Employer Health Care Reporting and Mandate Payments Postponed Until 2015

The Administration announced 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 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 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.

The ACA also requires information reporting by certain employers regarding the health coverage offered to their full-time employees. Effective for years beginning after Dec. 31, 2013, every applicable large employer that must meet the shared employer responsibility requirements  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.

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. Since postponement of the reporting requirements will make it impractical to determine which employers owe shared responsibility payments 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).

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 or does not provide minimum value. 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. 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.

We will provide you with additional information as it becomes available.  In the meantime, if you have any questions or need any additional information, please do not hesitate to contact us.

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