American Benefits Council
Benefits Byte


November 5, 2014

The Benefits Byte is the American Benefits Council’s regular e-mail and online newsletter for members only, providing timely reports on legislative, regulatory and judicial developments, along with updates on the Council’s activities in support of employer-sponsored benefit plans.

The Benefits Byte is published by the American Benefits Council, based on staff reports and edited by Jason Hammersla, Council director of communications. Contact information for Council staff related to specific topics can be found at the end of each story.

Click here to read past issues on the Benefits Byte Archive page.

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Council Comments on Draft Forms and Instructions for Compliance with PPACA Reporting Requirements

In a November 4 letter to the Internal Revenue Service (IRS), the Council recommended numerous clarifications to the draft forms and instructions that must be used by applicable large employers and insurers for reporting information regarding health care coverage and “minimum essential coverage” (MEC) as required under the Patient Protection and Affordable Care Act (PPACA).

The forms (Form 1095-A, Form 1095-B, Form 1095-C and Form 1094-C) are to be used to fulfill the requirements specified in final regulations on the reporting of MEC under Section 6055 of the Internal Revenue Code and the reporting of health insurance coverage under Section 6056 of the code (as previously reported in the October 6 Benefits Byte).

These reporting requirements were delayed for 2014 under previously issued Notice 2013-45 transition relief and will not be effective until 2015, making the first required reporting due in early 2016 (the IRS has invited voluntary reporting for 2014).

The Council’s November 4 letter underscored that the delay of the reporting requirement was “an important step toward providing employers and service providers with sufficient time to prepare for compliance.” However, the letter expressed concern that additional relief may be needed for 2015 due to the significant time and resources that will be required to implement the necessary changes, particularly given that 2015 will also be the effective date for the new employer shared responsibility requirements under tax code Section 4980H.  

The letter offered a range of recommendations for modifying the forms and instructions to provide clearer direction as to how the reporting will work. Recommendations addressed the use of indicator codes, clarifying reporting of employees and non-employees, eliminating duplicative or unnecessary sections and providing additional instructions with regard to third-party reporting. Issuance of final forms and instructions is anticipated at the end of the year.

For more information, contact Kathryn Wilber, senior counsel, health policy, at (202) 289-6700.

IRS Issues FAQs on Transitional Reinsurance Program

On October 31, the Internal Revenue Service (IRS) updated a set of frequently asked questions (FAQs) on the Transitional Reinsurance Program (TRP) of the Patient Protection and Affordable Care Act (PPACA) with two questions regarding the treatment of contributions made under the reinsurance program as ordinary and necessary business expenses. 

Section 1341 of the PPACA established a transitional reinsurance program (2014 through 2016) intended to stabilize premiums in the individual insurance market. Health insurance issuers and certain self-insured group health plans will be assessed a per-enrollee contribution to fund this transitional reinsurance program. The contribution is $63 per covered life for 2014.

Specifically, the FAQs state that:

  • a health insurance issuer may treat the contributions under the Reinsurance Program as ordinary and necessary business expenses; and
  • a sponsor of a self-insured group health plan may treat contributions (including contributions made directly or through a Third Party Administrator or an Administrative Services Only contractor) under the Reinsurance Program as ordinary and necessary business expenses. 

The U.S. Department of Health and Human Services (HHS) Centers for Medicare and Medicaid Services (CMS) recently released the form for submitting the TRP annual enrollment count (as reported in the October 24 Benefits Byte). The deadline for the 2014 benefit year’s annual enrollment count submission is November 15, 2014.

For more information on the TRP, contact Kathryn Wilber, senior counsel, health policy, at (202) 289-6700.

The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.

Notice: the information contained herein is general in nature. It is not, and should not be construed as, accounting, consulting, legal or tax advice or opinion provided by the American Benefits Council or any of its employees. As required by the IRS, we inform you that any information contained herein was not intended or written to be used or referred to, and cannot be used or referred to (i) for the purpose of avoiding penalties under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party any transaction or matter addressed herein (and any attachment).