House Ways & Means Committee Issues Report on Employer Reporting Improvement Act
Here are excerpts:
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I. SUMMARY AND BACKGROUND
A. Purpose and Summary The bill, H.R. 3801, the "Employer Reporting Improvement Act," as ordered reported by the
B. Background and Need for Legislation
The Patient Protection and Affordable Care Act (ACA) required that employers must annually report health insurance coverage data to the
During this reporting process, employers are required to submit tax identification (TIN) or
The Committee believes legislation is needed to give employees flexibility to report names and dates of birth for employee's spouses and dependents if the TIN or Social Security Number is inaccessible. The Committee also believes it is necessary to provide employers with relief by extending the appeal window for a potential penalty to 90 days and establishing a 6-year statute of limitations on assessing penalties.
C. Legislative History
Background
H.R. 3801 was introduced on
Committee hearings
On
Committee action
D. Legislative History
Pursuant to clause 3(c)(6) of rule XIII, the following hearings were used to develop and consider H.R. 3801: (1)
II. EXPLANATION OF THE BILL
A. TIN Reporting Flexibility (sec. 2 of the Bill and sec. 6055 of the Code)
PRESENT LAW
Under the Patient Protection and Affordable Care Act ("PPACA"),/1/ persons (including health insurance issuers and employers that self-insure) that provide minimum essential coverage/2/ to any individual during a calendar year ("reporting entities") must report certain health insurance coverage information to both the covered individual and to the
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/1/Pub. L. No. 111-148,
/2/As defined in section 5000A.
/3/Sec. 6055.
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The information required to be reported includes: (1) the name, address, and taxpayer identification number ("TIN") of the primary insured, and the name and TIN of each other individual obtaining coverage under the policy; (2) the dates during which the individual was covered under the policy during the calendar year; (3) whether the coverage is a qualified health plan offered through an Exchange;/4/ (4) the amount of any premium tax credit or cost-sharing reduction received by the individual with respect to such coverage; and (5) such other information as the Secretary of the
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/4/An Exchange established under section 1311 of the PPACA.
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If health insurance coverage is provided through an employer-provided group health plan, the reporting entity is also required to report the name, address and employer identification number of the employer, the portion of the premium, if any, required to be paid by the employer, and any other information the Secretary may require to administer the tax credit for eligible small employers./5/
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/5/Under section 45R.
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The reporting entity is required to report the above information, along with the name, address and contact information of the reporting insurer, to the
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/6/Treas. Reg. sec. 1.6055-1(f)(1).
/7/Treas. Reg. sec. 1.6055-1(g)(4)(i).
/8/Treas. Reg. sec. 1.6055-1(f)(2).
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A reporting entity that fails to comply with these reporting requirements is subject to the penalties for failure to file an information return and failure to furnish payee statements, respectively./9/
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/9/Sec. 6724(d)(1)(B)(xxiv), (d)(2)(GG); Treas. Reg. sec. 1.6055-1(h).
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Under
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/10/Treas. Reg. sec. 1.6055-1(e)(ii), (iii).
/11/See T.D. 9660, 79 Fed. Reg. 13220,
/12/Ibid.
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REASONS FOR CHANGE
The Committee believes that the
EXPLANATION OF PROVISION
Under the provision, the Secretary may allow for any covered individual's full name and date of birth to be substituted for the individual's name and TIN if the reporting entity is unable to collect information on the TIN of such individual. The provision thus generally codifies the current
EFFECTIVE DATE
The provision is effective for returns for which the due date is after
B. Electronic Statements (sec. 3 of the Bill and secs. 6055 and 6056 of the Code)
PRESENT LAW
For a description of the reporting requirements generally applicable to persons that provide minimum essential coverage, see part A of this document.
Employer shared responsibility for health coverage
In general
An applicable large employer may be subject to a tax, referred to as the employer-shared responsibility payment ("ESRP") for a month if one or more of its full-time employees is certified to the employer as receiving for the month a premium tax credit ("PTC") for health insurance purchased on an Exchange or reduced cost-sharing for the employee's share of expenses covered by such health insurance./13/ Whether an applicable large employer owes an ESRP and the amount of any penalty depend on whether the employer offers its full-time employees and their dependents the opportunity to enroll in minimum essential coverage under a group health plan sponsored by the employer and, if the employer offers such a group health plan, whether the coverage offered is affordable and provides minimum value.
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/13/Sec. 4980H. PTCs for health insurance purchased on an Exchange are provided under section 36B. Reduced cost-sharing for an individual's share of expenses covered by such health insurance is provided under section 1402 of PPACA.
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Definition of applicable large employer
"Applicable large employer" generally means, with respect to a calendar year, an employer that employed an average of at least 50 full-time employees on business days during the preceding calendar year./14/ In addition, in determining whether an employer is an applicable large employer, members of the same controlled group, group under common control, and affiliated service group are treated as a single employer./15/
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/14/Sec. 4980H(c)(2). Additional rules apply, for example, in the case of an employer that was not in existence for the entire preceding calendar year. Ibid.
/15/The rules for determining controlled group, group under common control, and affiliated service group under section 414(b), (c), (m) and (o) apply.
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Employer shared responsibility payments
If an applicable large employer does not offer its full-time employees and their dependents minimum essential coverage under an employer-sponsored plan and at least one full-time employee is certified as benefiting from PTCs or reduced cost-sharing, the employer may be subject to an ESRP of
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/16/Sec. 4980H(a), (c). Pursuant to Notice 2015-87, the
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Generally, an employee who is offered minimum essential coverage under an employer-sponsored plan is not eligible for a PTC or reduced cost-sharing unless the coverage is unaffordable or fails to provide minimum value./17/ However, if an employer offers its full-time employees and their dependents minimum essential coverage under an employer-sponsored plan but at least one full-time employee is certified as being allowed PTC or reduced cost-sharing (because the coverage is unaffordable or fails to provide minimum value), the employer may be subject to an ESRP of
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/17/Under section 36B(c)(2)(C), coverage under an employer-sponsored plan is unaffordable if the employee's share of the premium for self-only coverage exceeds 9.12 percent (for 2023) of household income (this percentage is updated as needed to reflect cost-of-living changes, see
/18/Sec. 4980H(b).
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Employer reporting of offers of health insurance coverage
Each applicable large employer subject to the ESRP must report certain health insurance coverage information to both its full-time employees and to the
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/19/Sec. 6056.
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The information required to be reported includes: (1) the name, address and employer identification number of the employer; (2) a certification as to whether the employer offers its full-time employees and their dependents the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan; (3) the number of full-time employees of the employer for each month during the calendar year; (4) the name, address and TIN of each full-time employee employed by the employer during the calendar year and the number of months, if any, during which the employee (and any dependents) was covered under a plan sponsored by the employer during the calendar year; and (5) such other information as the Secretary may require.
Applicable large employers that offer employees and dependents the opportunity to enroll in minimum essential coverage also must report: (1) the length of any waiting period with respect to such coverage; (2) the months during the calendar year during which the coverage was available; (3) the monthly premium for the lowest cost option in each of the enrollment categories under the plan; and (4) the employer's share of the total allowed costs of benefits under the plan.
The employer is required to file the return and transmittal to the
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/20/Treas. Reg. sec. 301.6056-1(e).
/21/Employers have an automatic extension of 30 days after
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An employer that fails to comply with these reporting requirements is subject to the penalties for failure to file an information return and failure to furnish payee statements, respectively./22/
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/22/Sec. 6724(d)(1)(B)(xxv), (d)(2)(HH); Treas. Reg. sec. 301.6056-1(i).
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Electronic furnishing of statements
Provided certain conditions are met, the
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/23/Treas. Regs. secs. 1.6055-2; 301.6056-2. The applicable conditions generally relate to consent and withdrawal of consent, notice requirements, and access periods.
/24/Ibid.
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REASONS FOR CHANGE
The Committee believes the
EXPLANATION OF PROVISION
Under the provision, applicable large employers/25/ and reporting entities/26/ are permitted to furnish statements to an individual electronically if the individual has previously consented at any prior time, to the employer of the individual during the relevant calendar year or relevant reporting entity, to receive such statement in electronic form, so long as the individual has not revoked consent in writing. The provision thus generally codifies the existing regulations permitting electronic furnishing of Forms 1095-B and 1095-C.
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/25/With regard to section 6056.
/26/With regard to section 6055.
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EFFECTIVE DATE
The provision is effective for statements for which the due date is after
Generally, when the
REASONS FOR CHANGE
The Committee believes that 30 days may not be enough time for applicable large employers to respond to a Letter 226-J. The Committee intends that the
EXPLANATION OF PROVISION
Under the provision, the Secretary is required to allow applicable large employers at least 90 days from date of the first letter which informs the employer of a proposed assessment of the ESRP (currently, Letter 226-J) to respond to the proposed assessment before taking any further action with respect to such proposed assessment.
EFFECTIVE DATE
The provision is effective for assessments proposed in taxable years beginning after the date of the enactment.
D. Statute of Limitations on Penalty Assessment (sec. 5 of the Bill and 6501 of the Code)
PRESENT LAW
For a description of the employer-shared responsibility payment ("ESRP"), see part B of this document.
Generally, the
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/27/Sec. 6501.
/28/
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REASONS FOR CHANGE
Because the
The Committee believes that, in the interests of fairness and finality, assessments of the ESRP should be subject to a statute of limitations, similar to other excise taxes, and subject to appropriate exceptions. The Committee also understands that the ESRP is a complex excise tax to administer, however, and that therefore the applicable limitations should be set at six years.
EXPLANATION OF PROVISION
Under the provision, a six-year limitations period is added for assessments of the ESRP under section 4980H. The statute of limitations begins on the due date of the applicable large employer's return under section 6056 (relating to the requirement that applicable large employers subject to the ESRP report certain information related to offers of health insurance coverage), or the date the return is filed, if later.
EFFECTIVE DATE
The provision is effective with respect to returns which are due after
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d) of rule XIII of the Rules of the
The estimated effect of the bill on Federal fiscal year budget receipts is a loss of less than
B.
In compliance with clause 3(c)(2) of rule XIII of the Rules of the
C. Cost Estimate Prepared by the
The Committee has requested but not received from the Director of the
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII of the Rules of the
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of the
C. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423 of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-4).
The Committee has determined that the bill does not contain Federal mandates on the private sector. The Committee has determined that the bill does not impose a Federal intergovernmental mandate on State, local, or tribal governments.
D. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff Benefits
With respect to clause 9 of rule XXI of the Rules of the
E. Tax Complexity Analysis
Pursuant to clause 3(h)(1) of rule XIII of the Rules of the
F. Duplication of Federal Programs
In compliance with clause 3(c)(5) of rule XIII of the Rules of the
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The report is posted at: https://www.congress.gov/congressional-report/118th-congress/house-report/111/1
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