There’s good news and there’s bad news regarding the instructions for the recently issued draft forms for the Affordable Care Act’s reporting requirements.
The good news is the Internal Revenue Service (IRS) just issued the instructions for 2015 reporting that walk employers through exactly what they’re supposed to do. A few weeks ago, the IRS issued drafts of the forms employers — with insured and self-insured plans — must use to comply with the law’s reporting requirements. However, the agency didn’t include any instructions with the forms.
The bad news: The instructions are both incredibly lengthy and complex.
Just how complicated are the IRS instructions? According to Amy Bergner, managing director of HR solutions at PricewaterhouseCoopers:
The instructions include many of the complicated and detailed rules about the employer mandate, details usually reserved for regulations or other technical guidance. We expect that many employers and insurers will need assistance decoding the instructions and the underlying rules to be able to ultimately provide timely and accurate reports.
Purpose of reporting
Now that employers have access to both the draft forms and the instructions on what to include, the IRS expects the reporting to do the following three things:
1. Help the agency compare what individuals report on their tax returns to what their employers’ report. Under the law, individuals must report whether or not they have the insurance required by the law.
2. Allow IRS to double-check whether people who have received subsidies to buy insurance on the exchange were actually entitled to do so. (Individuals who are offered employer-sponsored coverage generally aren’t entitled to a subsidy.)
3. Enable the agency to enforce the employer mandate — a mandate that requires businesses with 50 or more full-time employees to offer healthcare coverage or pay a penalty.
As the agency mentioned when it issued the draft forms, the filing for these forms is made on the basis of the calendar year — regardless of the type of year on which a firm administers its plan.
If your plan operates on a non-calendar year basis, the feds will allow you to defer compliance with the employer mandate reporting until the first day of the plan’s 2015-2016 plan year. If your plan defers, however, you must still file a report with the IRS for the entire 2015 calendar year.
