As with the proposed regulations issued in September 2013, the final regulations were released in two parts to address separate sections of the Internal Revenue Code: final regulations addressing employer reporting of health insurance coverage (under Section 6056) and final regulations on the reporting of MEC (under Section 6055).
These reporting requirements were delayed for 2014 under previously issued Notice 2013-45 transition relief and will not be effective until 2015 (first reporting is due in early 2016). As stated in prior guidance and the proposed regulations, the IRS is encouraging voluntary reporting for coverage in 2014.
Reporting of Health Insurance Coverage under "Shared Employer Responsibility" Provisions
Under Section 6056, every applicable large employer (generally, an employer that employed on average at least 50 full-time employees (or equivalents) on business days during the preceding calendar year) must file a return with the IRS that reports the terms and conditions of the health care coverage provided to the employer's full-time employees during the year. The return is also required to include and certify detailed and specific information on the employer's full-time employees, including those who received the coverage and when they received it. This information will be also used to administer the premium tax credit for eligible individuals.
The final regulations for Section 6056 generally preserve the proposed rule’s provisions regarding the content, manner and timing of information required to be reported to the IRS and to full-time employees. The final regulations adopt certain limited simplified reporting methods, although the IRS also rejected some of the proposed simplified methods that were contemplated in the initial draft of the rule.
Specifically, under the final regulations:
- Applicable large employers that sponsor self-insured plans can report the information required under both Section 6055 and Section 6056 on a single combined form.
- An applicable large employer can take advantage of simplified reporting obligations with regard to those employees for whom it can certify that that it offered minimum value MEC at an employee cost for employee only-coverage of no more than 9.5% of the federal poverty line, and also offered MEC to the employees’ spouses and dependents (defined in the regulations as a “qualifying offer”).
- Solely for 2015, an applicable large employer which can certify that it has made a “qualifying offer” to at least 95 percent of its full-time employees and their spouses and dependents will be able to provide a simplified notice to employees regarding the coverage provided.
- An applicable large employer that can certify that it offered minimum value and affordable MEC to 98 percent or more of its employees (and dependents) does not have to determine whether each employee is a full-time employee or report the total number of full-time employees.
Reporting of Minimum Essential Coverage
Under Section 6055, as amended by PPACA, every entity that provides MEC (including health insurance issuers and sponsors of a self-insured health plan) is required to file an annual return reporting specific information for each individual for whom MEC is provided. The information reported under Section 6055 can be used by individuals and the IRS to verify the months (if any) in which they were covered by MEC. This reporting facilitates compliance with, and administration of, PPACA provisions related to individual responsibility requirements and premium tax credits.
The final regulations under Section 6055 largely reflect the proposed regulations. As discussed above, however, applicable large employers that self-insure health benefits will be able to report the information required under both Section 6055 and Section 6056 to the IRS on a single form, which does provide some limited relief.
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