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Update to the Affordable Care Act Reporting Requirements


On July 21, 2015 WageWorks released a Compliance Alert, "Affordable Care Act Reporting Requirements" concerning the latest employer requirements to report minimum essential coverage (MEC) and coverage offered by applicable large employers (ALEs). Reporting on Forms 1094 and 1095 is set to begin in early 2016 with information gathered throughout the 2015 calendar year.
Based on initial IRS drafts, we stated in our previous Compliance Alert that "No reporting is required on Forms 1094-B and 1095-B for Health Reimbursement Arrangements (HRAs) integrated with group health plans that provide MEC." New IRS drafts were subsequently issued on August 7, 2015. The revised drafts of 2015 Instructions for Forms 1094-B and 1095-B , which are used to report MEC coverage provided by all employers, regardless of their size, stated that HRAs integrated with group health plans were required to submit separate forms for an HRA integrated with group health plans.
However, before the ink was dry on the revised draft forms and instructions, Notice 2015-68 was issued on September 17, 2015, along with Final 2015 Instructions and Forms 1094-B and 1095-C.

The new final instructions state:

Coverage in More Than One Type of Minimum Essential Coverage

  • If an individual is covered by more than one type of minimum essential coverage, reporting is required of only one of the types, if one of the following rules applies. If an individual is covered by more than one type of minimum essential coverage provided by the same provider, the provider is required to report only one of the types of coverage.
  • A provider of minimum essential coverage generally is not required to report coverage for which an individual is eligible only if the individual is covered by other minimum essential coverage for which reporting is required. (For employer-sponsored coverage, this exception applies only if both types of coverage are under group health plans of the same employer).

Under the first exception, if an individual is covered by a self-insured major medical plan and a health reimbursement arrangement (HRA) provided by the same employer, the employer is the provider of both types of coverage and therefore is required to report the coverage of the individual under only one of the arrangements.

Also included as a "caution": If an individual is covered by an HRA sponsored by one employer and a non-HRA group health plan sponsored by another employer (such as spousal coverage), each employer must report the coverage the employer provides.

What if Employee Does Not Have Employer's MEC Coverage? 

Once an employee is no longer covered by the employer's group health coverage that provides MEC, then reporting of MEC coverage under the HRA must begin. The employer must report coverage under the HRA for the months after the employee retires or drops the employer's group health coverage if the employee continues to be covered by the HRA.

If an employee is enrolled in an employer's HRA and in a spouse's group health plan, the participant's employer would be required to report MEC coverage for the HRA while the spouse's employer would report MEC coverage under the spouse's group health plan.

Other Miscellaneous Changes or Clarifications 

Minimum value (MV) means that insurance coverage must provide at least 60 percent of the cost of benefits provided by the plan, and the plan provides substantial coverage of inpatient hospital and physician services. This new definition will not apply before the end of the plan year for plans beginning after March 2, 2015.

Extensions for either reporting requirement are automatic by submitting a Form 8809 on or before the due date of the return. Alternatively, employers can send a letter as we outlined in our previous Compliance Alert to obtain an extension of time to file.

COBRA participant reporting was clarified in the new instructions for 1095-C reporting purposes. When a former employee terminates employment, an offer of COBRA coverage should not be reported as an offer of coverage in all circumstances.

Catastrophic coverage. The IRS intends to propose regulations that require issuers of catastrophic plans, enrolled in through an Exchange, to report the coverage on Form 1095-B. The regulations are intended to apply to coverage in 2016, with the returns filed in 2017.

Multiemployer plans have modified guidance relating to the employer shared responsibility rules

Basic Health Program. The state agency that administers the Basic Health Program is the entity that must report that coverage for MEC purposes.

The IRS is receiving comments until November 16, 2015 on the final instructions. We anticipate a few more changes or clarification to the final instructions after that time and will, of course, update future Compliance Alerts accordingly.

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