May 9, 2012
Authored by: benefitsbclp
In addition to requesting comments on the determination of “minimum value” (discussed in our prior post here), the IRS is also asking for comments regarding the information reporting requirements regarding “minimum essential coverage” under PPACA and for reporting by employers subject to “play or pay” penalties.
Minimum Essential Coverage Reporting. Under PPACA, every health insurance issuer, self-funded plan sponsor, governmental agency administering governmental health insurance programs, and any other entity that provides minimum essential coverage is required to file annual returns reporting who is covered under its plan or policy. For insured plans, the IRS intends to require the insurer to report.
The reporting must include, name, address, taxpayer ID number (usually a social security number) of each covered person, dates of coverage during the calendar year, and any other information Treasury may require. Additional reporting is required for policies offered through an exchange.
An employer must also separately report its own name, address, and EIN, the portion of the premium that it pays, and any other information Treasury may require.
Reporting is made to the IRS with a copy provided to each individual. It will be effective for coverage on or after January 1, 2014.
Why do we have to report this? Employers will want to report this information to avoid being hit with “play or pay” (or “shared responsibility”) penalties. Employees eligible for minimum essential coverage are not eligible for the tax credit to help them defray the cost of health insurance from the exchange. If an employee is not eligible for the tax credit, then the employer will not be penalized under the “play or pay” provisions, even if the employee obtains insurance through the exchange. Therefore, the reporting will help avoid assessments of play or pay penalties by the IRS.
The IRS is requesting comments on ways to minimize the reporting burden and duplication of reporting items by June 11. Notice 2012-32 lists seven specific areas of IRS interest. (You can also leave us a comment in the fields below, but we won’t promise the IRS will read it.)