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Employer Reporting under Health Reform — How Much Is Too Much, IRS Wants to Know

April 27, 2012 – 4:08 pm | By Todd Leeuwenburgh | 1 comment

Beginning in 2014, employers that sponsor health plans will have to watch closely if any employees qualify for a premium tax credit, triggered whenever the employer-sponsored coverage is unaffordable, or does not provide minimum value. On April 26, the IRS requested comments on how to determine whether a health plan provides “minimum value.” It did so in three separate notices: Notices 2012-31, 2012-32 and 2012-33. IRS in Notice 2012-31 proposed giving insurers and group health plans three options for determining minimum value.

• An actuarial value (AV) calculator that would allow an employer-sponsored plan to enter claims data, information about the plan’s benefits, coverage of services and cost-sharing terms to determine whether the plan provides minimum value. Such a calculator will be made available by the U.S. Department of Health and Human Services (HHS) and the Treasury Department. This is suggested as an option for self-insured and large-group insured group plans.
• Checklists developed by the agencies would provide a simpler way to ascertain that employer-sponsored plans provide minimum value without any calculations or help from an actuary. If the employer-sponsored plan’s terms are consistent with or more generous than any one of the safe harbor checklists, the plan would be treated as providing minimum value.
• A certification by a certified actuary may be required in instances where a plan has “nonstandard” features. Employers would first use an AV calculator, then engage a certified actuary to make adjustments.

Comment on Reporting Burdens Also for policies starting Jan. 1, 2014, insurers and self-insured employer plans will be required to submit to the IRS information on each covered life for whom minimum essential coverage is provided. According to IRS in Notice 2012-32, plan sponsors and insurers will have to report:

1. names, addresses and taxpayer identification numbers;
2. the dates each individual was covered under minimum essential coverage; and
3. whether coverage was offered through an exchange.

The agency requests comments on questions including: (1) how to determine when an individual’s coverage begins and ends; and (2) how to minimize duplication in reporting. All large employer plans will have to report to the IRS information on: (1) premiums; (2) waiting periods; (3) whether or not they offer minimum essential benefits; (4) the percentage of the premium they pay; (5) and other details — for every plan they sponsor. Notice 2012-33 requests comments on how to make this more palatable. Comments must be submitted by June 11, 2012.

IRS Sets HSA, HDHP Limits for 2013

April 27, 2012 – 1:29 pm | By John Iekel | No comments yet

Employers with high-deductible health plans (HDHPs) that make it possible for employees to open health savings accounts (HSAs) have plenty of lead time to prepare for 2013. The IRS on April 27 issued Revenue Procedure (Rev. Proc.) 2012-26, which contains the HSA and HDHP limits for calendar year 2013. The HSA annual limits and the annual out-of-pocket expenses for HDHPs are higher than those the IRS set for 2012; the HDHP annual deductibles for 2012 are the same as those the IRS set for 2011. The IRS adjusted the rates after applying the cost of living adjustment rules under Code Section 223, which governs HSAs. The 2013 rates will be as follows. HSAs

• annual limit of $3,250 on deductions for an individual with self-only coverage under an HDHP
• annual limit of $6,450 on deductions for an individual with family coverage under an HDHP

HDHPs The definition of an HDHP will be based on the following for 2013:

• annual deductible of $1,250 for self-only coverage
• annual deductible of $2,500 for family coverage
• annual out-of-pocket expenses of $6,250 for self-only coverage
• annual out-of-pocket expenses of $12,500 for family coverage

Next Steps Employers do not have to adjust any plan documents or practices in calendar year 2012 to apply these rates, as long as they have a plan whose plan year is based on the calendar year. These rates do not go into effect until 2013. This could, however, create challenges for employers that do not use a calendar year as the basis of their plan year and instead have a plan year that spans calendar years. The early release of the 2013 HSA and HDHP rates, however, gives employers plenty of time to adjust their documents, plans and policies as they prepare for 2013. The IRS issues the rates early to allow employers and plan administrators time to apply the new rates when they prepare their plan documents and materials for the next year. Finding out More Rev. Proc. 2012-26 will be published in Internal Revenue Bulletin 2012-20 on May 14, 2012. Additional information about Rev. Proc. 2012-26 is available by contacting its principal author, Bill Ruane of the IRS Office of Associate Chief Counsel (Income Tax & Accounting at (202) 622-4920. Additional information regarding Section 223 and HSAs is available by contacting Leslie Paul at (202) 622-6080.