The Affordable Care Act requires insurers and employers to provide annual reports to the Internal Revenue Service (IRS) as well as annual statements to employees covered by health insurance. These reports and statements are intended to help the IRS monitor compliance with the individual and employer mandates.
RETURNS TO THE IRS
Insurers and self-insured employers providing “minimum essential coverage” to individuals during a calendar year must report certain information about the coverage. For fully insured plans, insurers submit the reports. For self-insured plans, plan sponsors have reporting responsibility. These reports must include:
- name, address, and employer identification number (EIN) of employer sponsoring the plan (if the report is submitted by an insurer providing coverage through an employer’s fully-insured plan);
- name, address, and taxpayer ID number (i.e., social security number (SSN)) of employee or former employee;
- name and SSN of each other covered individual;
- months during which each individual was enrolled in coverage during the calendar year for at least one day; and
- any other information the IRS requires.
Applicable Large Employers (ALEs) must also file annual returns demonstrating compliance with the employer mandate. The return must show:
- employer name, date, EIN, and the calendar year for the information reported;
- name and telephone number of the employer’s contact person;
- certification as to whether the employer offered full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under the plan each calendar month;
- number of full-time employees for each calendar month during the calendar year, by calendar month;
- for each full-time employee, the months during the calendar year for which minimum essential coverage under the plan was available;
- for each full-time employee, the employee’s share of the lowest cost monthly premium for self-only coverage providing minimum value offered to that full-time employee under the plan, by calendar month; and
- name, address, and SSN of each full-time employee during the calendar year and the months, if any, during which the employee was covered under the plan.
The return will also include indicator codes to report additional information, such as:
- Whether coverage offered to full-time employees and their dependents provides minimum value and whether employees had the opportunity to enroll their spouses in coverage
- Total number of employees, by calendar month
- Whether an employee’s effective date of coverage was affected by a permissible waiting period
- Whether there were no employees during a particular month
Applicable Large Employers with self-funded plans will complete a single form to report information related to minimum essential coverage and compliance with the employer mandate. Simplified reporting methods may be available to employers who:
1. certify that they made a “qualifying offer” of minimum value, affordable minimum essential coverage to every full-time employee, their spouse, and dependents for all months during the year in which the employee was a full-time employee (for 2015 only, this method may be used if the employer certifies that they made a qualifying offer to 95 percent of employees, their spouses, and dependents), or
2. certify that they offered coverage to at least 98 percent of employees including full-time and part-time employees.
STATEMENTS TO EMPLOYEES
An annual written statement must be furnished to each responsible individual (i.e., the employee or former employee) included in the IRS return described above. Employers with fully insured plans whose insurers report to the IRS on their behalf about minimum essential coverage must also provide this statement. The statement must be issued on or before January 31 of the year following the calendar year for which the information was required to be reported (e.g., by January 31, 2016 for 2015). This statement must include:
- name, address, and contact information of the reporting person; and
- the information required to be shown on the return for that individual (see above).
Statements need not be provided to employees who waived coverage or are not eligible. Statements can be provided electronically if specific requirements are met, including that employees have consented to receiving them electronically.
Employers should use the appropriate IRS form for reporting. The forms vary depending on whether the employer is self-funded or fully insured, an ALE or a small employer, or both an ALE and self-insured. Reporting begins in early 2016 (by February 28 if filing on paper, or by March 31 if filing electronically) to report coverage provided in 2015. The IRS can penalize employers who fail to comply with these requirements. However, the IRS will not impose penalties on the reporting due in 2016 for the 2015 calendar year on those who show good faith efforts to comply. See the Health Care Reform Learning Zone at MSEC.org for more information.