IRS Proposed Regulations on Information Reporting Under ObamaCare

IRS guidance clarifies annual information reporting requirements for insurers and employers under the Affordable Care Act (ObamaCare). The required reporting enables the IRS to determine compliance with the employer and individual mandates and individual eligibility for premium tax credits under ObamaCare.

Beginning in 2014, individuals must generally maintain minimum essential coverage or pay an individual shared responsibility payment with their annual federal income tax return.

Internal Revenue Code § 6055, added by the Affordable Care Act § 1502, imposes annual information reporting requirements on insurers, employers that self-insure group health plans, and certain other providers of minimum essential health insurance coverage. Covered entities will report the required information to the IRS on Form 1095-B, or another form the IRS designates, and to covered individuals through a statement providing the policy number, contact information for the entity and information required to be reported to the IRS.

Code § 6055(a) requires entities providing minimum essential coverage to file annual returns reporting information about the entity and specific information for each individual for whom minimum essential coverage is provided.

Code § 6056, added by the Affordable Care Act § 1514, imposes annual information reporting requirement on applicable large employers regarding health insurance the employer provides to its full-time employees. Applicable large employers are generally defined as employers with 50 or more full-time equivalent employees.

Under the proposed regulations, applicable large employers are only required to report the employee’s share of the lowest cost monthly premium for self-only coverage, because the IRS determines the affordability of employer coverage for premium tax credit eligibility based on the cost of self-only coverage, not on the cost of coverage for the employee and his or her dependents. The IRS will use information obtained under this reporting requirement to determine employer compliance with ObamaCare’s employer shared responsibility rules and to determine individual eligibility for premium tax credits.

The IRS described various possible administrative simplifications that are designed to reduce or streamline information reporting and cost burdens on employers. We’ll have to wait to see if this goal is accomplished. In the meantime, the simplifications include:

  • Allowing employers to report offers of minimum essential coverage on Form W-2;
  • Eliminating the need to determine an employee’s full-time status if applicable coverage is offered to all potentially full-time employees;
  • Requiring an employer to report an employee’s cost to purchase employer-sponsored health coverage only when that cost is above a threshold amount;
  • Limiting reporting for employers offering no-cost coverage to employees and their spouses and dependents;
  • Eliminating certain duplicative reporting requirement; and
  • Various other simplifications

The IRS had delayed compliance with the proposed regulations for one year under IRS Notice 2013-45. The reporting requirements are now effective for tax years beginning in 2015, the first report due in 2015 for 2015 coverage.

Matt Austin is a Columbus, Ohio lawyer who owns Austin Legal, LLC, a boutique law firm with offices in central and northeast Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. Austin Legal’s Concierge Legal Services program is relied upon by companies to remain compliant and competitive. If you have employees, you need Concierge Legal Services. You can call Matt at (614) 285-5342 or email him at Austin@LaborEmploymentOSHA.com.

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