one day by the medical plan;
  • Whether or not the coverage is a qualified health plan provided through the SHOP Exchange and the SHOP’s unique identifier; and
  • Any additional data elements specified in the forms, instructions or other guidance to be issued by the IRS.

In addition to the information reported to the IRS, each covered employee must also receive a statement that includes the information listed above, plus the phone number of a person designated as your organization’s contact person. A retiree covered under your plan must also receive a statement, unless your coverage for the retiree simply supplements Medicare or some other government-sponsored coverage.

Like W-2 forms, the new statements will generally be due after the end of the calendar year.  You must provide statements to individuals by Jan. 31 (thus, 2015 reports must be sent by January 31, 2016) and to the IRS by Feb. 28 (or by March 31 if filed electronically — which is required if you must file at least 250 of these returns).

Information Reporting of Employer-Sponsored Coverage:  Under new Tax Code Section 6056, an employer who averages at least 50 full-time equivalent employees under the Affordable Care Act’s employer responsibility requirements must report to the IRS and to its employees whether the employer offers its full-time employees (and the employees’ dependents) the opportunity to enroll in minimum essential coverage. Keep in mind that for these purposes, full-time employee means someone who averages 30 or more hours of work per week.

If your company averages at least 50 full-time equivalent employees during 2014, this reporting requirement applies during 2015, even if your company qualifies for a transitional rule under the employer responsibility rules. Also, the reporting requirement applies to employers and not insurers, regardless of whether the health plan coverage is insured or self-insured.

If your organization is subject to this reporting requirement, you will need to file a separate report for each full-time employee that includes the following:
 
  • The name, address and EIN of the employer;
  • The name and telephone number of the employer’s contact person;
  • The calendar year for which the report is being submitted;
  • A certification as to whether the employer offered its full-time employees and their dependents the opportunity to enroll in minimum essential coverage, by calendar month.
  • The months during which medical plan coverage was available;
  • Each full-time employee’s share of the lowest cost monthly premium for self-only coverage offered under the medical plan, by calendar month;
  • The number of full-time employees for each month during the calendar year;
  • The name, address and tax identification number of each full-time employee during the calendar year; and the months, if any, during which the employee was covered under the plan; and
  • Any additional data elements specified in the forms, instructions or other guidance to be issued by the IRS.

The preamble to the final regulations lists additional information about your organization that you must report through the use of indicator codes, including:
 
  • Whether the coverage offer meets minimum value requirements;
  • Whether the employee had the opportunity to enroll his or her spouse in the coverage;
  • Total number of employees, by calendar month;
  • Whether an employee’s coverage was affected by a waiting period;
  • Whether the employer had no employees or no employees with any credited hours of service during any particular month (reported by month);
  • Whether the employer is part of a controlled group of employers that are considered an aggregated group — and if so, the name and EIN of each employer member of the aggregated group of employers;
  • If the employer contributes to a multi-employer plan, whether the employer is not subject to an assessment because of the employer’s contributions to the multi-employer plan;
  • If reporting on behalf of a governmental employer, the name, address and identification number of the governmental employer; and
  • If a third party is reporting on behalf of an employer, the third-party’s name, address and EIN (in addition to the name, address and EIN of the employer).

You will also use indicator codes to report the following information about each full-time employee:
 
  • Health plan coverage meeting the minimum value requirements was offered to:
    • Employee only;
    • Employee and employee’s dependents only;
    • Employee and employee’s spouse only; or
    • Employee, employee’s spouse and dependents
  • Coverage was not offered to the employee and:
    • An assessment is not required because the failure to offer coverage was permitted under the employer responsibility requirements (for example, because the employee was in a limited non-assessment period);
    • The employee was not a full-time employee;
    • The employee was not employed by the entity during that month; or
    • No other code or exception applies
  • Coverage was offered to the employee for the month although the employee was not a full-time employee during that month
  • The employee was covered under the plan
  • The entity met one of the affordability safe harbors with respect to the employee

Employers will submit the information above to both the IRS and to the individuals. As with Section 6055 reporting on Minimum Necessary Coverage, employers must furnish the Section 6056 reports on Employer-Sponsored Coverage to individuals by Jan. 31 and file with the IRS by Feb. 28 (March 31 if filed electronically).

For employers who must provide both 6055 and 6056 reports, the final regulations provide for a single, combined form. Employers reporting to individuals can use the same form filed with the IRS or may use a substitute statement that includes all of the required information. These reports may be mailed along with W-2 forms.

If you have any questions about the new reporting requirements, or any other Health Care Reform issues, please contact Norbert F. Kugele (nkugele@wnj.com or 616.752.2186), April A. Goff (agoff@wnj.com or 616.752.2154), or any other member of Warner Norcross & Judd’s Employee Benefits Practice Group.

NOTICE. Although we would like to hear from you, we cannot represent you until we know that doing so will not create a conflict of interest. Also, we cannot treat unsolicited information as confidential. Accordingly, please do not send us any information about any matter that may involve you until you receive a written statement from us that we represent you.

By clicking the ‘ACCEPT’ button, you agree that we may review any information you transmit to us. You recognize that our review of your information, even if you submitted it in a good faith effort to retain us, and even if you consider it confidential, does not preclude us from representing another client directly adverse to you, even in a matter where that information could and will be used against you.

Please click the ‘ACCEPT’ button if you understand and accept the foregoing statement and wish to proceed.

ACCEPTCANCEL