SHRM Supports Bipartisan Bills to Ease ACA Annual Reporting Obligations

Streamlined reporting would be limited to employees who applied for premium tax credits

Stephen Miller, CEBS By Stephen Miller, CEBS October 20, 2017

The Society for Human Resource Management (SHRM) is supporting bipartisan legislation recently introduced in the House and Senate that would ease the Affordable Care Act's (ACA's) annual reporting obligations for employers.

The Commonsense Reporting Act (H.R. 3919 and S. 1908) is "a first step to minimize the challenges associated with the law's reporting requirements," wrote Mike Aitken, SHRM's vice president for government affairs, in an Oct. 16 letter to members of Congress. "The stringent reporting requirements imposed on employers have been, and will continue to be, very difficult and costly," Aitken said.

On Oct. 3, the measure was introduced in the U.S. Senate by Sens. Mark R. Warner, D-Va., and Rob Portman, R-Ohio, and in the House by Reps. Diane Black, R-Tenn., and Mike Thompson, D-Calif.

"I have heard from hundreds of employers in Ohio that have spent hundreds of administrative hours attempting to comply with the reporting requirements in the Affordable Care Act," Portman said. "This added time and resources [have] not improved the quality of health insurance employers offered but only further discouraged employers from offering health insurance and hiring more workers. This bipartisan bill will help streamline the reporting process by allowing employers to report information to the IRS prospectively, easing the burden for employers and employees."

Under the law, employers that are unable to file or furnish the IRS forms run the risk of incurring significant financial penalties.

According to a 2017 SHRM member survey, 62 percent of HR professionals said reporting requirements were their biggest ACA challenge, while 66 percent reported that they outsourced at least some of the ACA reporting requirements.

Reporting Relief Sought

Employers with 50 or more full-time equivalent employees use IRS Form 1095-C to report on their health care coverage. They must annually complete and deliver Form 1095-C to full-time employees by Jan. 31, and file these forms with the IRS by Feb. 28 (if filing by paper) or by March 31 (for e-filing).

The IRS uses these reports to assess penalties against large employers when a full-time employee is not offered ACA-compliant coverage and receives a premium tax credit for a policy purchased through an ACA Marketplace exchange.

Self-insured employers with fewer than 50 full-time equivalent employees must complete and file Form 1095-B with the IRS and provide full-time employees with a copy of these forms by the above deadlines. Small employers don't have to provide health coverage but, if they do, then their plans must be ACA-compliant or they can be penalized.

"These reporting requirements are quite burdensome for employers. They also are not very helpful for verifying advance premium tax credit eligibility, as they are not filed until after the end of a year in which an employee received [the credit]," said Timothy Jost, a professor of health care law at the Washington and Lee University School of Law in Lexington, Va.

Streamlined Reporting Proposed

Among other changes, the Commonsense Reporting Act would:

  • Permit employers to voluntarily report to the IRS prospectively about their health plan for the current plan year. Employers would then be able to provide coverage updates though a federal data hub if the coverage offered were to change. The IRS could use this information to confirm whether an employee is eligible to receive a premium tax credit during the exchange enrollment process, rather than at the end of a tax year.
  • Require employer reporting only for those employees about whom an employer has received notification that the employees or their dependents purchased coverage through an ACA Marketplace exchange, rather than issuing reporting statements for the entire workforce.
  • Clarify that the IRS can accept full names and dates of birth in lieu of dependents' and spouses' Social Security numbers.

[SHRM members-only toolkit: Complying with and Leveraging the Affordable Care Act]

"The most significant feature of the proposed legislation is the creation of a voluntary advance reporting system," explained Scott Behrens, senior benefits attorney with Lockton Compliance Services in Kansas City, Mo.

Employers using advance reporting would "be required to issue Form 1095-Cs only to individuals for whom an ACA marketplace identifies as having received an advance subsidy," Behrens pointed out.

Under the program, an employer could, not later than 45 days before the start of its annual open enrollment period, voluntarily report to the IRS:

  • Whether it is offering minimum essential coverage to its full-time employees (or to part-time employees, dependents and spouses).
  • Whether the coverage meets ACA minimum value and affordability requirements.
  • Whether the employer reasonably expects to be liable for the employer responsibility penalty.
  • The months for which coverage is available.
  • Any waiting periods that apply to coverage.

"The IRS would share the information gained through these reports with the exchanges and federal data hub, which could use it for determining eligibility" for premium tax credits, Jost explained. "The exchanges could follow up with employers if they needed additional information. Employers would provide updates to the data hub if the coverage they offered changed. Exchanges would also notify employers if any of their employees enrolled in coverage or dropped coverage during a year."

Fewer Form 1095-Cs

"Use of the program is meant to reduce the number of Form 1095-Cs employers must send out, which may be particularly helpful for employers that have few employees eligible for subsidies and for those with high turnover as seen in the restaurant, staffing, hospitality and retail industries," Behrens noted. "When reporting, many employers have struggled with error messages that indicate the forms contain incorrect Social Security or tax identification numbers for spouses and dependents," he added. "The proposal solves this issue by clarifying that the IRS can accept the full name and dates of birth of spouses and dependents instead."

The bill "has bipartisan support and is likely to be considered in the current Congress if lawmakers look for a path forward on health care and for ways to shore up the exchanges under the ACA," said Chatrane Birbal, SHRM senior advisor for government relations.

Congress Reaches Tentative Deal on ACA Cost-Sharing Reduction Payments

President Donald Trump announced via executive order on Oct. 12 that he was ending payments to insurers for subsidizing low-income market participants, saying the payments are illegal because Congress hasn't appropriated the money. These so-called cost-sharing reduction (CSR) payments, which subsidized health plans purchased on the ACA's Marketplace exchanges, are sometimes called "extra savings" and are distinct from the premium tax credits that also subsidize policies purchased through an exchange.

Trump's executive order does not affect the penalties that large employers are subject to when a full-time employee is not offered ACA-compliant coverage and receives a premium tax credit for a policy purchased through a Marketplace exchange.

Shortly after the executive order was issued, a bipartisan agreement was brokered on the Senate Health, Education, Labor and Pensions Committee by Sens. Lamar Alexander, R-Tenn., and Patty Murray, D-Wash. The agreement, if passed by Congress in new legislation, would restore CSR payments to insurance companies for two years and would give states more flexibility from ACA regulations. 

Trump and some GOP congressmembers have indicated that they want any legislative fix to allow for a wider range of plans to be made available under the ACA, among other changes that might sink the deal if Democrats remain opposed.

Related SHRM Resources:

Health Care Reform Resources for Employers


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