Many employers are hanging their hat on the employer reporting requirements (i.e. Form 1095-C) going away under the changes proposed by the Trump Administration. The current legislative proposal in the American Healthcare Act (AHCA) repeals the employer mandate to offer coverage.
So under this proposal, the employer doesn't need to report information to the IRS anymore … right? Well, unfortunately, likely not.
In the AHCA, there are tax credits proposed for individuals if they are not offered coverage through an employer-sponsored plan. To that end, the IRS will need to know whether or not an individual was offered coverage through an employer-sponsored plan and unfortunately, the IRS won’t trust taxpayers to be honest, they will want to be able to verify this information based on information reported by employers.
Despite the fact that employers may no longer be required to offer coverage under the AHCA proposal, they are likely going to have to report to the IRS whether or not they actually offered coverage or not.
The IRS can then use this information and cross reference it to individual 1040 tax returns to verify that individuals claiming a tax credit are eligible to do so. In thinking this through, it may become incumbent upon all employers, not just ALEs (Applicable Large Employers) currently subject to the employer mandate, to report offer of coverage information to the IRS. As always with IRS reporting, penalties will apply if the employer does not report in a timely fashion, as well as if the employer does not report complete and accurate information.
So what are employers to do today? The simple answer is, “Stay the course.”
The ACA is the law of the land and as such, employers need to ensure they are protecting their company from potential penalties for not offering coverage, not offering affordable coverage and for not reporting offer of coverage information to the IRS on form 1095-C. In an article on “HR Morning”,
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