Treasury and the IRS Clarify Affordable Care Act Reporting Obligations
As expected, the Department of the Treasury and the IRS (the “Agencies”) finalized the employer information reporting requirements under the Affordable Care Act (the “ACA”) earlier this month. The final rules, which are designed to help the IRS enforce the employer shared responsibility provisions and the individual mandate, remain largely unchanged from the proposed rules subject to minor modifications in response to public comment. Originally intended to be effective in 2014, the new rules are effective January 1, 2015 after Treasury delayed the requirements in 2013.
The information reporting obligations only apply to applicable large employers, defined in the ACA as any employer with 50 or more full time employees in the preceding calendar year. The rules require that employers report certain information to the IRS on employer provided health coverage and also furnish employees with an information statement.
Most large employers will be required to report and furnish the information detailed in Code Section 6056. This provision requires the employer to report, for example, details about the number of full-time employees at the employer, whether the employer offered the opportunity to enroll in minimum essential coverage, and, if the employer offered coverage, details on the employee’s share of the cost to purchase coverage under the employer’s lowest cost health insurance option. Code Section 6056 also requires the employer to provide employees with a statement that includes the information that it reported to the IRS with respect each full-time employee. Employers that self-insure have additional reporting obligations, but this additional reporting can be done on the same form that the employer reports the information required for Section 6056.
The final rule also simplifies reporting requirements for employers that offer coverage to any of their full-time employees. Specifically, if the employer makes an offer of coverage that meets the minimum value and affordability requirements under the ACA, the report to the IRS only needs to include information that identifies the employee and acknowledges the fact that the employee received an offer of coverage. The information report to employees is also simplified.
For employers that participate in multiemployer welfare plans, the information reporting requirements of Section 6056 remain with the employer. The regulations, however, provide that an applicable large employer participating in a multiemployer welfare plan may agree to shift these reporting requirements to the multiemployer plan administrator. Under this type of arrangement, the employer would still be required to report and furnish information about its full-time employees who are not eligible to participate in the multiemployer plan. It is important to note that the employer would still remain subject to liability if the multiemployer plan fails to properly report or furnish the required information.
Draft forms to report information to the IRS and full-time employees will be made available by the IRS later this year. Employers may use these forms to satisfy the IRS and individual employee information reporting requirements under the final rules.