Starting in 2015, the Affordable Care Act imposes burdensome new reporting requirements on employers and insurers that provide group health coverage.  We described the reporting requirements in earlier posts, here and here.

Employers and other reporting entities have anxiously awaited the IRS forms on which these reports will be made, so that they can program and test their computer systems, develop administrative procedures, coordinate reporting responsibility with their affiliates, and make arrangements with their business partners to collect and report the necessary information.  The IRS posted drafts of the reporting forms on its website yesterday.  Unfortunately, however, the instructions to the forms—which are expected to provide much of the detail programmers will need—will not be available until August.

Reporting Requirements

Employers and insurance issuers that provide minimum essential health coverage must report the coverage they provide each month for each covered individual (including spouses and dependents).  Employers that report only minimum essential coverage information will file the report on IRS Form 1095-B.  Here are links to the draft Form 1095-B and the related Form 1094-B transmittal form, which will be used to send the information to the IRS.

Employers with at least 50 full-time employers must report additional information concerning the availability and cost of health coverage.  A large employer that is subject to both the minimum essential coverage reporting requirement and the affordability reporting requirement will report all of the necessary information on IRS Form 1095-C.  It is likely, though, that the employer will fill out different parts of the form for different covered individuals, depending on factors such as whether an employee is part-time or full-time, and whether health coverage is insured or self-insured.  Here are links to the draft Form 1095-C and the related Form 1094-C transmittal form.

Time to Develop Reporting Systems is Running Out

Although the first reports are not due until early in 2016, employers, insurers, and third-party administrators will need to program their systems to gather the necessary information in a usable form starting January 1, 2015.  The systems must gather health coverage information for each covered individual each month.

Employers must gather additional information—such as the Social Security numbers of spouses and dependents—that is not currently available in most employers’ systems.  Employers and other reporting entities must coordinate with their business partners to determine who is responsible for collecting the missing information and how they will obtain it.

In many cases, employers will find that the only way to collect this information for 2015 is to request it during open enrollment in the fall of 2014.  For most large employers and their third-party administrators, efforts to develop enrollment material and to program on-line election forms are well underway.  It will be hard to incorporate any additional data collection required by the new reporting forms in time for the upcoming enrollment season.

The absence of instructions for the newly-released forms makes a difficult process even more challenging.  The instructions are expected to provide explanations and other details that are not evident on the face of the forms.  Forms 1095-C and 1094-C, in particular, include different sections and indicator codes that probably will apply to different groups of covered individuals; but it is not clear which portions of the forms must be completed for which groups.  Accordingly, although the forms themselves provide some useful information, it is unlikely that reporting entities will be able to make substantial progress until they have the instructions as well.  An IRS statement accompanying the release of the forms explains that the IRS “anticipates” that draft instructions will be released some time in August.