On September 9, 2013, the U.S. Treasury Department published two proposed regulations (access the regulations here and here) that provide guidance to insurers and employers who provide minimum essential health coverage. The proposed regulations address reporting requirements applicable to employers and insurers under Internal Revenue Code (the Code) Sections 6055 and 6056.

Information Reporting of Minimum Essential Coverage

Beginning in 2014, individuals must generally maintain minimum essential coverage or pay a penalty – called the individual shared responsibility payment – with their annual federal income tax return. Minimum essential coverage is defined in Code Section 5000A(f)(1).

Code Section 6055 mandates annual information reporting requirements on insurance issuers, employers, and others that provide minimum essential coverage (the Reporting Entity). Such entities must report the required information to the IRS on Form 1095-B and to covered individuals via a statement that provides the policy number, the name, address, and contact number for the Reporting Entity, and the information required to be reported to the IRS. The information the Reporting Entity must report to the IRS includes, for example:

• The name, address, and taxpayer identification number (TIN) of the primary insured individual;

• The name, dates of coverage, and TIN of each individual covered under a policy;

• Whether health insurance coverage is a qualified health plan offered through a health insurance exchange; and

• The months an individual received minimum essential coverage in a calendar year.

Information Reporting by Applicable Large Employers on Health Insurance Coverage Offered Under Employer-Sponsored Plans

Section 6056 of the Code mandates annual information reporting requirements on applicable large employers (i.e. generally employers with 50 or more full-time employees) regarding health insurance provided to full-time employees. Employers that are subject to the employer shared responsibility requirements of Code Section 4980H must file a return using Form 1094-C that describes the health care coverage provided, a list of full-time employees, and the coverage offered to each full-time employee and for which months it applied. Applicable large employers must also report such information to its full-time employees.

Under the Proposed Regulations, applicable large employers are only required to report an employee’s share of the lowest cost monthly premium for self-only coverage. The IRS will determine the affordability of such coverage for premium tax credit eligibility, not the cost of coverage for an employee and dependents. The IRS will use information obtained under Section 6056’s reporting requirement to determine employer compliance with the Affordable Care Act’s employer shared responsibility rules and to determine individual eligibility for premium tax credits.

Next Steps

The Proposed Regulations apply to tax years beginning January 1, 2015, with the first reports due in 2016 for calendar year 2015. Insurance issuers, employers, and others that provide minimum essential coverage should prepare for compliance with these reporting requirements by reviewing internal processes and systems to ensure they can meet the obligations of Code Sections 6055 and 6056.