In Congressional testimony this week on final Affordable Care Act regulations, the U.S. Chamber of Commerce expressed concern about compliance with mandated employer reporting. While the U.S. Chamber has worked extensively with the IRS and U.S. Treasury to streamline ACA reporting, U.S. Chamber Executive Director of Health Policy Katie Mahoney states that employers face "exceedingly high administrative burdens and expenses" to comply with ACA reporting requirements.

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Employer ACA Reporting: Significant Compliance Challenge

Thu Jun 12, 2014

In Congressional testimony this week on final Affordable Care Act regulations, the U.S. Chamber of Commerce expressed great concern about the compliance burdens of mandated employer reporting.

On behalf of more than 3 million business employers in all 50 states Katie Mahoney, Executive Director, Health Policy, told lawmakers that the reporting rules impose “extensive burdens of cost and time to comply,” “exceedingly high administrative burdens and expenses,” and an “extraordinary expense of complying.”

Employer reporting under sections 6055 and 6056 represents one of the three pillars of employer ACA compliance, together with the mandate to offer affordable and minimum value coverage and to determine full-time employee status. The requirement takes effect next year, with the first forms to be filed in early 2016.

As the U.S. Chamber pointed out, the reporting requirements are intended to enable IRS to implement the employer mandate to offer coverage, the premium tax credit subsidy and the individual mandate to have health coverage.

In other words, to help the government enforce the law employers must annually report detailed information to the IRS on the terms and conditions of health coverage they offer with respect to each full-time employee and dependents.

For example, to enforce the employer pay or play mandate IRS will rely on an employer’s section 6056 report documenting, for each full-time employee, such information as the months when minimum essential coverage was offered and the employee’s share of the lowest cost monthly premium for self-only coverage. Potential employer liability for ACA “failure to offer” penalties will be based on section 6056 reporting.

As an indication of the administrative complexity of ACA reporting, IRS has been working on regulations for what is essentially a second W-2 process for at least three years. Indeed, the July 2013 decision to postpone the employer mandate from 2014 to 2015 was based on IRS’s need for more time to develop the reporting regime.

Katie Mahoney and the U.S. Chamber have done employers a great service over the past three years in working with IRS and U.S. Treasury officials to try to simplify and streamline ACA reporting.

Alas, the government’s dependence on employer reports to enforce key provisions of the law leaves little room for flexibility. As a result, employers face “exceedingly high administrative burdens and expenses” to comply with the reporting requirements and little prospect of additional relief absent new legislation.

The Chamber’s explicit message to Congress: ACA reporting will involve “significant challenges and tremendous costs to comply.” The implicit message to employers: prepare an administrative and expense mitigation compliance strategy now.