Permanent ACA Reporting Relief Sought by Employers

By Geoff Manville

Partner, Mercer’s Law & Policy Group

Major plan sponsor and business groups are urging the Biden administration to allow a permanent delay for employers in meeting the Affordable Care Act’s extensive reporting requirements. While complying with these requirements has always been challenging, the groups stress that the pandemic has made it especially difficult for many employers dealing with unprecedented workforce changes and continuing business uncertainty.

The ACA reporting rules require employers and health insurers to report to the IRS information showing which employees are offered coverage (and the terms of the offer) and which individuals have coverage. This information is relevant for a number of ACA purposes, most significantly the employer mandate and eligibility for ACA insurance exchange subsidies.

This information was also relevant for the individual mandate before Congress reduced it to $0 in the 2017 tax law. The IRS has created a number of forms for employers and insurers to use to meet these requirements (i.e., Forms 1094-C, 1095-C, 1094-B and 1095-B). The IRS has provided a number of types of relief for this reporting over the years, which were extended to reporting for the 2020 plan year by Notice 2020-76.

In comments submitted this week in response to the Notice, the American Benefits Council, the ERISA Industry Committee (ERIC), and the US Chamber of Commerce are asking that:

The 30-day furnishing delay be made permanent because it will continue to be the case that it is difficult for many employers to complete the reporting, and verify all the relevant data, by January 31.
Treasury and IRS provide good faith compliance relief through 2021, due to all of the workforce and coverage changes brought about by COVID-19 and the related economic crisis.
The Form 1095-B furnishing relief be made permanent, as it provides an option to insurers and could possibly reduce burdens.

In addition, ERIC is asking for a review of other important employer reporting policies such as:

Revising the list of data requirements under sections 6055 and 6056.
Decoupling information reporting for sections 6055 and 6056 from Form 1095-C.
Enabling large employers to report in advance to the IRS relevant data items about the type of coverage offered to their workforce of full-time employees before open enrollment season in the exchanges.
Requiring IRS review of large employer filed data before the IRS issues a 226-J penalty notification letter.
Providing large employers with 90 days, rather than 30 days, to appeal a 226-J tax penalty letter for any tax compliance year.
Working directly with the Department of Health and Human Services (HHS) and state-based exchanges to verify employer information during open enrollment to determine individual premium tax credit eligibility, as employers are not privy to household income for their employees.

How and when the IRS and Treasury respond to the comments remains to be seen, but we will be watching closely and will report any new developments.