Friday, October 11, 2013

Employer PPACA Reporting is Coming and You're Not Going to Like It

The proposed regulations are out. This is going to be a nightmare for many HR departments. The first reports are slated to begin in early 2016 based on 2015 plans.  Employers who don't have at least 75% of eligible employees covered under employer sponsored plans as required by most insurance contracts and 70% of employees covered under their plan as required by I.R.C. 105(h) will have no place to hide and be nudged to drop health care and push folks into the Exchanges.

This excerpt is from Seyfarth Shaw IRS Proposes Reporting Requirements for Plan Sponsors:
What information must be reported to the IRS?
Social Security Numbers:
Notably, the proposed regulations require reporting entities to make reasonable efforts to collect social security numbers (SSN).  Although the proposed regulations allow reporting entities to use a date of birth if a SSN is not available, this alternative should not be used unless the reporting entity has made reasonable efforts to obtain the SSN.  According to the preamble, this means that after an initial attempt to collect a SSN, a reporting entity must make two additional (consecutive) annual attempts.  If a reporting entity makes the two additional attempts, no penalty will be imposed for failing to provide all required information.  Many employers have been backing away from requiring employees to report social security numbers when enrolling in health coverage.  This new reporting requirement may require employers to shift gears and require this information during their next open enrollment.

The 6055 Report will allow taxpayers to establish, and the IRS to verify, the months during the year during which taxpayers had minimum essential coverage to satisfy the individual mandate.  Specifically, Section 6055 requires all providers of minimum essential coverage to report the following to the IRS:
    • The name, address, and employer identification number (EIN) of the employer plan sponsor;
    • the name, address, and taxpayer identification number (TIN) (i.e. social security number), of the primary insured, employee, former employee or related person (for example, a parent or spouse)  who enrolls for coverage (the “Responsible Individual”);
    • the name and TIN (i.e. social security number), of each other individual covered under the program; and
    • the months for which, each covered individual was enrolled in coverage and entitled to benefits (for at least one day). ...
What is the timing and manner of filing?
6055 Reports will be submitted to the IRS using IRS Form 1095-B, along with a transmittal form, IRS Form 1094-B, made available at a later date.  These forms must be filed with the IRS on or before February 28 (or March 31 if filed electronically) of the year following the calendar year to which they relate. Reporting entities must issue the 6055 Report to Responsible Individuals no later than January 31 of the year following the calendar year in which minimum essential coverage was provided. ...
The proposed regulations require each ALE member to report:
    • the name, date, and employer’s identification number (EIN) of the ALE member,
    • the name and telephone number of the applicable large employer’s contact person,
    • the calendar year for which the information is reported,
    • the number of full-time employees for each month during the calendar year,
    • a certification as to whether the ALE member offered its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an employer-sponsored plan, by calendar month,
    • for each full-time employee, the employee’s share of the lowest cost option of self-only coverage (that provides minimum value) offered under a plan, by calendar month, and
    • the name, address and TIN of each full-time employee and the months, if any, during which the employee was covered under the plan.
As stated above, the proposed regulations provide that plan sponsors of self-insured health plans must file a 6055 Report. The regulations confirm that in the context of a multiemployer plan, the plan sponsor (and entity responsible for issuing the report)  is the association, committee or joint board of trustees who establish or maintain a self-funded multi-employer plan. ...