ERIC Asks IRS to Simplify ACA-Related Regulations

November 15, 2013 ( – The ERISA Industry Committee (ERIC) asked the Internal Revenue Service (IRS) to simplify regulations about reporting requirements and health care coverage.

In a letter to the IRS, ERIC touches upon two sets of proposed regulations. The first deals with reporting requirements under Internal Revenue Code (IRC) Section 6055, which determine if an individual has the coverage necessary to avoid the individual mandate penalty under the Patient Protection and Affordable Care Act (or ACA). The second set covers reporting requirements under IRC Section 6056, which help to determine if an employer owes the ACA shared responsibility penalty and whether an individual is eligible for subsidized coverage on an exchange.

“While we very much appreciate the efforts the government has gone through to simplify the reporting requirements, the time, effort, and cost to comply with the regulations would place an excessive burden on employers and could result in increased costs to participants,” says Gretchen Young, senior vice president for health policy at the Washington, D.C.-based ERIC. “We strongly believe that there are easier ways to obtain the necessary information.”

To that end, ERIC offers several recommendations to the IRS. First, ERIC suggests that determining liability for both the individual and employer penalties could be done through a system in which employers affirm, in an annual certification, they have met their shared responsibility requirements to provide minimum essential coverage to 95% of their full-time employees. Responsibility would then be placed on individuals for establishing that they fulfilled their coverage obligation for themselves and their dependents.

If the IRS does use this approach, ERIC’s second recommendation is that employers be permitted to elect an alternative, check-the-box option where employers would certify they offer minimum essential coverage to at least 95% of full-time employees and their dependents. Companies would also provide the IRS with information about the employer, names of employees and dependents enrolled, and the dates of their coverage.

ERIC also recommends that the IRS provide greater flexibility with electronic disclosure options, since the proposed regulations currently limit the ability of plan sponsors to provide the information electronically, requiring companies to get an individual’s affirmative consent. ERIC suggests that plan sponsors should be allowed to electronically deliver the disclosures, consistent with other health plan documents. ERIC’s rationale is that the cost and administrative burden for large employers to obtain and administer the consents would be overwhelming.

Finally, ERIC recommends that the IRS give companies sufficient lead time to comply with reporting and disclosure requirements once they are finalized, since companies will need this time to create, test and implement their systems. The letter to the IRS suggests that plan sponsors be given at least one year after the regulations are finalized to create systems before they start capturing data that needs to be reported.

The full text of the letter to the IRS can be found here.