10/29/2013

1

Proposed Section 6055 and 6056

Reporting Requirements

Presented by Ashley Gillihan, Alston & Bird, LLP

On behalf of the Society of Professional Benefit

Administrators

October 28, 2013

10/29/2013

2

Statutory Reporting Requirements

• 6055—Reporting related to the individual mandate

– Who? Providers of MEC

– What? Identity of all individuals covered under the MEC and

the duration covered

• 6056—Reporting related to 4980H

– Who? Employers

– What? Information related to coverage offered to full-time

employees

• Notice 2013-45: Reporting requirements delayed until

2015 (i.e. reporting not required until 2016 for 2015

year)

10/29/2013

3

Proposed 6055 Reporting

Regulations

• Who is required to report?

– Issuers in the exchange not required to report exchange

coverage

– Employer sponsored plans

• Fully insured-the Insurance carrier

• Self-insured—the “plan sponsor”

– 414 aggregation rules do NOT apply

» One member may assist the others (but others must sign)

– Governmental employers may use “designated person” to file

10/29/2013

4

Proposed 6055 Reporting

Regulations• What is required to be reported to IRS?

– Name, (last known) address and TIN (or date of birth) of

• “responsible person”—this is NOT limited to active employees; includes former employees and would appear to include guardians of QMCSO

“alternate recipients”

• Each individual covered

– Reasonable effort rule for collecting TIN of dependent

– Name, address and EIN of employer maintaining the plan

– The months the individuals had MEC during the calendar year

• 1 day in the month is a whole month

• Not based on plan year

• No reporting required for HRAs that supplement MEC

10/29/2013

5

Proposed 6055 Reporting

Regulations

• How to Report?

– Electronic filing required unless “small employer”(determined based on aggregate forms)

– Due February 28 (march 31, if electronic)

– Form 1095-B

10/29/2013

6

Proposed 6055 Reporting

Regulations

• What is required to be furnished to individuals?

– Same information reported to the IRS with respect to that

individual

– Due January 31 of each year

• How?

– Mail

– Electronic delivery—requires advance consent

– One statement per address

• Not required to furnish a statement to someone who is not the

responsible individual

10/29/2013

7

Proposed 6056 Reporting

Regulations

• Who is required to report to IRS?

– Each applicable large employer member!!!

• Administrator of multiple employer plan to which employer

contributions can file on behalf of employer

– One form for each employer

– Employer signs

• Third parties can assist (employer remains liable)

• ALE member can file for others

10/29/2013

8

Proposed 6056 Reporting

Regulations• What is required to be reported?

– Name, address and EIN of employer

– Name, telephone number of contact

– Calendar year reported

– Certification whether MEC coverage was offered to full-time

employee (with dependent coverage available) for each month

– The full-time employee’s share of cost of lowest cost MEC that provides MV

– The number of full-time employees each month during the

year

– Name, address of each full-time employee during the calendar

year and the months covered

10/29/2013

9

Proposed 6056 Reporting

Regulations

• How to report?

– Electronic

• Small employer exception

– Due February 28 (march 31 if electronic)

– 1094-C

10/29/2013

10

Proposed 6056 Reporting

Regulations• Information expected to be requested using codes:

– Whether coverage is MV

– Whether coverage was affected by waiting period

– Total number of employees each month

– Whether the employer was not conducting business during a month

– Whether ALE member expects to be an ALE member in the subsequent

year

– If ALE member is part of controlled group

– Whether full time employee is treated as eligible to participate to MEP due

to employer’s contributions

– If MEP is reporting on behalf of employer, the address of MEP

administrator

10/29/2013

11

Proposed 6056 Reporting

Regulations• Additional information with respect to each full-time expected to be requested

using codes for each month:

– MEC providing MEC was offered to:

• Employee only

• Employee and employee’s dependents only

• Employee and the employee’s spouse only

• Employee, spouse and dependents

– Coverage was not offered to employee and

• Employee was in a waiting period

• Employee was not full-time that month

• Employee not employed during that month

– Coverage was offered for the month but was not a full-time employee

– The ALE member satisfied one of the affordability standards

10/29/2013

12

Proposed 6056 Reporting

Regulations

• What is required to be furnished to full-time employee?

– Same information with respect to full-time employee

– Name, address, EIN of employer

• When is it required to be furnished?

– January 31

• How?

– Mail

– Electronic but only after consent

10/29/2013

13

Proposed 6056 Reporting

Regulations• Optional methods-employer could use one or more of these for full-time

employee:

– No 6056 employee offered the same coverage with static cost for all 12

months

• Report instead using W-2 code

• Code would indicate level of coverage (if MV), no coverage, or not

MV

– No need to identify full-time employees to IRS if employer certifies that all

of its employees to whom coverage was not offered were NOT full-time

• Certify that all employees not offered coverage were not full-time or were not required

to be offered

– Mandatory MV, self insured coverage to all family members with no

employee contribution—only satisfy 6055, put code on W-2, and summary

information on 6056 transmittal.

10/29/2013

14

2013-03/2013-54

They said what?

10/29/2013

15

Foundational Overview

• Health Insurance Reforms apply to all group health plans other than:

– Excepted benefits

– Stand alone retiree health plans

• 2 of the relevant health insurance reforms:

– Section 2711

• No annual or lifetime dollar limit on essential health benefits

• “Integrated” HRAs and Section 106(c)(2) arrangements exempted

– Section 2713

• Plans must cover preventive care without cost sharing in all instances

10/29/2013

16

Policy Concerns

• Employers providing/facilitating coverage for

employees with major medical plans issued in the

individual market

– Strain on individual market

• Employees receiving tax free subsidies from employer

for government subsidized coverage in the Exchange

• Employers using defined contribution arrangements as

primary medical coverage

10/29/2013

17

FAQ

• Agencies issued guidance in early summer 2013

indicating that:

– HRA could not be integrated with individual market coverage

– Since it could not be integrated, it violated Section 2711

– Employers had to stop making contributions after December

31, 2013

• Spend down allowed thereafter subject to certain limitations

10/29/2013

18

2013-03/2013-54

• Generally effective for plan years beginning on or after 1/1/2014

– See special effective date for 106(c)(2) exception from Section 2711

• No payments for major medical policies issued in the individual market that are

excluded from income under 106

– Includes pre-tax salary reductions under cafeteria plan

– After tax payments for such policies also prohibited if ERISA’s voluntary

plan safe harbor is not satisfied

• Non-integrated, defined contribution accounts that are not excepted

benefits/stand alone retiree health plans are not permissible

• Health FSAs offered through a cafeteria plan that are not excepted benefits are

impermissible

• Special integration rules for defined contribution arrangements arrangements

10/29/2013

19

How did they get there?

• Reiterate that HRAs and Health FSAs are group health plans

• Define a new type of defined contribution arrangement “employer payment plan”

– A Rev. Rul. 61-146 arrangement

– Includes cafeteria plans!!!!!

– Guidance treats employer payment plan as a group health plan

• Defined contribution coverage cannot be integrated with IM coverage

• Non-integrated defined contribution arrangement will violate Section 2711

– Premium for policy is an EHB (look through to underlying coverage)

– Promise to pay premium is an inherent annual dollar limit

– Effective 9/13/13, 106(c)(2) exemption in 2711 is limited to Health FSA offered

through cafeteria plan

• Non-integrated defined contribution arrangement will violate 2713

– Even if somehow exempt from 2711, cap on benefits will violate requirement to

pay all recommended preventive treatment without cost sharing in all instances

10/29/2013

20

How did they get there?

• Integrated defined contribution arrangement generally o.k.

• Integrated definition

– Must limit participation to defined-benefit, employer group health plan

• Any employer

– Must allow an opt out/waiver of future reimbursement once coverage under

employer’s health plan has ended

– If reimbursement under defined contribution account reimburses other than

the following, the employer’s group health plan must provide minimum

value

• Deductible under employer plan

• Coinsurance under employer plan

• Co-pays under employer plan

• Premiums under employer plan

• Non-essential health benefits

10/29/2013

21

How did they get there?

• Integration

– Spend down permitted with respect to amounts credited to

defined contribution arrangement while defined contribution

arrangement was “integrated”

– Can you pay IM coverage through an integrated arrangement?

• Likely not!!!!!!

• Even if you could, it would have to be integrated with an

employer’s plan that provides minimum value

10/29/2013

22

What is left?

• Tax free payment of excepted benefit coverage (see

HRA issue below)

• Defined contribution arrangements limited to former

employees

• Defined contribution arrangements that provide

excepted benefit coverage

– Note potential issue with dental/vision

– No reimbursement of indemnity policies through “HRA”

• Health FSA offered through a cafeteria plan that is an

excepted benefit

10/29/2013

23

What if I don’t comply?

• Violation of health insurance reforms are subject to

$100 per day/per affected beneficiary excise tax under

4980D

• Penalty under PHSA (state/local governmental plans)

• Suits under ERISA for specific performance

10/29/2013

24

When do I need to comply?

• General effective date is plan years beginning on or after

1/1/14

• 9/13/13 effective date for limitation on 106(c)(2)

exemption from Section 2711 confusing

– Virtually every defined contribution arrangement w/o a waiver

relied on this exception

– Could mean any impermissible arrangement without a waiver

must cease as of 9/13/13

– Could mean no new plan years start after 9/13/13

• What about spend down?