Stylios Trachanas - Health Care Reporting Requirements for Business Smart business owners know the importance of keeping good records. The Affordable Care Act has created one more incentive for employers to keep abreast of sometimes complicated reporting requirements, by requiring them to provide information about company-provided health care to both their employees and the government. Not all of the law's employer responsibility provisions have been implemented yet. Nevertheless, it makes good business sense to establish effective systems to meet obligations that are likely to be rolled out soon. Acting early will give business owners more time to iron out any wrinkles before the law comes to bear. Reporting to Employees The Affordable Care Act requires most employers to report the cost of any employer-sponsored group health plan on employee Forms W-2. This requirement applies to all employers who provide what the government defines as "applicable coverage," even if the employers are religious organizations or are not subject to Consolidated Omnibus Budget Reconciliation Act (COBRA) requirements. Small businesses issuing fewer than 250 Forms W-2 total are exempt from the reporting requirement until further guidance is issued.
For businesses subject to the rules, the amount reported in Box 12 of Form W-2 must include both the employer and employee portions of the plan's cost. Certain forms of coverage must be reported, while other forms are either optional or excluded. For more information, see the IRS' full chart of reporting requirements. The Health Insurance Marketplace, often referred to as the exchanges, may provide alternatives that cost less than the employer-provided health care plan, if any. Employers must make clear that employer contributions, if any, may be lost if the new employee chooses to pursue private insurance instead. Employers may satisfy the notice requirement through third-party entities, such as insurers or multiemployer health plans, as long as every new employee receives such a notice regardless of whether he or she plans to enroll in the company health care plan. Finally, any employer providing a health care option must also furnish employees with a standard Summary of Benefits and Coverage (SBC) form. This form explains what services and care the plan does and does not cover. It also lays out the plan's cost clearly. Reporting to the IRS As previously mentioned, the Affordable Care Act introduced new reporting guidelines for employers, known as Section 6056 rules, which mainly affect how employers will report to the IRS. Last September, the Treasury issued proposed regulations to provide further guidance on how businesses should observe the rules; the final regulations were released in mid-February. For the most part, these regulations only apply to employers that had 50 or more full-time employees (or full-time equivalent employees) for the prior year.
Affected large employers must file a return with the IRS reporting certain information for every employee who was full-time for at least one month during the calendar year, including: The employee's name The employee's address The employee's Taxpayer Identification Number (TIN) Information about the health care coverage offered to each employee by month, including What coverage was available The employee's share of the lowest-cost, self-only premium Which months, if any, the employee was actually covered under the plan The return will also specify how many employees the business had each month in the calendar year. These requirements are currently scheduled to take effect . In addition to Section 6056 rules, certain employers may also fall subject to Section 6055 rules, regardless of size. These rules mainly apply to institutions providing health insurance, such as insurers. However, businesses that self-insure may also need to follow these rules. Affected businesses must provide information for each individual enrolled in minimum essential coverage, including the individual's name, taxpayer ID number and the months in which the individual received coverage. If any of a business' employees are liable for the Additional Medicare Tax, employers will also need to withhold the tax, set at 0.9 percent, and report the withholding. The threshold earnings amount to determine the tax liability is $200,000 for single filers and $250,000 for married taxpayers filing jointly. This tax should not be confused with the Net Investment Income Tax (NIIT), which is also sometimes called the Medicare surtax. The NIIT does not affect wages and is not the employer's responsibility. Reporting to States Certain states may have their own health care reporting requirements. For example, Massachusettsbased employers with 11 or more employees must file an Employer Health Insurance Responsibility Disclosure and an Employee Health Insurance Responsibility Disclosure for each employee. While these rules are not a product of the Affordable Care Act, employers should take care to comply with all statespecific reporting requirements as well as with federal rules. As with most parts of the Affordable Care Act, reporting requirements will remain a moving target for some time. As a result, satisfying all of the rules may be a challenge for some employers, at least in the near term. However, the sooner you begin, the sooner you will be able to identify the more difficult rules to follow and develop adequate systems to address them, regardless of whether regulators extend leniency for what is technically required.