IRS Issues Proposed Regulations on Employer-Provided Health Care Coverage Reporting Requirements

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The Internal Revenue Service has issued proposed regulations on reporting requirements under the Affordable Care Act (ACA). The regulations, released on September 9, 2013, address two separate ACA reporting requirements: one relating to the individual mandate and the other relating to the employer mandate. Failure to comply could result in tax penalties unless the failure is due to reasonable cause and not willful neglect.

Each of these requirements has been delayed one year. The government is encouraging voluntary compliance for reports due in 2015 (for the 2014 calendar year), but the first mandatory reports are not due until 2016 (for the 2015 calendar year).

The regulations under section 6055 of the Internal Revenue Code impose new reporting requirements on health insurers, sponsors of self-funded group health plans, and others who provide individuals with minimum essential health coverage. These health benefit providers must furnish a report to the IRS and a statement to enrollees containing specific information to be used in the administration of the individual mandate. Although the report and statement are due annually (on the same schedule that applies to Form W-2), they must set forth information on a month-by-month basis.

The regulations under section 6056 require large employers (more than 50 full-time employees or full-time equivalents) to furnish a report to the IRS and a statement to all full-time employees containing information about the employer-provided coverage that is offered, regardless of whether the employee enrolls. This information will be used in the administration of the employer mandate. As under section 6055, the report and statement are due annually (on the same schedule as Form W-2), but present information on a monthly basis. The report also provides the IRS and individuals with information necessary to administer the premium tax credit under section 36B of the Internal Revenue Code.

The two new reporting requirements are in addition to the current requirement to report the cost of coverage on Form W-2. Many are hoping that some or all of these reporting requirements will be combined and simplified. The U.S. Department of the Treasury and IRS have not yet found an approach to reconcile the differences among the requirements, but they continue to consider a combined approach, pending the issuance of regulations.

As the federal health care reform effort gained steam, Ballard Spahr attorneys established the Health Care Reform Initiative to monitor and analyze legislative developments. With federal health care reform now a reality, our attorneys are assisting health care entities and employers in understanding the relevant changes and planning for the future. They also have launched the Health Care Reform Dashboard, an online resource center for news and analysis on developments under the Affordable Care Act.