March 21, 2018
With more than 30 years of experience in federal legislative and regulatory affairs, Jim O’Connell focuses on HR and PAYROLL POLICY ISSUES, keeping customers informed about fast-changing and complex compliance regulations and workforce trends. Follow him on Twitter JOCWashDC
Some of Washington D.C.’s most influential organizations have teamed up on a new coalition to bring about change in Affordable Care Act (ACA) compliance requirements.
The new Partnership for Employer-Sponsored Coverage (P4ESC) will focus exclusively on reducing employer compliance burdens. Member groups include the Society for Human Resource Management (SHRM), the National Retail Federation (NRF), the National Association of Health Underwriters (NAHU), and the National Association of Builders and Contractors.
P4ESC supports enactment of the Commonsense Reporting Act of 2017, introduced in the U.S. Senate by Senators Mark Warner (D-VA) and Rob Portman (R-OH) (Senate bill 1908), and in the U.S. House of Representatives by Rep. Diane Black (R-TN) (as identical House bill 3919).
The Commonsense Reporting Act of 2017 targets the Affordable Care Act’s employer reporting mandate, perceived by many employers as an overly burdensome and costly compliance requirement.
The ACA added new Internal Revenue Code sections 6055 and 6056 that require “applicable large employers” and others to file detailed health coverage information reports annually with the IRS, and to provide corresponding reports to employees.
The purposes of special information reporting are to verify compliance with the ACA’s individual and employer coverage mandates, and to confirm employee eligibility for premium tax credits. Calendar year 2017 Forms 1094-C and 1095-C must be filed with the IRS by April 2, 2018 for electronic filers.
The Commonsense Reporting Act of 2017 would, among other provisions, simplify ACA employer health coverage reporting in two important ways:
1. The bill would create a voluntary and prospective information reporting system. If enacted, the bill would permit employers to voluntarily report general coverage information to the IRS, and prospectively report about current plan year health plans offered to employees. This, say the bill’s co-sponsors, would increase the accuracy of premium tax credit eligibility determinations because it would apply to current as opposed to past coverage offered.
2. It would streamline the reporting process by requiring Code section 6056 reporting only on behalf of those employees for whom the employer has received official notification that an employee has purchased coverage through an exchange. This process would replace ACA information reporting for an employer’s entire workforce.
Approval of the Commonsense Reporting Act of 2017 has taken on added urgency. This follows the IRS’s moves, beginning last November, to notify (with “226-J” letters) certain employers of possible ACA employer shared responsibility payment penalties based on alleged failure to offer affordable and minimum value coverage to full-time employees.
The new Partnership for Employer-Sponsored Coverage (P4ESC), with its diverse array of coalition partners, represents a formidable lobbying powerhouse for this legislation.
When the nation’s retailers, building contractors, HR professionals, insurance underwriters, franchise establishments and others all get together to advocate a single piece of legislation, the odds of it becoming law increase markedly.
P4ESC has pinpointed a defect in the Affordable Care Act – complex information reporting compliance – and identified a modest bipartisan remedy. The Commonsense Reporting Act of 2017 arguably represents a balanced attempt to improve employer compliance with the law.
In an otherwise dismal Capitol Hill environment for new legislation, the proposal has three advantages:
One, the bill has won the support of key Democrats and Republicans. Indeed, it’s fair to say that many lawmakers concede that ACA employer information reporting regulations are too complex and potentially make compliance with the law more difficult.
Two, Congress must approve by midnight on March 23 an omnibus spending bill to fund government agencies until Sept. 30. Sponsors of the Commonsense Reporting Act of 2017 could use this fact to get the bill to the White House for President Trump’s signature, if amendments regarding the ACA are added to the omnibus spending bill. It’s a long shot given an increasingly hostile political climate, but the March 23 deadline may be the best opportunity this year.
And three, the legislation has the P4ESC’s aforementioned support.
According to the IRS, the ACA information reporting regime under section 6056 was first required in 2015. Employers therefore have had to comply with Forms 1095-C and related regulations for at least three years.
Even if reasonably confident that they and their service providers have solved the reporting riddle, employers would no doubt welcome compliance relief in the form of a replacement system of voluntary and prospective health coverage information reporting.
If the scenario outlined above plays out, and the Commonsense Reporting Act of 2017 makes it across the goal line, it will represent a small step in the relaxation of ACA requirements – but a big step toward common sense compliance.