Reporting requirements for essential coverage

Once insurers or employers have determined that their health plans meet the minimum value requirements of health care reform, they need to provide detailed reporting to the government. On April 26, 2012, the Internal Revenue Service and Health and Human Services issued proposed guidance on how this reporting should be done.

Quick background information
Health care reform requires employers to offer a health plan that meets an actuarial value of 60% — which means the benefit costs the employee must pay equals no more than 40% of the total benefit costs.

For more information and the latest update on calculating this “minimum value” of coverage, see the article “IRS and HHS issue new guidance on minimum value,” on this website.

What you need to know now
The proposed guidance requires that any entity providing minimum essential health coverage after January 1, 2014, must file annual returns to report specific information for each individual who is covered under the plan.

This includes every:

• Health insurance issuer
• Employer or other sponsor of a self-insured health plan
• Government agency that administers government-sponsored health insurance programs
• Any other entity offering health insurance coverage

To report coverage to the government, the provider must include the terms and conditions of the health care coverage along with specific information on the employer’s full-time workforce.

This information will help the IRS determine which employees at certain income levels are eligible for premium subsidies in the form of tax credits for coverage through the Health Insurance Exchanges, because the coverage they are offered is either not affordable or does not meet the minimum value threshold.

Before issuing final guidance on the subject, the government is seeking comments on a range of questions before June 11.

For more information on the proposed guidelines and the submission of comments, see the IRS publications Notice 2012-32 and Notice 2012-33.

Impact on employees — This will help the government verify which employees meet the criteria for premium subsidies, which are tax credits based on:

• A household income of less than 400% of the federal poverty level*
• Employer-provided health coverage that does not meet one of the following:
  
  
  • Affordability mandate
  • Minimum value mandate

Impact on employers — The reporting is expected to increase the administrative burden on employers and/or their health insurers. They will need to create new processes for gathering and reporting this information.

Impact on brokers — Brokers will need to be prepared to answer questions about the reporting requirements and help employers plan a strategy for implementation in 2014.

For more information, see the IRS publications Notice 2012-32 and Notice 2012-33.

* $89,400 for a family of four in 2011