Column 60 The Tax Man Cometh

The Tax Man Cometh:  Reporting requirements on employee benefits is greater than ever!

Employers, benefits consultants, tax professionals and individuals: take note.  Here's your chance to have some input on the upcoming forms you will have to complete.

On July 24, 2014, the Internal Revenue Service (IRS) released initial drafts of forms to be used in reporting health insurance coverage offered by applicable employers, and minimum essential coverage by insurers and employers of self-insured plans. The IRS has posted the draft forms at as information only, and will post final versions for actual filing at a later date. Instructions are expected to be issued later this summer.

Insurers and employers have two forms they must provide the IRS. Insurers will likely come back to the employer for some of the information required on their forms so you probably want to look at both. Of course, without instructions, it's still a little tricky to understand them!

Employers will file Form 1094-C to the IRS only, and Form 1095-C to both the IRS and named individuals. Insurers will send Form 1094-B to the IRS only, and Form 1095-B to both the IRS and named individuals for insured coverage only. I assume this will be used to verify coverage when you file your tax return.  Form 1095-A appears to be a report about the Health Marketplace coverage. 

The really interesting form is 8962 for the Premium tax credit reconciliation. Of course, I am not a CPA and this column does not propose to give tax advice, but tax implications are a bit part of decisions regarding insurance choices. 

The IRS is open to comments on these forms, which should be submitted to the Comment on Tax Forms and Publications page on  I have no idea if they really read our comments, but I have submitted some comments.   One of my biggest concerns is the ambiguity around the definition of "affordable" coverage.  Most insurance professionals understand that definition, but the 10 million individuals who applied on the Exchange without assistance may not.  So far I am seeing little in the way of opportunity for the IRS to reconcile this issue, since the employer report does not seem to address dependents.  I guess there could be some way to cross reference the social security numbers. But I can't imagine their system is that sophisticated

More Covered CA updates:

Covered California announced expected rate actions for 2015.  In our Northern Counties, 90.8% of the 49,665 enrollees are in Anthem plans. The anticipated rate increase is a weighted average of 4.7%.  Blue Shield's plan will continue to be an EPO (Exclusive Provider Organization) plan and increases are expected to be about 6%.  It is not surprise that 91% of the applicants in the northern counties who applied through the Exchange qualified for premium assistance.  I have yet to see numbers as to how many folks enrolled outside the Exchange.

Covered California also announced this week that consumers are now required to submit proof of identity when applying for coverage. This process can be completed by a consumer directly through the portal.  Last week we talked about the fact that Covered CA is sending out letters with access codes and instructing members to set up their online accounts.  This was in anticipation of recertifying for open enrollment and this is simply one more item that will be part of the process.

Identity proofing is necessary for all new Individual Marketplace applications and for consumers wanting to make changes to previously submitted applications submitted on or after August 4th.

Once a consumer has completed the identity proofing process, they do not need to be re-proofed, even if their identity details should change. 

Note: All information in this column is provided" to the best of my knowledge" subject to final regulation by the respective agencies.