These new reporting obligations require employers and other entities to report information to assist the IRS with enforcing the individual mandate (i.e., the requirement for individuals to maintain minimum essential health care coverage) as well as the employer mandate (i.e., penalties that are imposed on certain employers if minimum health insurance coverage is not offered by the employer).
In order to monitor compliance with both the individual and employer mandates, the ACA requires reporting by employers and insurers. To understand these reporting obligations, one must understand the general manner in which both the individual mandate and the employer mandate operate.
If an individual does not have minimum essential coverage, the IRS will collect a tax penalty from him or her. The monthly tax penalty is equal to 1/12th of the greater of:
- For 2015: $325 per uninsured adult in the household (capped at $975 per household) or 2.0 percent of the amount by which the household income exceeds the filing threshold (e.g., single person making more than $10,150 in 2015 must file a tax return).
- For 2016: $695 per uninsured adult in the household (capped at $2,085 per household) or 2.5 percent of the amount by which the household income exceeds the filing threshold.
- 9.5% of an employee’s W-2 wages (such wages amount being net of any salary reductions under a 401(k) plan or cafeteria plan)
- 9.5% of an employee’s monthly wages (hourly rate x 130 hours per month)
- 9.5% of the Federal Poverty Level for a single individual
- Name of each individual who has minimum essential coverage (including covered spouse and dependents);
- Name and address of the “responsible person” through whom the individual has coverage (generally the primary participant, employee, or applicant);
- Taxpayer identification number (TIN, which is generally the Social Security Number) for each covered individual, including covered spouse and dependents; and
- Calendar months for which each individual was covered during the calendar year.
- Name, address and employer identification number (EIN) of the ALE;
- Name and telephone number of a contact person;
- Calendar reporting year;
- Certification as to whether the ALE offered its full-time employees and their dependent children the opportunity to enroll in minimum essential coverage by calendar month;
- Number of full-time employees for each month in the calendar year;
- For each full-time employee, the months for which minimum essential coverage was made available;
- For each full-time employee, the employee’s share of the lowest-cost monthly premium for “employee-only” coverage providing minimum value, by calendar month; and
- Name, address and TIN for each full-time employee, and the months, if any, for which the full-time employee was covered under an employer-sponsored plan. (This information would be the same as data provided for Section 6055 reporting.)
- Information Technology – to ensure that all the required data is accessible;
- Finance – to budget and allocate compliance resources needed;
- Legal – to interpret and apply the regulations;
- Human Resources – to make decisions regarding employee scheduling and monitoring hours over 30 hours per week;
- Payroll – to track hours (to identify full-time employees) and calculate affordability; and
- Benefits – to develop plan design, eligibility, and communications to employee