May 20, 2015
- IRS Provides New Guidance on PPACA Reporting
- Senate Committee Scrutinizes EEOC; Agency Aims to Publish GINA Rule in July
- House Subcommittee Examines PPACA Implementation, Executive Actions
IRS Provides New Guidance on PPACA Reporting
In one set of new and one set of revised Question-and-Answer documents released on May 19, the Internal Revenue Service provided additional detail on how to comply with the reporting requirements for employers under Internal Revenue Code sections 6055 and 6056, as added by the Patient Protection and Affordable Care Act (PPACA).
Code Section 6056 requires every applicable large employer (generally, an employer that employed on average at least 50 full-time employees or equivalents) to file a return with the IRS that reports the terms and conditions of the health care coverage provided to the employer's full-time employees during the year. Form 1095-C: Employer Provided Health Insurance Offer and Coverage is to be used to fulfill this requirement, while Form 1094-C is to be used for transmitting Form 1095-C.
Employers that provide self-insured coverage are subject to the reporting requirements of Section 6055 as well as Section 6056. (Section 6055 requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs and other entities that provide minimum essential coverage to file annual returns reporting certain information for each individual for whom minimum essential coverage (MEC) is provided and to provide a copy of the return to the individual.) As discussed in previous IRS Questions and Answers on Information Reporting by Health Care Providers (Section 6055) (No. 27), applicable large employers will combine section 6055 and 6056 reporting on Form 1095-C.
The IRS has revised Questions and Answers on Reporting of Offers of Health Insurance Coverage by Employers (Section 6056), which provides the following guidance with respect to the reporting of health care coverage:
- Basics of Employer Reporting (Questions 1-4)
- Who is Required to Report (Questions 5-12)
- Methods of Reporting (Questions 13-17)
- How and When to Report the Required Information (Questions 18-31)
Notably, the new questions and answers in the revised document confirm that an “applicable large employer member” (generally, a member of the controlled group that constitutes an applicable large employer) that does not have full-time employees does not generally have to file under Code Section 6056, but will still have to file Form 1094-C and Form 1095-C if it sponsors a self-insured health plan in which any employer or employee’s spouse or dependent was enrolled. There are also questions and answers that provide additional guidance on reporting under the “simplified” or “alternative” reporting methods that have been developed by the IRS. In addition, the IRS has confirmed what it previously had indicated informally- that a Form 1095-C may be delivered to employees in any manner permitted for Form W-2. However, the IRS also clarified that an employer is not required to furnish a Form 1095-C to an employee within 30 days of the employee’s written request after the employee terminates employment (which is a requirement that applies to the Form W-2).
The IRS also released an entirely new guidance document, Questions and Answers about Employer Information Reporting on Form 1094-C and Form 1095-C. This document provides more specific guidance on how to complete the required forms, including:
- Basics of Employer Reporting (Questions 1-5)
- Reporting Offers of Coverage and other Enrollment Information (Questions 6-13)
- Reporting for Governmental Units (Questions 14-15)
- Reporting Offers of COBRA Coverage (Questions 16-18)
Among the issues addressed in this new document are:
- how an employer reports the offer of coverage for the month in which an employee is hired or terminates employment.
- how to report enrollment information for self-insured coverage that was provided to an individual who was not an employee on any day of the calendar year, such as a non-employee COBRA beneficiary.
- how to report an offer of COBRA continuation coverage to a full-time employee that terminates mid-year, and to an employee who receives an offer of COBRA continuation coverage due to a reduction in hours.
- how an employer that sponsors a self-insured plan reports MEC provided to spouses and dependents of an employee who separately elect to receive COBRA coverage.
Senate Committee Scrutinizes EEOC; Agency Aims to Publish GINA Rule in July
Lawmakers on the Senate Health, Education, Labor and Pensions (HELP) Committee raised strong concerns about the enforcement and litigation strategy of the Equal Employment Opportunity Commission (EEOC) in a May 19 hearing, touching on the agency’s recent legal action against employer-sponsored wellness programs.
The hearing, Oversight of the Equal Employment Opportunity Commission: Examining EEOC’s Enforcement and Litigation Programs, was held by the committee “to find out why such an important agency with such a critical task has gotten so far afield of its mission,” said Chairman Lamar Alexander (R-TN).
In extensive opening remarks, Alexander asserted that the agency has “placed too much emphasis on litigating high-profile lawsuits at a time when there were more than 70,000 complaints of workplace discrimination that hadn’t been investigated.” Among his chief concerns with EEOC is the fact that, “after the agency initiated litigation against employee wellness programs – creating a conflict with the [Patient Protection and] Affordable Care Act [(PPACA)] and ignoring the clear intentions of Congress and the president to encourage these programs – the agency’s proposed rule on the plans does not resolve all the issues it created.”
As we reported in the April 16 Benefits Byte, the EEOC recently issued proposed rules that amend regulations and interpretive guidance under the Americans with Disabilities Act (ADA) relating to employer wellness programs. The proposed rules provide guidance on the extent to which employers may use incentives to encourage employees to participate in wellness programs that include disability-related inquiries and/or medical examinations.
As the Council testified in a January 29 hearing of the Senate HELP Committee and a March 24 hearing of a House of Representatives Education and Workforce Subcommittee, the lack of clear guidance from the EEOC regarding the application of the ADA and the Genetic Information Nondiscrimination Act (GINA) to employer-sponsored wellness programs has contributed to the sense of legal and regulatory uncertainty for such programs, particularly as the EEOC began to pursue litigation against wellness plan sponsors in late 2014. Alexander has sponsored the Preserving Employee Wellness Programs Act (S. 620) designed to provide legal certainty to employers offering wellness programs (see the March 6 Benefits Bytefor more details).
The EEOC is soliciting comments on the proposed regulations through June 19. In anticipation of filing comments with the agency, the Council held a Benefits Briefing webinar on May 12 to discuss the proposal.
Following Alexander’s opening statement, the Committee’s Ranking Democrat, Patty Murray (D-WA), focused her comments on the important role the EEOC plays in preventing workplace discrimination and the need to increase its budgetary funding.
The hearing featured testimony from Jenny R. Yang , Chair, Equal Employment Opportunity Commission, and P. David Lopez, General Counsel, Equal Employment Opportunity Commission, both of whom spoke very broadly about the EEOC’s mission and caseload.
Most relevant to benefit plan sponsors, Yang noted that the recent proposed rule addressing wellness programs was developed as part of an effort to “ensure coordination of our policy guidance and our enforcement efforts to provide a clear and consistent agency position.” Because the proposal only addresses the application of the ADA to wellness programs, Yang said that the agency is targeting July 2015 for the issuance of a separate proposed rule on the application of GINA to wellness programs.
The bulk of the question-and-answer period was related to the criteria EEOC uses to prioritize its enforcement and litigation activities, in which the panelists cited age and gender discrimination as the predominant issues before the agency. At the end of the hearing, however, Alexander told Yang that he believes the EEOC’s recent guidance does not resolve the regulatory conflict between PPACA and the ADA – and may even exceed the agency’s jurisdiction. He asked Yang to review S. 620 as it develops its final rule.
House Subcommittee Examines PPACA Implementation, Executive Actions
In a May 20 hearing, the U.S. House of Representatives Ways and Means Subcommittee on Oversight heard testimony on the executive actions taken by the Obama Administration in implementing the Patient Protection and Affordable Care Act (PPACA) and discussed whether these actions were carried out in accordance with congressional intent.
The administration’s actions in implementing a number of provisions of PPACA have been criticized by congressional Republicans, including the July 2013 delay of the mandatory employer and insurer reporting requirements under sections 6055 and 6056 of PPACA and the associated "employer shared responsibility" penalties. The Council applauded the administration’s action at the time, saying in a July 2013 press release that the delay provided “vital breathing room to implement the law in a more thoughtful and administrable way.”
In response, House leadership formally filed a lawsuit against the administration in November 2014, charging the president and other federal officials with failure “to act in a manner consistent with that official’s duties under the Constitution and laws of the United States with respect to implementation of any provision of [PPACA]” (see the November 24, 2014, Benefits Byte).
In his opening statement, subcommittee Chairman Peter Roskam (R-IL) said that though the hearing, “Examining the Use of Administrative Actions in the Implementation of the Affordable Care Act,” focused on the executive actions relating to PPACA implementation, “don’t lose sight of the critical importance of these issues at the core of our representative democracy.” He said that the administration’s use of unilateral actions erodes the balance of power through the system of checks and balances as established in the Constitution.
The subcommittee heard testimony from the following witnesses:
- Grace-Marie Turner, president of the Galen Institute, outlined the administrative actions taken that were contrary to the PPACA statute, including the employer mandate delay. She also noted that while many of the changes made to PPACA were supported by Congress and demonstrate that the law would have been nearly impossible to implement as it was written, “it is not the job of the administration to fix the law but to implement it as written. The U.S. Constitution requires the executive branch to seek new legislation … if changes to the law are needed.”
- Jonathan Adler, professor of law at the Case-Western Reserve University School of Law, testified that the administrative agencies have “repeatedly disregarded the plain text of [PPACA] and the limits on their statutory authority when implementing this law.” He also listed examples of the actions he considers to be outside regulatory authority, including the issue at the heart of King v. Burwell, the controversial case that challenges the legality of federal subsidies for individuals obtaining health coverage in federally facilitated insurance exchanges (see the March 4 Benefits Byte).
- Elizabeth Papez, partner at Winston & Strawn LLP, testified that despite the administration’s statements that its actions have past precedent, such precedents are not comparable to the actions taken in implementing PPACA. She also discussed the litigation challenging the legality of the federal subsidies for individuals in federal exchanges and stated that Congressional oversight is critical to ensuring implementation consistent with the Constitution.
- Robert Weiner, partner at Arnold and Porter LLC, testified on the benefits of PPACA and noted that, particularly with the employer mandate delay, there are numerous precedents for phased-in requirements past statutory deadlines. He said that such delays are “the prudent exercise of administrative discretion, based on a productive dialogue with the business community, to avoid disruption and achieve better long term compliance by phasing in new requirements instead of imposing them abruptly.”
During the question-and-answer portion of the hearing, the subcommittee members discussed the executive actions and whether they established a precedent that could result in future executive overreach by other administrations. Representative Kristi Noem (R-SD) asked about the burden of cost on employers implementing PPACA. Papez responded that costs in addition to predictability are critical for businesses and stated that they are entitled to fair notice on how laws will be enforced without abrupt changes.
For more information, contact Katy Spangler, senior vice president, health policy, at (202) 289-6700.