The Administration announced on the White House and Treasury websites that it will provide an additional year, until Jan. 1, 2015, before the Affordable Care Act’s (ACA’s) mandatory employer and insurer reporting requirements begin. Since this will make it impractical to determine which employers do not provide minimum essential health coverage, and therefore would owe shared responsibility payments under Code Sec. 4980H for 2014, transition relief is also being extended for those payments. Any employer shared responsibility payments will not apply until 2015.
Background on ACA reporting. Effective in 2014, Code Sec. 6055(a) generally requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs and every other entity that provides minimum essential health coverage (as defined in Code Sec. 5000A(f)) to file annual returns reporting information for each individual for whom minimum essential coverage is provided. An entity filing an information return reporting minimum essential coverage must furnish a written statement to each individual listed on the return that shows the information that must be reported to IRS for that individual. (Code Sec. 6055(c)(1))
The ACA also requires information reporting (under Code Sec. 6056) by certain employers regarding the health coverage offered to their full-time employees. Under Code Sec. 6056(a), effective for years beginning after Dec. 31, 2013, every applicable large employer that must meet the shared employer responsibility requirements of Code Sec. 4980H during a calendar year will be required to file an information return that reports the terms and conditions of the health care coverage provided to the employer’s full-time employees for the year.
The return must include:
the employer’s name and employer identification number;
the date the return is filed;
certification that the employer offers its full-time employees and their dependents the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan under Code Sec. 5000A(f)(2);
the number of full-time employees of the employer for each month during the calendar year;
the name, address, and taxpayer identification number of each full-time employee employed by the employer during the calendar year and the number of months, if any, during which the employee (and any dependents) was covered under a plan sponsored by the employer during the calendar year; and
other information as IRS requires. (Code Sec. 6056(b)(2)(B))
Employers who offer the opportunity to enroll in minimum essential coverage under (3), above, must also certify the duration of any waiting period with respect to that coverage, the months during the year when coverage was available, the monthly premium for the lowest cost option in each enrollment category under the plan, and the employer’s share of the total allowed costs of benefits provided under the plan. (Code Sec. 6056(b)(2)(C))
Under Code Sec. 6056(c), the applicable large employer will also be required to furnish to each full-time employee whose name is required to be set forth in the return under (5), above, a written statement that includes:
… the applicable large employer’s name, address, and contact information; and
… the information relating to coverage provided to that employee (and dependents) that is required to be reported on the employer’s return.
Transition relief. The Administration has announced that it will provide an additional year, until Jan. 1, 2015, before the ACA’s mandatory employer and insurer reporting requirements begin. The postponement will (1) give Treasury time to develop ways to simplify the new reporting requirements consistent with the law, and (2) provide time to adapt health coverage and reporting systems. Since postponement of the reporting requirements will make it impractical to determine which employers owe shared responsibility payments under Code Sec. 4980H for 2014, transition relief is also being extended to shared responsibility payments. Any employer shared responsibility payments will not apply until 2015.
Treasury’s website states that within the next week it will publish formal guidance describing the transition relief. Treasury Assistant Secretary for Tax Policy, Mark J. Mazur, announced that Treasury expects to publish proposed rules implementing these provisions this summer after a dialogue with various stakeholders, including employers that already provide their full-time work force with more than minimum essential coverage, about how to minimize reporting burdens consistent with effective implementation of the law. Once these formal rules have been issued, the Administration will work with employers, insurers, and other reporting entities to encourage them to voluntarily implement this information reporting in 2014, in preparation for the full application of the provisions in 2015.
Treasury’s web posting notes that the transition relief does not affect employees’ access to the premium tax credits available under the ACA (or any other provision of the ACA).
RIA observation: Thus, it appears that transition relief is not being extended to the individual mandate. An employee, or a member of the employee’s family, who is eligible to enroll in an employer-sponsored plan is not eligible for a premium tax credit unless the plan’s coverage for the employee either is unaffordable, as defined in Code Sec. 36B(c)(2)(C)(i)(II), or does not provide minimum value, as defined in Code Sec. 36B(c)(2)(C)(ii). An employee (or member of the employee’s family) also is not eligible if he or she actually enrolls in the employer-sponsored plan, even if the plan is not affordable or fails to provide minimum value. Under Code Sec. 4980H, an applicable large employer (i.e., one with 50 or more full-time equivalent employees) is generally liable for an assessable payment if any full-time employee receives a premium tax credit. Without insurer and employer reporting for 2014 it is difficult to understand how insurance exchanges and individual taxpayers will have the information to understand who qualifies for premium tax credits or how IRS will be able to administer the rules related to them.
References: For return requirements for providers of minimum essential coverage, see FTC 2d/FIN ¶ S-3321 et seq.; United States Tax Reporter ¶ 60,554 ; TaxDesk ¶ 812,314 et seq.; TG ¶ 60245 . For return requirements for “applicable large employers,” see FTC 2d/FIN ¶ S-3331 ; United States Tax Reporter ¶ 60,564.01 ; TaxDesk ¶ 816,301 ; TG ¶ 60246 . For the “minimum value” requirement for employer-sponsored minimum essential coverage, see FTC 2d/FIN ¶ A-4246.2C ; United States Tax Reporter ¶ 36B4.01 ; TaxDesk ¶ 569,469.3 ; TG ¶ 1386 .
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