Reporting of Health Coverage for Issuers and Self-insured Plans (Code § 6055)
Section 6055 requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs and any other entity that provides MEC to file an annual return with the IRS reporting information for each individual who is provided with this coverage. Related statements must also be provided to individuals.
The IRS will use the information from the returns to implement the ACA’s individual mandate (that is, the requirement that individuals obtain acceptable health insurance coverage for themselves and their family members or pay a penalty). The ACA’s individual mandate became effective in 2014.
Reporting entities will generally use Form 1094-B, Transmittal of Health Coverage Information Returns, and Form 1095-B, Health Coverage, to report under Section 6055 (unless the reporting entity is required to report under both Sections 6055 and 6056 using the combined method).
Minimum Essential Coverage
Under the Section 6055 reporting requirements, every person that provides MEC to an individual during a calendar year must report on the health coverage provided. MEC includes the following:
- Eligible employer-sponsored coverage, including self-insured plans, COBRA and retiree coverage;
- Coverage purchased in the individual market(including an Exchange qualified health plan);
- Medicare Part A coverage and Medicare Advantage plans;
- Most Medicaid coverage;
- Children's Health Insurance Program (CHIP)coverage;
- Certain types of veterans health coverage administered by the Veterans Administration;
- Most types of TRICARE coverage;
- Coverage provided to Peace Corps volunteers;
- Coverage under the Nonappropriated Fund Health Benefit Program;
- Refugee Medical Assistance supported by the Administration for Children and Families;
- Self-funded health coverage offered to students by universities and state high-risk pools for plan or policy years that begin on or before Dec. 31, 2014 (for later years, sponsors of these programs may apply to HHS to be recognized as MEC); and
- Other coverage recognized by HHS as MEC.
Section 6055 reporting is not required for coverage that is not MEC, including coverage that qualifies as “excepted benefits,” such as stand-alone vision care or dental care, workers’ compensation and accident or disability policies. Thus, no reporting is required for health savings accounts(HSAs), coverage at on-site medical clinics or for Medicare Part B. However, Medicare Part A qualifies as MEC and is subject to reporting. Note that health flexible spending accounts (health FSAs) must satisfy certain requirements to qualify as excepted benefits. Beginning in 2014, health FSAs that do not qualify as excepted benefits will generally be prohibited under the ACA.
In addition, Section 6055 reporting is not required for “supplemental coverage,” if an individual is covered by more than one MEC plan or program, where one of the plans or programs supplements the other “primary” coverage. This rule is intended to eliminate duplicative reporting of an individual’s MEC in situations where there is reasonable certainty that the provider of the “primary” coverage will report.
Proposed regulations would clarify reporting for supplemental coverage by providing two rules:
- If an individual is covered by more than one MEC plan or program provided by the same reporting entity, reporting is required for only one of the plans or programs. For example, if an individual is enrolled in a self-insured group health plan provided by an employer and also is enrolled in a self-insured health reimbursement arrangement (HRA) provided by the same employer, the employer is required to report only one type of coverage for that individual.
- Reporting is not required for an individual’s MEC to the extent that the individual is eligible for that coverage only if he or she is also covered by other MEC for which Section 6055 reporting is required. This applies to eligible employer-sponsored coverage only if the supplemental coverage is offered by the same employer that offered the eligible employer-sponsored coverage for which Section 6055 reporting is required. For example, reporting is not required for MEC if that coverage is offered only to individuals who are also covered by other MEC (including Medicare, TRICARE, Medicaid or certain employer-sponsored coverage) for which reporting is required. In the case of eligible employer-sponsored coverage, if an employer offers both an insured group health plan and an HRA for which an employee is eligible only if enrolled in the insured group health plan, and an employee enrolls in both, the employer is not required to report the employee’s coverage under the HRA. However, if an employee is enrolled in his or her employer’s HRA and in a spouse’s non-HRA group health plan, the employee’s employer is required to report for the HRA, and the employee’s spouse’s employer (or the health insurance issuer or carrier, if the plan is insured) is required to report for the non-HRA group health plan coverage.
Entities Subject to Section 6055 Reporting
Under Section 6055, every person that provides MEC to an individual during a calendar year must report on the health coverage provided. Reporting entities include:
- Health insurance issuers;
- Self-insured plan sponsors;
- Government-sponsored programs; and
- Other entities that provide MEC.
To ensure complete and accurate reporting, Section 6055reporting is required for all covered individuals. Reporting entities may use third parties to facilitate filing returns and furnishing statements under Section 6055. However, these arrangements do not transfer the potential liability for failure to report. In contrast, a government employer that maintains a self-insured group health plan or arrangement may designate (in writing) another related governmental unit, agency or instrumentality as the person responsible for Section 6055 reporting, called a designated government entity (DGE).
Health Insurance Issuers
Health insurance issuers are responsible for Section 6055reporting for all insured coverage except: (1) Coverage under certain government-sponsored programs (such as Medicaid and Medicare) that provide coverage through a health insurance issuer; and (2) Coverage under QHPs through the Exchange. To avoid collecting duplicate or unnecessary information, issuers are not required to report under Section 6055 for QHP coverage through an individual Exchange. The Exchange will provide the necessary information to the IRS and the individual. However, issuers must report on QHPs in the small group market enrolled in through the Small Business Health Options Program (SHOP),because Exchanges will not be reporting information on these plans.
In addition, proposed regulations would require health insurance issuers to report coverage in catastrophic health insurance plans that were enrolled in through an Exchange, beginning for 2017. However, the 2017 instructions for Forms 1094-B and 1095-B provided that, for coverage in 2016 (filing in 2017) AND coverage in 2017 (filing in2018), issuers and carriers are encouraged (but not required) to voluntarily report on catastrophic health plan coverage. Beginning with coverage in 2018 (filing in 2019), health insurance issuers and carriers may be required to report coverage in catastrophic health plans enrolled in through the Exchange.
Self-insured Plan Sponsors
The plan sponsor is responsible for Section 6055 reporting for a self-insured group health plan. In general, the plan sponsor is the entity that establishes or maintains the plan.
The employer is the plan sponsor for a plan established or maintained by a single employer.
- Each participating employer is the plan sponsor for a plan established or maintained by more than one employer (other than a multiple employer welfare arrangement).
- For a multiemployer plan, the plan sponsor is the association, committee, joint board of trustees or other group of representatives who establish or maintain the plan.
For purposes of identifying the employer, the Code Section 414aggregation rules do not apply. Thus:
- A self-insured group health plan or arrangement covering employees of related companies is treated as sponsored by more than one employer; and
- Each employer is required to report for its employees.
However, one member of the group may assist the other members by filing returns and furnishing statements on behalf of all members.
Most employers that sponsor self-insured group health plans are ALEs required to report under both Section 6056 and Section 6055. ALEs apply the rules under Section 6056 for identifying the reporting entities in a controlled group. Employers in controlled groups that are not ALEs, and reporting entities (such as issuers) that are not reporting as employers, may report under Section 6055 as separate entities or choose one entity that may report for the group.
Governmental units that provide coverage under a government-sponsored program must also report under Section 6055. For a government-sponsored program, the entity responsible for reporting under Section 6055 is as follows:
In general, an entity that is reporting under Section 6055 as health insurance issuers or carriers, sponsors of self-insured group health plans that are not reporting as ALEs, sponsors of multiemployer plans and providers of government-sponsored coverage will report using Forms 1094-B and 1095-B.
However, a reporting entity that is reporting under Section 6055 as an ALE will file under a combined reporting method, using Forms 1094-C and 1095-C. As part of this combined reporting method, Form 1095-C will be used by ALEs to satisfy both the Section 6055 and 6056 reporting requirements, as applicable.
Written statements must also be provided to each responsible individual identified on the IRS return. A “responsible individual” is the person who (based on a relationship to the covered individuals, the primary name on the coverage or some other circumstances) should receive the statement. Generally, the statement recipient should be the taxpayer (tax filer) who would be liable for the individual mandate penalty for the covered individuals, if that person is known. A statement recipient may be:
- A parent, if only minor children are covered individuals;
- A primary subscriber, for insured coverage;
- An employee or former employee, in the case of employer-sponsored coverage;
- A uniformed services sponsor, for TRICARE; or
- Another individual who should receive the statement.
Statements may, but are not required to, be provided to any other individual who is not the responsible individual. Individual statements may be made by furnishing to the responsible individual a copy of the IRS return (or a substitute statement that includes the required information).
Information Required to Be Reported
Section 6055 requires the reporting of several data elements that are not required by taxpayers for preparing their tax returns or by the IRS for tax administration. The return must include:
- The name, address and EIN of the reporting entity;
- The name, address and TIN of the responsible individual;
- If coverage is through an employer’s group health plan, the name, address and EIN of the employer sponsoring the plan;
- The name and TIN (or birthdate) of each individual covered under the policy or plan, and the months for which, for at least one day, each individual was enrolled in coverage; and
- Any other information required by the IRS.
The individual statement must show the phone number for the reporting entity’s designated contact person, and the information required to be shown on the Section 6055 return for the responsible individual and each covered individual listed on the return.
Requirement to Report the SSN or TIN
Under Section 6055, reporting entities are required to report the SSN or other TIN for each covered individual. According to the IRS, reporting of TINs for all covered individuals is necessary to verify an individual’s coverage without the need to contact the individual. However, if reporting entities are unable to obtain an SSN or TIN after making a reasonable effort to do so, the covered individual’s date of birth may be reported in lieu of an SSN or TIN. In this case, a reporting entity will not be subject to a penalty if it demonstrates that it properly solicits the SSN or TIN, but does not receive it.
In an effort to minimize burden and streamline the reporting process, while minimizing the need for employers and the IRS to build multiple systems to accommodate multiple forms, ALEs will use a single combined form for reporting the information required under both Section 6055 and Section 6056. Under this combined reporting method, Form 1095-C will be used by ALEs to satisfy the Section 6055and 6056 reporting requirements, as applicable.
- An ALE that sponsors a self-insured plan will complete all sections (Parts I, II and III) of Form 1095-C to report the information required under both Sections 6055 and 6056. Therefore, these ALEs will use a single form to report information regarding whether an employee was covered.
- An ALE that provides insured coverage will also report on Form 1095-C, but will complete only the sections of Form 1095-C related to Section 6056 (Parts I and II).
Section 6055 reporting entities that are not ALEs or are not reporting in their capacity as employers (such as health insurance issuers, self-insured multi employer plan sponsors and providers of government-sponsored coverage) will report under Section 6055 on Forms 1094-B and 1095-B.
ALEs will also be providing only a single employee statement (with the Section 6056 information and, for employers with a self-insured group health plan, Section 6055 information). Employers may mail one or more of the required information returns to an employee in the same mailing (such as the combined Section 6055 and Section 6056 employee statement and the Form W-2).
Reporting for Nonemployees Enrolled in Self-insured Coverage
At the employer’s option, ALEs may report employer-sponsored self-insured health coverage for nonemployees (and their family members) using either:
- Forms 1094-B and 1095-B; or
- Form 1095-C, Part III (but only if the individual identified on Line 1 has an SSN or TIN).
If Form 1095-C is used with respect to an individual who was not an employee for any month of the calendar year, Part II must also be completed by using Code 1G on Line 14 in the “All 12 Months” box (or the box for each month of the calendar year).
This option applies only for ALEs offering self-insured health coverage for any individual who enrolled in the coverage for one or more calendar months of the year, but was not an employee for any calendar month of the year, such as a nonemployee director, a retired employee who retired in a previous year, a terminated employee receiving COBRA coverage who terminated employment during a previous year, and a nonemployee COBRA beneficiary.
A nonemployee does not include an individual who obtained coverage through the employee’s enrollment, such as a spouse or dependent obtaining coverage when an employee elects family coverage. In the case of a nonemployee who enrolls in the coverage under a self-insured health plan, all family members who are covered individuals due to the individual’s enrollment must be included on the same Form 1095-B or Form1095-C as the individual who is offered, and enrolls in, the coverage.
A reporting entity that fails to comply with the Section 6055 or Section 6056 reporting requirements may be subject to the general reporting penalties for failure to file correct information returns (under Code Section 6721) and failure to furnish correct payee statements (under CodeSection 6722). However, penalties may be waived if the failure is due to reasonable cause and not to willful neglect. Penalties may be reduced if the reporting entity corrects the failure within a certain period of time.
The Trade Preferences Extension Act of 2015 increased the base penalties under Section 6055 and Section 6056 to $250 per violation, up to an annual maximum of $3 million. These changes took effect for information returns and individual statements required to be filed or provided after Dec. 31, 2015. In addition, for information returns and individual statements required to be filed or provided after 2014, the base penalties are subject to annual inflationary increases. Also, lower annual maximums apply for entities that have average annual gross receipts of up to $5 million for the three most recent taxable years.
The adjusted penalty amounts are:
*For failures due to intentional disregard of the filing requirement, the penalty is equal to the greater of either the listed penalty amount or 10 percent of the aggregate amount of the items required to be reported correctly.
Extension of Good-faith Transition Relief from Penalties for 2020
Notice 2020-76 also extends transition relief from penalties for providing incorrect or incomplete information to reporting entities that can show that they have made good-faith efforts to comply with the Sections 6055 and 6056 reporting requirements for 2020 (both for furnishing to individuals and for filing with the IRS). The IRS stated that this will be the last extension of this penalty relief.
This relief applies to missing and inaccurate taxpayer identification numbers and dates of birth, as well as other information required on the return or statement. No relief is provided for reporting entities that:
- Do not make a good-faith effort to comply with the regulations; or
- Fail to file an information return or furnish a statement by the due dates (as extended).
In determining good faith, the IRS will take into account whether a reporting entity made reasonable efforts to prepare for reporting the required information to the IRS and furnishing it to individuals (such as gathering and transmitting the necessary data to an agent to prepare the data for submission to the IRS or testing its ability to transmit information to the IRS). The IRS will also take into account the extent to which the reporting entity has taken steps to ensure that it would be able to comply with the reporting requirements.
Penalty Relief Regarding the Furnishing Requirement underSection 6055 for 2020
The individual mandate penalty has been reduced to zero, beginning in 2019. As a result, the IRS has been studying whether and how the Section 6055 reporting requirements should change, if at all, for future years.Because the individual mandate penalty has been reduced to zero in 2019, an individual does not need the information on Form 1095-B in order to calculate his or her federal tax liability or file a federal income tax return. However, reporting entities required to furnish Form 1095-B to individuals must continue to expend resources to do so.
As a result, Notice 2020-76 provides relief from the penalty for failing to furnish a statement to individuals as required underSection 6055 in 2020 in certain cases. Specifically, the IRS will not assess a penalty under Section 6722 against reporting entities for failing to furnish aForm 1095-B to responsible individuals in cases where the following two conditions are met:
- The reporting entity prominently posts a notice on its website stating that responsible individuals may receive a copy of their 2020 Form 1095-B upon request, accompanied by an email address and a physical address to which a request maybe sent, as well as a telephone number that responsible individuals can use to contact the reporting entity with any questions; and
- The reporting entity furnishes a 2020 Form1095-B to any responsible individual upon request within 30 days of the date the request is received.
ALEs that offer self-insured health plans are generally required to use Form 1095-C, Part III, to meet the Section 6055 reporting requirements, instead of Form 1095-B. This Section 6055 furnishing penalty relief does not extend to the requirement to furnish Forms 1095-C to full-time employees. As a result, for full-time employees enrolled in self-insured health plans, penalties will continue to be assessed consistent with prior enforcement policies for any failure by ALEs to furnish Form 1095-C, including Part III, according to the applicable instructions. However, the Section 6055 furnishing penalty relief does extend to the requirement to furnish the Form1095-C to any non-full-time employees enrolled in an ALE’s self-insured health plan, subject to the requirements of the Section 6055 furnishing penalty relief.
The Section 6055 furnishing penalty relief also does not affect the requirement or the deadline to file the 2020 Forms 1094-B, 1095-B,1094-C or 1095-C, as applicable, with the IRS.