BHCG Monitor: Focus on Health Care Benefits

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BHCG Monitor: Focus on Health Care Benefits - Health Insurance Exchanges


Health Care Reform – Notable News

The Internal Revenue Service (IRS) has issued final regulations on the Affordable Care Act’s (ACA) health coverage information reporting requirements that were scheduled to take effect in 2014 but have been delayed until 2015, with reporting commencing in 2016. In addition, the IRS posted guidance clarifying flexible spending account (FSA) carryovers and health spending account (HSA) eligibility and procedures.

Health coverage reporting

Beginning in 2016, insurers and self-funded health plans must report information about health coverage provided during the prior year to all enrollees in accordance with Section 6055 (minimum essential coverage reporting) of the ACA. Employers are required to provide information that includes taxpayer identification numbers of all covered persons, as well as the specific dates that covered persons had coverage. A copy of the information must also be given to each “responsible individual” named on a plan application who enrolls one or more individuals in minimum essential coverage.

In addition to the Section 6055 information, employers with 50 or more full-time employees are required to report information (Section 6056 regarding employer responsibility reporting) for the prior year about the lowest cost option offered and whether minimum value requirements were satisfied and furnish a copy to each full-time employee on or before January 31 of each year (however the first required statement in 2016 is due on February 1 due to January 31 falling on a Sunday).

The IRS will provide a consolidated form that employers can use to report Section 6055 and 6056 information to both the IRS and employees. The data elements on the form will be used to help enforce employer “pay or play” penalties and help the IRS verify consumer information as to whether a consumer is eligible for premium tax credits under the ACA.

The final health care coverage reporting regulations also include simplified alternatives for reporting data in certain circumstances. For more information see Section 6055 and Section 6056.

FSA carryover & HSA eligibility rules

Last November the IRS announced a change to the FSA “use it or lose it” rule, allowing for $500 of unused FSA funds to be carried over from one benefit year to the next. However, questions remained regarding the long-standing IRS rules prohibiting HSA contribution when employees are enrolled in general purpose or health care FSAs. New guidance issued by the IRS this spring clarified the regulation and how FSA carryovers will affect HSA eligibility.

The IRS guidance lists two ways FSA contributions can be carried over without employees losing their ability to contribute the following year to an HSA:

  • An employee participating in a general purpose FSA can elect to have unused balances carried over into the next year to a limited purpose HSA.
  • Employers can designate that their general purpose FSAs’ unused amounts are automatically carried over into the next year in limited purpose FSAs for those employees enrolled in health plans that include an HSA component.

The IRS also allows employers to give employees the option (pre-plan year) to decline or waive a carryover from their general purpose FSA, allowing them to contribute to an HSA in the new plan year. For more information, please see the IRS clarifying memo.

Works Cited

(2014, June 1). Retrieved July 16, 2014, from Practical Law:

ACA Updates - Affordable Care Act. (2014, July). Retrieved from The Alliance.

Geisel, J. (2014, March 28). Benefits Management. Retrieved from Business Insurance:

Jones Day Publications. (2014, April). Retrieved from Jones Day:

Peter Marathas, J. (2014, April 3). Legal Alerts. Retrieved from Benefit Advisors Network:


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BHCG Monitor: Focus on Health Care Benefits - April 2012