It’s important for employers to understand and prepare for a slew of new Patient Protection and Affordable Care Act reporting requirements, according to Sidney Blumling, an attorney at Fisher & Phillips in Irvine, Calif.
“Health care reform has caused a lot more cooperation between HR and payroll,” he said in an Aug. 8, 2013, interview with the Society for Human Resources Management. “The two functions often are completely separate, but all the reporting requirements—whether W-2, 6055 or 6056—all invoke payroll departments and also pull in HR.”
Blumling outlined the main Affordable Care Act notices for employers.
The first big notice requirement under the law is businesses’ obligation to provide notice about the exchanges to every employee by Oct. 1, 2013. Organizations also must distribute the notice to any new hire within 14 days of his or her hire date.
The notice informs employees about the existence of exchanges, how to get coverage on them and about the employer’s health coverage or lack of it.
The Department of Labor (DOL) provides model exchange notices, and the one for employers that offer health care is three pages. Most organizations are not filling out the optional third page, Blumling noted; this page has employee-specific information.
Revised COBRA Notice
The DOL also has issued an updated model election notice under COBRA to inform qualified beneficiaries of coverage options through the Affordable Care Act exchanges.
Not to be confused with an SPD (summary plan description), a summary of benefits and coverage (SBC) now is required annually. The point of the SBC form, four pages of which must be completed, is to make it easy for employees and their family members to compare different plans so they can choose between them. The notice was mandatory as of last year’s open enrollment, but, Blumling said, “not all employers are on top of” the requirement.
The requirement that W-2s include the cost of coverage for employees has already taken effect, but Blumling has noticed that “a lot of covered employers are not on top of” this mandate, either.
An exception to the requirement is in place for employers with fewer than 250 W-2s in the prior year; however, he cautioned, small businesses should be aware that this exemption is likely to eventually go away.
6055 and 6056
The Internal Revenue Service (IRS) is expected later this summer to issue guidance on notices called by their revenue requirement section in the Internal Revenue Code (Title 26)—Section 6055 and Section 6056. The first year for gathering information for this mandate has been pushed to 2015, meaning the first 6055 and 6056 reporting won’t happen until 2016.
The IRS pushed back the employer-mandate penalties to 2015 on account of this notice.
Information on what will have to be reported to the IRS should appear in the proposed regulation, which will have a comment period before a final rule is issued, giving employers enough time to figure out how to capture the data. A final rule on this notice will probably appear by mid-2014, so payroll can prepare to collect the information by the end of next year. Payroll “needs a lot of lead time before these new reporting requirements come into play,” Blumling said.
Technically, 6055 reporting is by anyone who provides minimum essential coverage, such as an insurance company or an employer that self-insures. An unresolved question is whether the burden to provide the data will be on the insurer or the insured, he noted.
6056 reporting applies only to large employers. “There’s a lot of overlap in reporting” under 6055 and 6056, Blumling observed. The IRS is evaluating whether the two reporting mechanisms can be combined to avoid duplication.
Regardless of the size of employers, they will be affected by the notice requirements, Blumling said. “It will just be a matter of the extent to which they are affected.”
Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.
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