Volume 37 | Issue 25 | March 6, 2014

IRS issues final ACA reporting regulations

Yesterday the IRS released final regulations governing how employers and insurers will report the
information that the agency needs to enforce both the individual and employer shared responsibility
requirements in 2015. The guidance provides simplified reporting alternatives for employers that offer
affordable coverage to substantially all full-time employees, including a special transition rule for 2015.
Employers now have the guidance they need to finalize their compliance strategies for this reporting
requirement.
Background
The ACA added two significant reporting requirements to the Internal Revenue Code (Code) to help the IRS
enforce the individual and employer shared responsibility requirements and to administer the premium assistance
tax credit. Both reporting requirements are effective for coverage provided on or after January 1, 2015, with the
first information returns to be filed with the IRS and provided to individuals in early 2016:
Code section 6055 reporting. Insurers, sponsors of self-insured plans, governmental entities, and other
parties must report information to the IRS for each individual to whom they provided minimum essential
coverage (MEC). They must also provide a statement to each individual. This reporting is intended
primarily to support the IRS enforcement of the individual mandate.
Code section 6056 reporting. Large employers subject to the shared responsibility provisions of the
ACA must report information to the IRS about the health care coverage provided to full-time employees.
As with the Code section 6055 reporting, a statement is also provided to each individual. This reporting
will support the IRS enforcement of the employer shared responsibility provisions. The individual
statement will be used by employees to determine eligibility for the individual premium tax credit.
Late last year the IRS published proposed regulations on the reporting requirements. The IRS held hearings in
November at which Buck Consultants testified. (See our December 17, 2013 For Your Information.) Last month
the IRS issued final regulations on the employer shared responsibility requirements. (See our February 11, 2014
For Your Information.)
The IRS has now issued final section 6055 and 6056 reporting regulations. The final regulations generally follow
the proposed regulations with a few significant exceptions. Importantly, the level of information required to be
reported is largely the same as in the proposed regulations, with some exceptions for employers who can use one
of the simplified reporting alternatives.





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Volume 37 | Issue 25 | March 6, 2014

Combined section 6055 and 6056 reporting
The final regulations permit employers to satisfy their reporting obligations under both section 6055 and 6056
using a single combined form. Employers with self-insured plans will report both section 6055 and 6056
information to the IRS and to employees on the same form. Employers with insured plans would use the same
form but only complete the section relating to 6056 reporting on the form; the insurer would independently report
section 6055 information on a separate form. Draft forms are being prepared by the IRS and will be released in
the near future for comment. A substitute form that includes all the required information can also be used
Buck comment. Although the use of a combined form may simplify the preparation and distribution of the
form, employers will be required to report the same information as under the proposed regulations for
separate forms. The exact level of detail required to be reported will not be known until the draft forms are
released.
Simplified reporting alternatives
The final regulations include the general method for reporting that largely follows the approach outlined in the
proposed regulations. The final regulations also include two simplified reporting alternatives. An employer is
permitted to use the general method or the simplified methods for different groups of employees at the employers
election. Under these simplified approaches, the level of information required to be provided to the IRS and
employees is reduced.
Reporting based on certification of qualifying offers
If an applicable large employer certifies that it made a qualifying offer of health insurance coverage to a full-time
employee for all months during the year in which an employee was full-time, it may report simplified section 6056
information for that employee to the IRS and in a simplified statement to the employee. For this purpose, an
employer is deemed to have made a qualifying offer if it offered the employee coverage that provides 60%
minimum value at an employee cost for employee-only coverage of no more than 9.5% of the federal poverty line,
and also offered minimum essential coverage to employees spouses and dependents. For employees for whom
the qualifying offer was made for all 12 months of the calendar year, the employer may be able to use a code
indicating that fact.
Under a special transition rule for 2015 only, this approach can be used if the employer can certify that it has
made a qualifying offer to at least 95% of its full-time employees and their spouses and dependents. In that case
the employer will be able to provide a simplified statement to employees regarding the coverage provided.
Reporting without separate identification of full-time employees
Some employers offer coverage to all or substantially all employees, including employees who average less than
30 hours of service a week. This alternative method allows employers to report to the IRS without identifying or
specifying the number of full-time employees included. An employer would be required to certify that it offered
coverage to at least 98% of the employees included in the reporting, and that the coverage provides 60%
minimum value and is affordable. The determination of affordability can be made using any of the affordability
safe harbors in the shared responsibility regulations.





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Volume 37 | Issue 25 | March 6, 2014

Buck comment. While most employers will not be able to use either of these safe harbors for all
employees, they may be beneficial for some groups of employees. The employer will need to balance the
advantages and disadvantages of using different reporting methods for different groups of employees.
Section 6055 reporting requirements
With the exception of the combined section 6055 and 6056 reporting, the section 6055 requirements are largely
unchanged from the proposed regulations. Importantly, the regulations retain the requirement that employers
report dependent social security numbers, and can provide a date of birth only if the social security number is not
available after reasonable efforts to obtain it. Employers should ensure a process is implemented to obtain social
security numbers.
In closing
Employers now have the final guidance required to comply with the reporting requirements. Although reports will
not have to be submitted until 2016 for 2015 coverage, employers should begin now to assess what data items
they will need to collect to satisfy their reporting obligations.



Authors
Richard Stover, MAAA, FSA
Leslye Laderman, JD, LLM

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