HRB 79 - IRS Guidance on Delay of Employer Shared Responsibility Reporting Requirements
Released July 10, 2013I Download as a PDF July 10, 2013 --
Shortly before the July 4th holiday, the Treasury Department announced in a blog that certain reporting requirements will be delayed, and hence the imposition of the employer shared responsibility tax would be delayed until 2015 (see CBIZ Health Reform Bulletin, Employer Shared Responsibility Reporting Requirements Delayed and Final Exchange Regulations
, 7/3/13). In the blog, the government has promised guidance; this has come in the form of IRS Notice 2013-45
, issued on July 9, 2013.
As background, employers employing 50 or more full-time equivalent employees are required to offer their employees working 30 or more hours a week, health coverage that meets minimum value standards at an affordable rate, or risk an paying an excise tax. The excise tax would be triggered when an employee qualifies for government assistance to pay for health coverage purchased through the marketplace (exchange), and he/she had not been offered adequate coverage at an affordable rate by the employer (see CBIZ Health Reform Bulletin, Shared Responsibility Guidance, 1/9/13). Individuals potentially eligible for government assistance are those who fall between 100% and 400% of the federal poverty level.
The law includes two new reporting requirements that were to take effect in 2014. IRC Section 6055 imposes a reporting requirement upon insurers, self-funded health plans, and other entities providing minimum essential coverage. IRC Section 6056 imposes a reporting requirement upon large employers (those with 50 or more full-time employees) to disclose certain plan information for purposes of the shared responsibility excise tax. These reports have not been developed. The government has indicated that it wants to work with stakeholders in the development of these reporting requirements.
The government will use these reports to determine whether an employer might be subject to the excise tax. The government will review the information contained in these forms and compare it to individuals who have been granted premium assistance. The government would then provide this information to the reporting employer who would have an opportunity to respond, proving or disproving that the affected individual was offered adequate coverage at an affordable rate. Because these reports are not available yet, the government indicated that it will not be able to assess the excise tax for 2014.
The IRS guidance relating to this transition relief comes in four fairly simple question and answers, as follows:
- When will the IRS publish rules regarding IRC Sections 6055 and 6056 Information Reporting and how will these provisions apply for 2014?
According to this Notice, the rules governing the IRC Sections 6055 and 6056 reports described above will be published later this summer. Employers and insurers are encouraged to voluntarily comply with the reporting requirements for the 2014 year, though, the reports will not be required until 2015. According to this Notice, the hope is that allowing adequate time to develop systems to ensure accurate reporting will, in the long term, facilitate a smooth transition.
- What does the 2014 transition relief mean for IRC §6056 Information Reporting with regard to the Employer Shared Responsibility requirements that take effect in 2014?
The reporting form required by IRC Section 6056 is to be used by large employers to report information about the coverage it offers to employees. Because the reporting form is not available, employers are encouraged, again, to voluntarily comply with the reporting requirements in 2014 but the reports are not required until 2015.
- Does this transition relief impact employees requesting premium assistance?
No; employees will still be able to request premium assistance through the marketplace (exchange). However, the employer may be asked to provide information about its plan coverage in that process. The single source application that will be used for purposes of applying for coverage through the marketplace, and determine eligibility for premium assistance, Medicaid, or other government assistance, includes an Employer Tool asking for information about the employer’s plan. The employer will want to become familiar with this Tool (see Appendix A on pages 9-10 of the Marketplace Consumer Application); and in fact, the employer may want to pro-actively provide its employees with the information requested in the Tool.
- Does this transition relief impact other aspects of ACA?
No. All other aspects of the ACA remain in effect, including the individual shared responsibility requirement.
What Should an Employer Do?
At this point, all systems are ‘GO’ for all aspects of the ACA, with the exception of the IRC Sections 6055 and 6056 reporting requirements described above. And, there will be no risk of the employer shared responsibility tax penalties imposed for the 2014 year. Large employers (those employing 50 or more full-time employees) are encouraged to:
- Develop systems to ensure smooth reporting as soon as guidance is issued; and
- Continue offering and consider expanding access to their plans.
With regard to developing a reporting system, at minimum, the type of information that may be requested pursuant to IRC Section 6056 includes:
- Name, date, and employer identification number of the employer.
- Certification as to whether the employer offers to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan.
- If the employer certifies that it offered its full-time employees (and their dependents) the opportunity to enroll:
- The length of any waiting period;
- The months during the calendar year for which coverage under the plan was available;
- The monthly premium for the lowest cost option in each of the enrollment categories under the plan: and
- The employer share of the total allowed costs of benefits provided under the plan.
- The number of full-time employees for each month during the calendar year.
- The name, address, and TIN of each full-time employee during the calendar year and the months during which such employee (and any dependents) were covered under any such health benefits plans.
The marketplaces (exchanges) are expected to be open for enrollment beginning October 1, 2013. Small employers will be able to buy coverage through the Small Business Health Options Program (SHOP) – see these CBIZ Health Reform Bulletins:
Group Health Plan Mandates
Under the ACA, the following requirements will be imposed on group health plans for plan years beginning on or after January 1, 2014:
- Applicable to all group health plans, including grandfathered and non-grandfathered plans:
- Ban on preexisting condition exclusion limitations on anyone;
- Extension of dependent coverage until age 26;
- Full implementation of ban on annual or lifetime limits for essential health services;
- Increased limit in outcome-based incentives/disincentives in wellness programs from 20 to 30%; or, up to 50% for tobacco free programs; and
- Ban on waiting periods exceeding 90 days.
- In addition, non-grandfathered health plans are subject to these ACA Provisions:
- Fair health insurance premiums;
- Guaranteed availability of coverage;
- Guaranteed renewability of coverage;
- Ban on discrimination against health care providers (“any willing provider” type laws);
- Inclusion of essential benefit coverage, providing a specified actuarial value, and cost-sharing limitations by insurers in small group and individual markets, and large group markets via State marketplaces. The cost-sharing limitations, specifically out-of-pocket limits, apply to both insured and self-funded plans offered through or outside marketplace; and
- Coverage for individuals participating in approved clinical trials
Additional ACA Requirements applicable to Group Health Plans
- New Reporting Obligation: Notice of Marketplace (exchange) Coverage (10/1/13)
- Fees and Taxes
- Patient-Centered Outcome Research Fee
- Transitional Reinsurance Fund (Premium Stabilization Program)
About the Author: Karen R. McLeese is Vice President of Employee Benefit Regulatory Affairs for CBIZ Benefits & Insurance Services, Inc., a division of CBIZ, Inc. She serves as in-house counsel, with particular emphasis on monitoring and interpreting state and federal employee benefits law. Ms. McLeese is based in the CBIZ Leawood, Kansas office.
The information contained herein is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. The information contained herein is provided as general guidance and may be affected by changes in law or regulation. The information contained herein is not intended to replace or substitute for accounting or other professional advice. Attorneys or tax advisors must be consulted for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein. As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained herein is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.