Effective in 2015, the Affordable Care Act requires that employers report information about the health coverage they offer to employees. Internal Revenue Code Section 6055 requires employers and insurers to report information about the entity providing coverage, including contact information and a list of individuals with identifying information and the months they were covered. Under IRC Section 6056, entities must report information about the applicable large employer offering coverage and a list of full-time employees and information about the coverage offered to each, by month, including the cost of single (or employee only) coverage.
The Section 6055 reporting requirements apply to employers with self-funded or self-insured plans and to the insurer with respect to offering an insured plan. Section 6056 applies to applicable large employers (those with over 50 full-time equivalents who are obligated to offer coverage). Employers with self-funded plans are going to have to file both forms, while employers with an insured plan will only file the latter under Section 6056. While employers can use outside service providers to complete the filing, the responsibility to make sure the filing was made remains on the employer. Returns must be filed with the IRS by Feb. 28 (or March 31 if filed electronically) for the applicable reporting year.
Employers must file an information return annually and must provide annual statements to their full-time employees. The general reporting requirement for an annual filing requires the employer to provide detailed information, for each calendar month, on the total number of full-time employees, the name, address and Social Security number of each full-time employee, whether the coverage offered to that employee was minimum essential coverage, whether it satisfied the minimum value requirement, whether it was affordable and how much the employee was required to pay and whether the coverage was offered to full-time employees and their dependents.
More information and guidance is sure to be issued on these reporting requirements, particularly when model forms are created, but employers need to start looking at the reporting process now. First, since the obligations under 6055 and 6056 are somewhat duplicative, employers should first figure out whether they have to file both. Second, collecting this information is going to take a lot of coordination between the HR, payroll and benefits departments. Now is a good time to see what information is available and how responsive information will be collected and aggregated for final reporting. If the company relies on an outside vendor for benefit services, it will probably have to review and even amend service provider agreements to make sure the process works smoothly.
So as you plan for ACA compliance, be reminded that you have this reporting obligation, not just to the Internal Revenue Service but to employees as well. Develop a process for collecting and sorting the required information and anticipate that you will need to show not only who was offered coverage, but how much it cost. And as we get closer to the reporting deadline, make sure to work with your tax and legal professionals to ensure that your ACA compliance is properly reported.
Keith R. McMurdy is partner with Fox Rothschild. He focuses primarily on labor and employment issues arising from the design, drafting and administration of employee benefits plans. He can be reached at firstname.lastname@example.org or 212.878.7919.
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