The Internal Revenue Service recently issued requests for
comments in advance of issuing proposed regulations on health care
reform reporting and minimum value requirements.
Determination of "Minimum Value" Coverage
Under the U.S. Patient Protection and Affordable Care Act
(subject to repeal by the Supreme Court of the United States),
beginning in 2014, certain low-income individuals will be eligible
to receive a premium tax credit that can be used to purchase health
coverage through a health insurance exchange. The credit will not
be available to individuals who are eligible for affordable
coverage under an employer group health plan that provides
"minimum value." Employers that do not offer affordable
minimum value coverage will be assessed a penalty if any full-time
employee receives the premium tax credit through an exchange.
The Internal Revenue Service (IRS) has issued Notice 2012-31 (the Notice), requesting
comments on possible approaches for determining whether
employer-sponsored group health plan coverage provides
"minimum value." A plan fails to provide minimum value if
the plan pays less than 60 percent of the total cost of coverage
provided under the plan. The Notice anticipates that determination
of minimum value will focus on four categories of benefits and
services: physician and mid-level practitioner care, hospital and
emergency room services, pharmacy benefits, and laboratory and
The Notice discusses three potential approaches to determining
minimum value under consideration:
Use of an actuarial value calculator (for insured small group
plans) or minimum value calculator (for self-insured and insured
large group plans) created by the U.S. Departments of Health and
Human Services and the Treasury, which would permit an employer to
enter information about the plan's benefits, coverage and
cost-sharing features to determine whether the plan provides
Creation of various design-based safe harbor checklists
describing deductibles, co-pays, coinsurance, out-of-pocket
maximums and other cost-sharing attributes for the four core
categories of benefits and services. A plan would be treated as
providing minimum value if its cost-sharing attributes are at least
as generous as one of the safe harbor options.
For non-standard plan designs, determination by a certified
actuary that the plan provides minimum value.
Effective January 1, 2014, employers providing health care
coverage to their employees must comply with two new reporting
requirements. First, employers must annually provide information to
the IRS about individuals receiving "minimum essential
coverage" through the employer's plan (including the
individual's name, address, tax identification number and the
period covered under the plan) and about the employer's
coverage (including the employer's name, address, and employer
identification number and the portion of the premium paid by the
employer). Individuals participating in the plan must also be
provided with an annual statement notifying them of the personal
information that was reported to the IRS.
Second, employers with 50 or more full-time employees must
report to the IRS each year whether they offer employees the
opportunity to enroll in minimum essential coverage through an
employer-sponsored group health plan, the number of full-time
employees for each month during the year and information about each
full-time employee covered under the plan (including name, address,
tax identification number and the months enrolled in the plan). For
employers providing minimum essential coverage, the employer must
also report specific information about its plan, including length
of the plan's waiting period, the months during the year when
plan coverage was available, the monthly premium for the lowest
cost option in each enrollment category under the plan and the
employer's share of the total cost of benefits provided under
the plan. The IRS will use this information to verify
employer-sponsored coverage for purposes of the employer mandate.
Individuals whose information was reported on the employer's
information return must receive a statement showing the personal
information submitted to the IRS.
The IRS has released Notice 2012-32 and Notice 2012-33, requesting comments on these
two reporting requirements, including how to coordinate and
minimize duplication between these overlapping requirements.
Comments for both are due by June 11, 2012.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Information returns and payee statements subject to these penalties include Forms 1099, 1098, W-2, 1042-S, as well as the new Forms 1094-B, 1095-B, 1094-C, and 1095-C required under the Affordable Care Act.
Form 8938 (Statement of Foreign Financial Assets), introduced in 2011 as part of the Foreign Account Tax Compliance Act (FATCA), requires taxpayers to report their foreign assets, subject to minimum values, and indicate where the related income is picked up on their tax return.