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IRS struggles to combine PPACA reports

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The Internal Revenue Service is still trying to figure out how to combine two new Patient Protection and Affordable Care Act (PPACA) information reporting programs.

One of the new programs, described in Section 6056 of the Internal Revenue Code, requires a health coverage issuer to tell the IRS and consumers whether it is providing “minimum essential coverage.”

The other, described in IRC Section 6056, requires a large employer to tell the IRS whether it is meeting the PPACA “shared responsibility” requirements — the employer mandate requirements — by offering full-time workers affordable coverage with a minimum value. An employer that violates the mandate rules could have to pay a penalty of $2,000 per affected worker.

The IRS will publish the PPACA Section 6055 MEC reporting requirement and PPACA Section 6056 shared responsibility reporting requirement draft regulations in the Federal Register Monday.

Comments will be due 60 days after the publication date.

The IRS asked for comments on the IRC Section 6055 and IRC Section 6056 reporting programs in April 2012.

Many commenters asked the IRS to combine the reporting programs.

Combining the programs will be complicated, because the programs apply to different types of entities and will generate different types of information, IRS officials said in the preamble to the Section 6056 reporting program draft.

The Section 6055 MEC requirements apply to the coverage issuers, such as insurers, and those issuers have to report the Section 6055 information only for people who actually have coverage, officials say. The individuals will use the MEC information to qualify for subsidies and see if they owe individual mandate penalties.

The Section 6056 shared responsibility reporting requirements apply to large employers, and those employers must report on the coverage they have offered workers, whether or not the workers have agreed to take the coverage, officials said.

In some cases, the IRS may let large employers use information reported on Form W-2 and information reported to meet the Section 6055 MEC reporting requirements to meet the Section 6056 shared responsibility requirements, officials said.

The IRS is considering letting employers meet the Section 6056 shared responsibility reporting requirements by using a code on the W-2.

Also in the draft, officials:

  • Declined to let employers with fiscal years other than the ordinary calendar year to base Section 6055 or Section 6056 reporting on the fiscal year. Consumers need the coverage information early in the calendar year, officials said.
  • Declined to create a “safe harbor” from penalties for coverage issuers or employers that violate reporting rules because other parties cause problems. Another provision already offers issuers and employers relief for any errors that are corrected in a timely manner, officials said.
  • Said that the insurer that insures a group health plan, not the group plan sponsor, is responsible for meeting the Section 6055 MEC reporting requirements for the group plan members.

Comments on the draft regulations will be due 60 days after the official Federal Register publication date. 

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