The Internal Revenue Service today announced that it will make small cuts in employers’ Affordable Care Act (ACA) coverage reporting requirements for 2019, and big cuts insurers’ coverage reporting requirements.
(Related: ACA Employer Coverage Reporting Survives)
IRS officials have described how they expect to enforce the ACA coverage reporting rules for 2019 in IRS Notice 2019-63.
The Affordable Care Act
ACA drafters tried to cut the average per-person cost of health coverage by pushing and pulling young, healthy people into health plans.
- Provided an exchange system, or web-based health insurance supermarket, to make it easy to sign up for health coverage.
- Provided a premium tax credit subsidy to help moderate-income people pay for coverage, to increase the odds that healthy people would get covered.
- Imposed an “individual shared responsibility” penalty on many people who failed to get covered.
- Imposed an “employer shared responsibility” penalty on many employers that failed to provide what the government classified as affordable coverage with a minimum value.
The ACA Employer Coverage Reporting Form Family
The ACA added two major employer coverage reporting provisions to the Internal Revenue Code (IRC): IRC section 6055 and IRC Section 6056:
IRC Section 6055 requires a health insurer to provide coverage statements that the insureds can use to show the IRS that they’ve met the individual shared responsibility requirements. Insurers meet the Section 6055 coverage reporting requirements with IRS Form 1095-B.
IRC Section 6056 requires a large employer to provide coverage statements that show whether it’s met the ACA employer shared responsibility standards. Employers meet the Section 6056 coverage reporting requirements with IRS Form 1095-C.
Self-insured employers usually meet the Section 6055 requirements along with the Section 6056 requirements by sending out 1095-C forms.
A taxpayer that sends out 1095-B forms to the insureds is supposed to send copies of those forms, along with a 1094-B cover sheet form, to the IRS.
Similarly, a taxpayer that sends out 1095-C forms is supposed to send copies of those forms, along with a 1094-C coverage sheet form, to the IRS.
Under the standard ACA rules, insurers and employers are supposed to get 1095-B and 1095-C forms to the insureds by Jan. 31.
The Compliance Background
Since the ACA system came to life, in 2010, Congress has zeroed out the ACA individual shared responsibility penalty. The penalty will not apply for months beginning after Dec. 31, 2018.