Even amid delays in enforcement of the Affordable Care Act's employer mandate, tax and reporting regulations are sowing confusion among employers and putting large businesses on edge.
The Internal Revenue Service must improve communications around all of the ACA provisions it is enforcing, according to the Advisory Committee on Tax Exempt and Government Entities.
There "is not yet a complete understanding of all employer requirements or the costs to implement necessary changes," the committee wrote in its annual recommendations.
"In order to assure successful, compliant, reporting by employers the IRS will need a 'full court press' for communications and outreach including education for employers" -- particularly public-sector employers.
All state governments and most regional and local governments are considered "applicable large employers" under the ACA, and "there are many challenges ahead," including compliance with documentation requirements, the committee writes.
Many local governments, especially, told the committee that they "are understaffed with bare-bone budgets" and face new administrative complexities.
Onerous requirements
Reporting requirements for the tax year 2015 will, for many governments, "entail significant data gathering of information not formerly in the realm of data fields needed or captured," such as information on dependents.
For many unionized public sector workforces, the health plan administrator is the union health trust, which is responsible for filing and paying the fee that supports the Patient Centered Outcomes Institute. The governments themselves, as employers, have separate reporting requirements.
Under section 6055, employers, including those with self-funded health plans, have to report both employee and dependent Social Security numbers (or the dependent's date of birth).
"Reporting of this data should be able to be assigned/ delegated to the Union Health Trusts," although that may not be possible in every situation, the IRS committee writes.
"If this reporting requirement cannot be assigned to these Health Trusts, it seems the local and state governments are being held accountable for compliance over items that are outside of their control."
If the employers cannot access that information from plan administrators in time, "they would then be required to survey the employees directly, which would be a significant effort."
Proper identification of full time employees and collection of employee dependent data are bound to be compliance issues, the committee says. The IRS should consider using "tables and graphics to better summarize" the ACA regulations they oversee and should "actively manage" an up-to-date FAQ page that employers can easily submit questions to.
Many public sector health plans are also girding for 2018 to pay the ACA's "Cadillac tax" on plans exceeding $10,200 in value annually for individuals.
Without reducing the actuarial value of their health plans, the average municipality in states like Illinois and Massachusetts will have to pay a tax of around $5,000 per employee in 2018 and perhaps as much as $9,000 within a few years, according to estimates by analysts at United Benefit Advisors.