Q&A with Barbara Klepper
Employers soon to rework their benefit reporting for Obamacare
Q: The Affordable Care Act’s complex “play or pay” rules kick in next year, but that’s not the only compliance issue for which employers should be preparing. What do employers need to know about the ACA’s reporting requirement?
A: In March, the IRS issued final regulations to enforce the shared responsibility and individual mandate provisions under the ACA. Certain employers providing minimum essential coverage to individuals during the calendar year must report certain health insurance coverage information to the IRS and must also provide a written statement to the covered employee or former employee. This information helps the IRS to determine which individuals will be subject to the tax penalty for violation of the individual mandate. Additionally, an applicable large employer – that is, an employer with 50 or more full-time employees or equivalents – must certify that it offers its full-time employees and their dependents the opportunity to enroll in minimum essential coverage on a month-by-month basis. Applicable large employers also must provide a qualifying employee statement to each full-time employee.
Q: What is “minimum essential coverage?”
A: “Minimum essential coverage” means health coverage offered under, for example, a government-sponsored program (i.e., Medicare, Medicaid, etc.), an eligible employer-sponsored health insurance plan, a health insurance plan offered in the individual market, or other certain types of government-approved health coverage options. If an individual doesn’t enroll in minimum essential coverage either through the health insurance marketplace (also known as the “Exchange”) or through one of these other types of programs, he or she will face a tax penalty.
Q: Do the reporting requirements apply to all employers?
A: No. Employers offering fully-insured health plans don’t have to report on minimum essential coverage for purposes of the individual mandate. Only employer plan sponsors of self-funded group health plans must report regarding offers of minimum essential coverage – this is true regardless of the employer’s size. With respect to the shared responsibility requirements, only applicable large employers must report.
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