United States Capitol Building

Employer Reporting



ISSUE SUMMARY:

The requirements for employers to report health plan information to the federal government are confusing and extremely complicated. We are concerned that many employers could choose to stop offering health insurance coverage to their employees because the compliance burden is too much for their business to bear.

ACTIVE LEGISLATION:

  • There is no active legislation on this issue.

ACTION NEEDED:

Congress should take action to ease the reporting requirements under Section 6055 and 6056 for employers by establishing a new voluntary reporting system, reduce the number of individuals and amount of information that would need to be reported, and eliminate the requirement to collect dependent social security numbers.

TAKE ACTION:

  • There are no active Operation Shouts on this issue.

BACKGROUND:

In March 2014, the Department of the Treasury and the Internal Revenue Service (IRS) released final regulations final regulations on what health plan information all employers will be required to report to the federal government annually for enforcement of both the health reform law's individual and employer mandates. Unfortunately, the final regulations are confusing and extremely complicated for businesses of all sizes. As a licensed benefits specialist who works with employers on a daily basis, I am concerned that many employers are about to stop offering health insurance coverage to their employees because the compliance burden is too much for their business to bear.

Forthcoming legislation will ease the compliance reporting requirements for employers offering health insurance coverage to their employees. The bill clarifies that any information regarding health insurance which is communicated to employees must be aligned with the processes that are already in place by employer or employee, including the use of electronic notification for all notification forms. We believe that providing employees with multiple and similar notices is confusing for employees and employers alike.

Furthermore, legislation would protect the privacy of an employee’s dependents by ensuring that employers and insurers are not required to collect dependent Social Security numbers unless they are already collected. Collecting dependent Social Security numbers should be unnecessary as spouses who receive tax credits are required to file joint returns and individuals are required to include tax dependent Social Security numbers on their personal Form 1040. The Internal Revenue Service (IRS) should be able to verify dependents using alternative data such as name and date of birth.

Finally, the legislation would require that the Treasury Department, in consultation with the Department of Health and Human Services (HHS), the Department of Labor, and Small Business Administration, write a report to Congress that would detail the processes necessary to develop a prospective reporting system. Greater sharing of employer plan information between the IRS and HHS to improve exchange subsidy eligibility determinations would work best if the administration would also allow greater employer flexibility to provide information to employees and health exchanges regarding the employer health coverage offered on a prospective basis. Under a voluntarily prospective reporting system, employers could provide to the IRS information about coverage offered to employees electronically at the employer’s open-enrollment period or by the January 31 statutory deadline at the employer’s election. I believe if greater flexibility was provided and prospective reporting allowed it will result in greater coordination between the exchanges and the IRS, leading to fewer faulty subsidy determinations and penalty assessments.


TALKING POINTS:

  • Forthcoming legislation will ease the compliance reporting requirements for employers offering health insurance coverage to their employees. Specifically, the legislation would:

    • Establish a new voluntary reporting system for employers to report to the IRS information about their health plans. Exchanges will use the federal data hub to access this data for individual verification for tax credits.
    • Only employees (and/or their dependents) who access subsidized coverage through the exchanges would need to be reported to the IRS, greatly simplifying the requirement of all employees be reported.
    • Information that would be reported would include: name and employer identification, who has been extended an offer of minimum essential coverage, whether coverage meets minimum value and the affordability safe harbor, and months that coverage is available without waiting periods.
    • Remove the requirement to collect and report on dependent social security numbers, unless that data is already being collected.
    • Allows employees to deliver reports to employees electronically without another consent form.
    • Instructs the Government Accountability Office to conduct a study on the notifications, HHS appeals process, and the prospective reporting system.
    • Requires HHS to review the most recent tax filing for individuals automatically re-enrolled in exchange-based coverage and adjust their tax credits accordingly.

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