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ACA Reporting and Governmental Health Plans
Monday, October 12, 2015

Like all things involving governmental health plans, trying to apply an administrative structure designed for traditional employers creates a special set of challenges for the governmental employers sponsoring those plans.

Take, for example, the Affordable Care Act’s (ACA’s) reporting requirements. They seem straightforward enough; IRC Section 6055 requires the sponsor of a self-insured health plan to annually report certain health coverage information to the IRS as well as to those who are covered by the plan. The plan sponsor reports with regard to all individuals covered under the plan, including employees, non-employees (including COBRA participants and retirees), and their dependents (including spouses and dependent children). This report typically is made via the Form 1094-B and 1095-B (the “B” forms).

“Applicable Large Employers” (ALEs) (generally defined as employers that have 50 or more employees) must report annually to the IRS and their full-time employees whether they offer full-time employees (and the employees’ dependent children up to age 26) the opportunity to enroll in the ALE’s health plan, as well as other information about the employees’ access to health coverage. This report typically is made via Form 1094-C and 1095-C (the “C” forms).

ALEs that are also plan sponsors of self-insured plans may meet their reporting obligations under both Sections 6055 and 6056 by filing just the “C” forms.

If that’s not challenging enough, there are a special set of rules that allow governmental entities to designate related governmental entities to report on their behalf. For purposes of Section 6055 reporting, a government employer that maintains a self-insured group health plan may enter into a written agreement with a related governmental unit, agency, or instrumentality that participates in the plan through which the other governmental unit, agency, or instrumentality is designated as responsible for the reporting. For purposes of Section 6056 ALE reporting, an ALE that is a governmental unit (or any agency or instrumentality thereof) may delegate its 6056 ALE reporting to a related governmental unit—such as the government unit that maintains the plan—by obtaining a written designation by January 31, 2016 that contains specific language and information, and is signed by both parties.

Neither of the written designations described above need to be filed with the IRS and need only be maintained by the governmental entities under applicable record retention laws.

What does this mean for a large governmental plan that covers both employees of related agencies and also those of unrelated political subdivisions and instrumentalities? Confusion. The agency sponsoring the plan will need to determine which of these entities it is responsible to report for and ensure it either has the information it needs to complete the “B” and “C” forms (as applicable) or, alternatively, designate the related governmental entities to complete the required reporting.

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