One of the most time consuming and expensive elements of the Affordable Care Act (ACA) is the reporting requirement of the employer mandate.
Under the employer shared responsibility provision of the ACA, applicable large employers (ALEs) must either offer a health plan to its full-time employees that is both affordable and meets minimum value or pay a sharing fee. Our previous articles highlight the 2018 requirements.
The purpose of the mandate is to:
- dissuade employers from dropping their health plans, which then forces their employees into the individual market where they could be eligible for government subsidies or tax credits;
- ensure that all individuals covered under an employer’s health plan have comparable coverage to the ACA’s minimum coverage standards; and
- provide a system to check the validity and eligibility of individuals claiming a subsidy/tax credit in the individual market
To assess the employer’s offering, the ACA creates a reporting requirement for both health plans and employers. Employer and health plan reporting takes place at the beginning of the year following each plan year. This retrospective reporting is complex, requiring information about the offering and the enrollment of every full-time employee working at least one day in at least one calendar month in the reporting year.
To accommodate this new requirement, employers expend significant time and resources to document and maintain the information necessary to complete the annual IRS filing and produce the corresponding employee statements. This also requires modifications and ongoing maintenance to payroll systems and other benefit enrollment systems and documents.
Beginning in 2018, the IRS is actively pursuing fines for failure to file or for failure to meet their obligation under the law. The rebuttal to inaccurate assessments, which represent approximately 80% of the notices issued to date, is yet another drain on employer’s limited time and resources.
While the three purposes of the mandate are important to the overall functioning of the law, there are more straightforward, cost-effective ways to achieve results. One such method is the idea of prospective reporting. Rather than reporting on every full-time employee at the conclusion of the year, the employer would provide information to the IRS about the employer’s benefits offering at the beginning of the plan year and forgo providing specific employee information unless a discrepancy arises later in the year.
On October 3, 2017, both chambers introduced the Commonsense Reporting Act of 2017, H.R. 3919 and S. 1908. The purpose is to streamline the employer reporting process and strengthen the eligibility verification process for the premium assistance tax credit and cost-sharing subsidy. This new idea would significantly reduce the burden on employers while providing the Departments with the information they need to carry out accurate determination and payment of the premium tax subsidies.
Of course, this bill needs to pass both the House and Senate and be signed by the President to become law. We urge you to get involved and persuade your congressman to ease your reporting burden by supporting this bill. Through Operation Shout, our partner, the National Association of Health Underwriters (NAHU), has made it easy to do by providing a ready-made email to educate your representatives and senators.
To send the email, follow the directions below:
- Follow the NAHU link here,
- Enter your name and email address
- Review the content of the email, edit if you like
- Hit send
- Check the “opt-in” box if you’d like to be alerted about other Operation Shout opportunities for employers and individuals to make a difference.
We will continue to advocate on your behalf to make this changes. We appreciate your help in this effort. If you have any questions, please feel free to reach out to your OneDigital consultant.
We’ve included the text of the bill below:
SECTION 1 – Purpose
Titles the bill as the “Commonsense Reporting Act of 2017”
SECTION 2 - Findings
- requires the Dept. of Health and Human Services (HHS) and the Internal Revenue Service (IRS) to “work together with other relevant departments and agencies to identify and implement methods to minimize compliance burdens on businesses, insurance carriers, and individuals”
- balances between sufficient reporting to enforce the law and protecting the privacy of individuals
SECTION 3 – Voluntary Prospective Reporting System
- requires Secretaries of HHS, IRS, DOL, and Small Business Administration (SBA) to develop and implement a voluntary prospective reporting system within one year of enactment and will be available no later than January 1, 2019;
- the new system will include the following:
- annual voluntary reporting by each participating employer, not later than 45 days before the first day of the annual open enrollment;
- reporting information to include:
- employer name;
- EIN number;
- information about the benefit plan offering, e.g. who the plan is offered to, certification of minimum value, affordability, employee eligibility for the plan, number of months in the year that the plan is offered, and description of any applicable waiting periods; and
- anticipation of any applicable penalty
- establishes processes necessary to:
- ensure the Exchanges, Federal Marketplace Data Services Hub and IRS can securely access information to carry out responsibilities to determine eligibility for advance payment of premium tax credits;
- allow Exchanges to follow-up with employers in order to obtain any additional reasonably necessary information relating to an employee’s eligibility for advance payment or cost-sharing subsidy including employer notification; and
- allow employers to provide timely updates to the Federal Marketplace Data Services Hub regarding cancellation of coverage or significant change in coverage;
- provides notification to employers of the names of any employees or dependents enrolling or losing coverage in the Exchange;
- clarifies that employers participating in this program will be treated as having satisfied their annual reporting requirement if they:
- follow all rules and annually provide the prospective information, as indicated above; and
- submit reporting forms to both the IRS and to individuals identified as having participated in the Exchange
- allows that, if an employer is unable to collect tax ID numbers for dependents, the employer may submit full name and date of birth rather than name and tax ID number;
- applies 60 days after the date of enactment
- clarifies that employers and health plans may furnish statements to employees electronically if the employee consents, at any prior times within the year, to receive the notice electronically;
- employers and health plans must honor, also, any employee who revokes consent;
- applies to statements due after December 21, 2017
- instructs Comptroller General to conduct a functionality study of this reporting system for the calendar year of 2019;
- the study shall address the number of employers participating, accuracy of information, and any challenges arising;
- the study report is to be furnished to the Senate Finance and Health Education Labor and Pensions (HELP) committees and the House Ways and Means and Energy and Commerce committees;
- applies no later than July 1, 2020
SECTION 4 – Protection of Dependent Privacy
SECTION 5 – Electronic Statements
SECTION 6 – GAO Studies