Code Section 6724
| Code Section | Effective Date | Name of Act | Name of Provision | 10yr Revenue Estimate ($millions) |
|---|---|---|---|---|
| 6055 and 6724(d) | 1/1/2014 | Patient Protection and Affordable Care Act | Reporting of Health Insurance Coverage | *See note below |
| 6056 and 6724(d) | 12/31/2013 | Patient Protection and Affordable Care Act | Reporting of Employer Health Insurance Coverage | *See note below |
*Note on Revenue Estimate
See table 3 of CBO estimate letter addressed to Speaker Pelosi on March 20, 2010, http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/113xx/doc11379/amendreconprop.pdf
Reporting of Health Insurance Coverage
Explanation of Provision
Under the provision, insurers (including employers who self-insure) that provide minimum essential coverage 767 to any individual during a calendar year must report certain health insurance coverage information to both the covered individual and to the IRS. In the case of coverage provided by a governmental unit, or any agency or instrumentality thereof, the reporting requirement applies to the person or employee who enters into the agreement to provide the health insurance coverage (or their designee).
The information required to be reported includes: (1) the name, address, and taxpayer identification number of the primary insured, and the name and taxpayer identification number of each other individual obtaining coverage under the policy; (2) the dates during which the individual was covered under the policy during the calendar year; (3) whether the coverage is a qualified health plan offered through an exchange; (4) the amount of any premium tax credit or cost-sharing reduction received by the individual with respect to such coverage; and (5) such other information as the Secretary may require.
To the extent health insurance coverage is provided through an employer-sponsored group health plan, the insurer is also required to report the name, address and employer identification number of the employer, the portion of the premium, if any, required to be paid by the employer, and any other information the Secretary may require to administer the new tax credit for eligible small employers.
The insurer is required to report the above information, along with the name, address and contact information of the reporting insurer, to the covered individual on or before January 31 of the year following the calendar year for which the information is required to be reported to the IRS.
The provision amends the information reporting provisions of the Code to provide that an insurer who fails to comply with these new reporting requirements is subject to the penalties for failure to file an information return and failure to furnish payee statements, respectively.
The IRS is required, not later than June 30 of each year, in consultation with the Secretary of HHS, to provide annual notice to each individual who files an income tax return and who fails to enroll in minimum essential coverage. The notice is required to include information on the services available through the exchange operating in the individual’s State of residence.
Reporting of Employer Health Insurance Coverage
Explanation of Provision
Under the provision, each applicable large employer subject to the employer responsibility provisions of new section 4980H and each ‘‘offering employer’’ must report certain health insurance coverage information to both its full-time employees and to the IRS. An offering employer is any employer who offers minimum essential coverage 782 to its employees under an eligible employer-sponsored plan and who pays any portion of the costs of such plan, but only if the required employer contribution of any employee exceeds eight percent of the wages paid by the employer to the employee. In the case of years after 2014, the eight percent is indexed to reflect the rate of premium growth over income growth between 2013 and the preceding calendar year. In the case of coverage provided by a governmental unit, or any agency or instrumentality thereof, the reporting requirement applies to the person or employee appropriately designated for purposes of making the returns and statements required by the provision.
The information required to be reported includes: (1) the name, address and employer identification number of the employer; (2) a certification as to whether the employer offers its full-time employees and their dependents the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan; (3) the number of full-time employees of the employer for each month during the calendar year; (4) the name, address and taxpayer identification number of each full-time employee employed by the employer during the calendar year and the number of months, if any, during which the employee (and any dependents) was covered under a plan sponsored by the employer during the calendar year; and (5) such other information as the Secretary may require.
Employers who offer the opportunity to enroll in minimum essential coverage must also report: (1) in the case of an applicable large employer, the length of any waiting period with respect to such coverage; (2) the months during the calendar year during which the coverage was available; (3) the monthly premium for the lowest cost option in each of the enrollment categories under the plan; (4) the employer’s share of the total allowed costs of benefits under the plan; and (5), in the case of an offering employer, the option for which the employer pays the largest position of the cost of the plan and the portion of the cost paid by the employer in each of the enrollment categories under each option.
The employer is required to report to each full-time employee the above information required to be reported with respect to that employee, along with the name, address and contact information of the reporting employer, on or before January 31 of the year following the calendar year for which the information is required to be reported to the IRS.
The provision amends the information reporting provisions of the Code to provide that an employer who fails to comply with these new reporting requirements is subject to the penalties for failure to file an information return and failure to furnish payee statements, respectively.
To the maximum extent feasible, the Secretary may provide that any information return or payee statement required to be provided under the provision may be provided as part of any return or statement required under new sections 6051 783 or 6055 784 and, in the case of an applicable large employer or offering employer offering health insurance coverage of a health insurance issuer, the employer may enter into an agreement with the issuer to include the information required by the provision with the information return and payee statement required under new section 6055.
The Secretary has the authority, in coordination with the Secretary of Labor, to review the accuracy of the information reported by the employer, including the employer’s share of the total allowed costs of benefits under the plan.
767- As defined in section 5000A of the Patient Protection and Affordable Care Act, Pub. L. No. 111–148, as amended by section 10106, as further amended by section 1002 of the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111–152.
-Return to Explanation of Provision
782- As defined in section 5000A of the Patient Protection and Affordable Care Act, Pub. L. No. 111–148, as amended by section 10106, as further amended by section 1002 of the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111–152.
-Return to Explanation of Provision
783- For additional information on new section 6051, see the explanation of section 9002 of the Patient Protection and Affordable Care Act, Pub. L. No. 111–148, ‘‘Inclusion of Employer-Sponsored Health Coverage on W–2.’’
-Return to Explanation of Provision
784- For additional information on new section 6055, see the explanation of section 1502 of the Patient Protection and Affordable Care Act, Pub. L. No. 111–148, ‘‘Reporting of Health Insurance Coverage.’’
-Return to Explanation of Provision
Back to Tax Tracker Codes Menu