The IRS has stepped in once again to clear up the confusion around another set of requirements of the Patient Protection and Affordable Care Act. This time, the confusion involves PPACA reporting requirements set to kick in next year for applicable large employers, or ALEs. And you might want a pint of the suds to help wade through the guidance.
Essentially, what's being explained is how employers are to report the health insurance coverage status of employees.
Employers must disclose whether their full-time employees have been offered what the act defines as minimal coverage. And they have to report whether all full-time employees have minimal coverage. Forms 1094-C and 1095-C are the appropriate ALE reporting vehicles.
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The difficulty has been attempting to determine which companies need to file, because there's quite a bit of hair-splitting going on around ALE reporting requirements. Let's look at some basic questions and answers.
1. Which companies have to report and which employees must be included in the report?
There's been confusion around what a full-time employee is.
The IRS explains what it isn't in this guidance. Someone who has not worked a full month during the previous 12 isn't in the group covered by the requirement. Nor is someone who's undergoing a job assessment during the 12 months. Everyone else who is full time is in the group.
Any company that had no full-time employees during any month of the prior 12 doesn't have to file a report. With one exception: companies that offer a self-insured plan in which any employee, spouse, or dependent is enrolled.
2. How many months must be reported?
If someone starts work after the first day of the month, must they be counted as covered for the whole month? If someone's employment, and coverage, expire in mid-month, must the entire month be included in the report?
In the first case, which would apply to new hires, the month only counts toward coverage if the new hire received coverage for the entire month.
In the second case of the terminated employee, employers would report that no coverage was offered for the month, even though it was for part of it.
3. How can I get more guidance?
Still confused? Your best option is probably to let your lawyer review the guidance and just tell you what to put on the report. That's what lawyers are for anyway.
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
