The closer the new Patient Protection and Affordable Care Act (PPACA) employer coverage reporting deadlines get, the more complicated the rules look, according to Ed Fensholt.
Fensholt, a benefits compliance specialist at Lockton, gives that assessment in a review of new Internal Revenue Service (IRS) draft instructions for the 1095-B and 1095-C PPACA coverage reporting forms.
The draft rules are so complicated that employers will often end up having to submit corrected forms, even if the original forms were accurate when the original forms were created, Fensholt predicts.
Some of the corrections “are likely to be the fruit of significant chaos,” Fensholt writes. But “the filing process lends itself to the need to make corrections rather routinely,” Fensholt adds.
An employer is supposed to file a correction if the employer has provided an incorrect name, Social Security number or employer identification number; given incorrect information about the offer of coverage or premium amount; used the wrong “Safe Harbor” codes; or given inaccurate information about the covered individuals.
Employers may start creating the original reporting forms for 2015 toward the end of this year, then finding themselves having to prepare a wave of updates due to employee decisions to terminate coverage late in the year, or to elect COBRA continuation coverage after the end of the year.
“If the employee elects and pays for COBRA, restoring coverage retroactively, presumably the IRS will want a corrected Form 1095-B and/or 1095-C, depending on the circumstances,” Fensholt writes.
An affected employer is supposed to use 1095-B to report on health benefits provided by an insurer, and 1095-C to report on health benefits coming from a self-insured group health plan.
The Obama administration has postponed many PPACA reporting requirements.
If the administration sticks to the current deadlines:
Employees and other primary insureds should get their 1095-B and 1095-C forms by Feb. 1, 2016.
The IRS should get reporting forms from affected employers that are filing on paper by Feb. 29, 2016.
The IRS should get reporting forms from affected employers that are filing electronically by March 31, 2016.
See also: IRS posts Form 1094-B draft
An affected employer is supposed to send a bundle of 1095-B forms to the IRS with a 1094-B summary sheet, and an employer is supposed to send a bundle of 1095-C forms to the IRS with a 1094-C summary sheet.
The form correction process is not the only PPACA reporting subtlety now coming into clearer focus, Fensholt says.
He says simply determining whether an employer has enough of the right types of employees to have to file the forms in the first place will be tricky.
An employer will be able to skip reporting on full-time employees during a “limited non-assessment period” of up to three months, Fensholt says.
Employers may have heard that the IRS will classify their coverage as affordable if the premium for employee-only coverage is less than 9.5 percent of the employee’s household income.
“But the 9.5 percent is adjusted for inflation,” Fensholt writes.
The target will increase to 9.56 percent for 2015, and to 9.66 percent for 2016, Fensholt says.