Reporting of Employer Health Insurance Coverage
Smart first steps
Certain employers will be required to file an annual information return with the IRS certifying whether they offer minimum essential coverage to their full-time employees (and their dependents) and, if so, disclosing specific details about that coverage as well as the names, addresses, and taxpayer identification numbers (TINs) for each full-time employee enrolled in the employer’s plan.
The information return will only have to be filed by “applicable large employers” and “offering employers,” and employers may enter into agreements with health insurance issuers to include the required information with a similar information return issuers will be required to file.
For employers subject to the filing requirement that offer minimum essential coverage, additional information will have to be reported. This additional information includes:
- The length of any applicable waiting period, but only if the employer is an “applicable large employer”
- The monthly premium for the lowest cost option in each of the plan’s enrollment categories
- The employer’s share of the total allowed costs of benefits provided under the plan
- The option for which the employer pays the largest portion of the cost of the plan and the portion of the cost paid by the employer in each of the enrollment categories for that option, but only if the employer is an “offering employer”
Additional information may be required by Department of Treasury regulations.
Employers (or health insurance issuers) also will be required to provide employees with a written statement identifying the information reported to the IRS. It will have to be provided by January 31 of the year following the year for which the relevant information return is filed.
Effective date: The information reporting and related employee notice requirement is effective for periods beginning after December 31, 2013.
The information reporting requirement will apply regardless of whether an employer’s plan is a grandfathered health plan.
The following definitions apply with respect to this information reporting requirement:
Applicable large employers – Any employer that employed an average of at least 50 full-time employees on business days during the preceding calendar year.
Full-time employees – An employee who is employed on average at least 30 hours of service per week during a month.
Minimum essential coverage – This generally refers to the type of health coverage needed for an individual to satisfy the individual coverage mandate under health reform. Examples of minimum essential coverage include employer-sponsored coverage offered through the small or large group market in any state.
Offering employers – Any employer that offers minimum essential coverage to its employees and pays a portion of the cost of such coverage, but only if any employee’s required contribution exceeds 8% of wages the employer pays to such employee.
Key implication: Administration
Preparing and filing the new information return and related notice to plan participants will likely represent an administrative burden for employers. However, the burden likely will be greatest during the first year the new requirements apply. For employers with insured plans, the ability to enter into agreements with health insurance issuers to satisfy these requirements also has the potential to significantly reduce the administrative burden on the employer.
Smart first steps for employers to consider
Employers generally will wait until the Department of Treasury issues additional guidance to begin preparing for the implementation of the information return and related participant notice requirement. In the meantime, employers might consider whether they will be subject to these rules and, if so, begin discussing them with their insurance issuers.
As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.