The Internal Revenue Code Sections 6055 and 6056 New

Filing Requirements Under Health Care Reorm

Introduction: New Annual Reporting Requirements
The Patient Protection and Affordable Care Act (PPACA) crafted employer shared responsibility rules, also known
as the pay or play penalties, that impose one of two types of penalties on large employers (employers with oer !"
full#time employees or full#time e$uialents) if they fail to offer coerage to their full#time employees or offer coerage
that is not affordable (employee cost shares e%ceed &'!( of an employees) *#+ self#only income) and,or does not
proide minimum re$uired coerage as described by PPACA' PPACA also imposes a penalty on certain indiiduals
who fail to obtain minimum re$uired coerage' -eginning in +"./, a ta%payer (or an indiidual for whom the ta%payer
is liable) that does not purchase minimum re$uired coerage for one or more months during the year, unless an
e%emption applies, will be liable for the indiidual shared responsibility payment on his or her indiidual ta% return'
The new Code 0ections 1"!! and 1"!1 filing re$uirements are intended to proide the 2nternal 3eenue 0erice
(230) with the information it needs to determine whether an employer or an indiidual should be assessed a penalty
under PPACA for failing to offer or purchase the re$uired coerage'
Code Section 6055
Code 0ection 1"!! re$uires health insurance companies and employers that sponsor self#insured health plans to
report information concerning the type and period of coerage to the 230 and to the coered indiiduals' 0ection
1"!! reporting is intended to sere as erification that the indiidual has purchased coerage under his or her
employer sponsored plan for purposes of enforcing the indiidual responsibility re$uirements' Code 0ection 1"!1
re$uires large employers to proide information to the 230 about whether coerage is offered to their full#time
employees and their dependents' This information will allow the 230 to determine whether an employer owes a
penalty under the pay or play rules and whether an employee is eligible for a premium ta% credit on a marketplace
e%change'
How to Report
4mployers with !" or more 5T4s use 5orms ."&/#C and ."&!#C to report the information re$uired under Code
0ections 1"!! and 1"!1' 5orm ."&/#C is used to report to the 230 summary information for the employer and to
transmit the 5orms ."&!#C to the 230' 5orm ."&!#C is used to report information about each applicable employee'
A large employer sub6ect to the pay or play rules must file one or more 5orm(s) ."&/#C and must file a 5orm ."&!#C
(or substitute) for each employee who was a full#time employee of the employer (and for any other employee who has
coerage under the employer)s plan, een if the employee is not a full#time employee) for any calendar month during
the year' 2f an employer proides coerage through an insured plan, the insurance company is obligated to complete
that portion of the ."&!#C form that re$uires specific coerage information for indiidual employees'
The 230 has released draft forms and instructions to be used for 0ection 1"!! and 1"!1 reporting, including, draft
5orm ."&!#C, draft 5orm ."&/#C and draft instructions for draft 5orms ."&/#C,."&!#C' The forms and instructions
are e%pected to be finali7ed later in this year and can found on the following websites http8,,www'irs'go,pub,irs#
dft,f."&/c##dft'pdf9 http8,,www'irs'go,pub,irs#dft,f."&!c##dft'pdf'
When to ile
There is no filing re$uirement for +"./9 employers may oluntarily file for coerage proided in +"./' 5orms ."&/#C
and ."&!#C for the +".! year (with +".! data) must be filed by 5ebruary +&, +".1 (if paper filing) and by :arch ;.,
+".1 (if filing electronically)' 5or calendar year +".!, 5orm ."&!#C must be furnished to employees by 5ebruary .,
+".1' 4mployers filing +!" or more 5orms ."&!#C must file electronically'
New Caeteria !lan Change in Status "#tions
The 230 recently announced two new $ualifying eents that will allow employees to change their midyear elections
under their employer)s cafeteria plan' -oth are optional choices that an employer may elect if the plan or 0P< is
amended to permit the new $ualifying eents'
irst !ption: Reduction in Hours
2f it later turns out that an employee who was initially e%pected to work on aerage at least ;" hours per week does
not, the amended rules allow the employee to drop his or her employer#proided group health plan coerage, een if
the employee is still eligible to participate in the his or her employer)s group health plan' The change in election,
howeer, is only permitted if the employee intends to enroll in some other group health plan, i'e', a spouse)s, or
intends to purchase coerage through an e%change' The administrator of the employer)s cafeteria plan may rely on
an employee)s reasonable representation about the intended enrollment'
Second !ption: "#change Co$erage
An employee who is eligible to enroll in coerage through an e%change (during an e%change)s open enrollment or
special enrollment period) may drop his or her employer#proided group health plan coerage midyear' The change
in election is only permitted if the employee intends to enroll in coerage through an e%change' The administrator of
the employer)s cafeteria plan may rely on an employee)s reasonable representation about the intended enrollment'
%lan Amendment
2f an employer chooses to adopt one or more of these midyear election changes for its cafeteria plan, a plan
amendment is necessary' The amendment generally must be adopted on or before the last day of the plan year in
which the additional changes are allowed and can be effectie retroactiely to the first day of that plan year, proided
that the plan operates in accordance with the guidance, including notification to participants of the amendment'
Special Rule &or the '0() %lan *ear
=nder a special rule, an employer that adopts these new midyear election changes for its +"./ cafeteria plan year
has until the last day of the +".! plan year to adopt the amendment' Although plan amendments may be adopted
retroactiely, election changes to reoke coerage retroactiely are not permitted'