September 17, 2013
RE: IRS Issues Rule Proposal on Reporting by Employers under the Affordable Care Act (ACA).
On September 5, the Internal Revenue Service (IRS) issued a proposed rule outlining the types of information employers will have to provide annually to the IRS so that they can determine compliance with the employer and employee requirements of the Affordable Care Act (ACA). Neil Bomberg at the National League of Cities (NLC) has provided us with a good analysis of the proposed rule.
The IRS regulation would outline the reporting requirements for every employer who provides health care as well as employers with 50 or more employees (including municipalities). If adopted, it would require all employers, regardless of size, who provide health care and employers with 50 or more employees who are required to provide health care, to provide a range of information designed to help the IRS determine the level of compliance and the eligibility of employees for subsidized health care coverage through the Health Insurance Marketplaces.
Large employers will be required to provide information on individual employees including: the amount paid by the employer and employee for health insurance, whether an employee’s dependents are covered, whether the employee is full-time (works 30 or more hours per week) or part-time, and whether the employee has received a premium tax credit. Large employers will also have to provide information on how many employees are and are not covered by health care coverage, the essential minimum requirements that are covered, and the number of full-time workers employed per month.
The IRS will use this data to determine if:
- Employers with 50 or more employees are meeting their “shared responsibility” obligations by providing appropriate health care coverage for their full-time employees;
- Employees who opt out of employer-sponsored health care do not receive a tax credit if they decide to purchase their insurance in the Marketplace; and
- Employees who have employer-sponsored health care coverage are meeting their “shared responsibility” obligations under the law, but are not paying more than 9.5 percent of their total income for health care coverage.
The IRS proposal is supposed to:
- Eliminate the need for an employer to determine whether an employee is full- or part-time, if adequate health care coverage is provided to all employees;
- Require that employers report the specific cost to an employee of purchasing health insurance only if the cost is above a specified dollar amount;
- Allow self-insured plans to report all information on a single form (rather than the two forms currently required);
- Limit substantially the reporting that is required if an employer offers no-cost coverage to employees and their families through a self-insured plan;
- Replace the specific dates of coverage with the months of coverage; and
- Permit governmental units such as the state to report compliance on behalf of a city or town, and grant cities and towns flexibility in how they report the benefits for different categories of workers if their health insurance coverage is different.
You can access a complete copy of the proposed rulemaking and detailed instructions on how to comment on the rulemaking at https://www.federalregister.gov/articles/2013/09/09/2013-21791/information-reporting-by-applicable-large-employers-on-health-insurance-coverage-offered-under . The link also contains a range of questions that the IRS would like employers subject to this proposed rulemaking to answer.
Comments on the proposed rule are due to the IRS by November 8, 2013. If you submit comments on the proposed rule please copy the League. In addition, the IRS will also hold a public hearing in Washington, DC, on November 18, 2013. Requests to appear at the hearing must be received by the IRS by November 8.
If you have any questions, please contact Lori Buckelew at 609-695-3481, ext. 112 or firstname.lastname@example.org or Jon Moran, ext. 121 or email@example.com.
Very truly yours,
William G. Dressel, Jr.