On September 5, 2013, the Internal Revenue Service issued two notices of proposed rules intended to implement key reporting requirements of the Affordable Care Act. One rule would require large employers to report to the IRS and to their employees information regarding the health care coverage they offer to full-time employees. The second rule would require insurers, self-insured employers, government-sponsored programs, and entities that provide minimum essential coverage to report information on this coverage to the IRS and to covered individuals. The IRS also issued a press release describing the proposed rules.
These reporting requirements serve distinct purposes under the ACA. The large-employer reporting requirement is necessary to determine whether large employers are complying with the employer responsibility provisions of the ACA and will also help identify individuals who are ineligible for premium tax credits because they have been offered coverage by their employer. The minimum essential coverage reporting requirement will assist the IRS in determining whether individuals are complying with the ACA’s individual responsibility requirement, and also whether they are eligible for premium tax credits because they lack minimum essential coverage.
The absence of these rules was the reason given by the IRS for delaying the employer mandate until 2015. The IRS is encouraging voluntary reporting by employers and insurers subject to the requirements for 2014, and should have no trouble getting the final rules in place for mandatory reporting in 2015.
Although the proposed rules should gather the information necessary for these purposes, the IRS is also attempting to avoid collecting unnecessary information and to avoid duplication. Insurers, for example, are not required to report information on individuals covered by qualified health plans through the exchanges, since this information will be available from the exchanges. Large employers need only report the employee’s share of the lowest-cost monthly premium for self-only coverage, since a determination as to whether employer coverage is affordable for adjudicating eligibility for premium tax credits is based on the cost of self-only rather than family coverage. Entities that must report minimum essential coverage can report birthdates rather than Social Security numbers for dependents if they are unable to secure the Social Security numbers after reasonable efforts.
The IRS is also considering, and asks for comments on, further simplifications, such as allowing reporting offers of minimum coverage to employees on W-2s, or reporting the annual cost of insurance to employees at zero if coverage cost $800 or less, since this amount would be less than 9.5 percent of the poverty level and thus an employee charged this amount would never qualify for exchange coverage.
A detailed report on the two proposed rules will be available here on Saturday, September 7.