The following two (of many) provisions from the Patient Protection and Affordable Care Act are worth noting and were discussed at the AICPA National Conference on Employee Benefit Plans. Recent guidance has been published on both.
Expanded 1099 Requirements Repealed
Last month, the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011, which repeals the expanded Form 1099 information reporting requirements mandated by last year's health care legislation, was signed into law.
The Patient Protection and Affordable Care Act had expanded the Form 1099 reporting requirements to include payments made to corporations after December 31, 2011 from businesses aggregating $600 or more in a calendar year to a single payee. In addition, payments made for property and other gross proceeds for both property and services were also going to be reportable. The new Act repeals these expanded requirements. As a result, the 2011 Form 1099 reporting rules remain unchanged from 2010.
Reporting Employer-Provided Health Coverage
Under the Patient Protection and Affordable Care Act, employer-provided health coverage, while not taxable, is required to be reported on Form W-2 starting in tax year 2011. The Act requires employers to report the cost of coverage under an employer-sponsored group health plan. To give employers more time to update their payroll systems, the Internal Revenue Service recently issued interim guidance making this requirement optional for all employers in 2011. Further relief was granted for smaller employers filing fewer than 250 Forms W-2 by making the reporting requirement optional for them, at least for 2012. This optional treatment for smaller employers will continue until further guidance is issued.
Furthermore, the cost of coverage under a multiemployer plan is not reportable. An employer that contributes to a multiemployer plan is not required to include the cost of coverage provided to an employee under that multiemployer plan in determining the aggregate reportable cost. If the only applicable employer-sponsored coverage provided to an employee is under a multiemployer plan, the employer is not required to report any amount on the Form W-2 for that employee.
This reporting is for informational purposes only, to show employees the value of their health care benefits so they can be more informed consumers. The amount reported does not affect tax liability, as the value of the employer contribution to health coverage continues to be excludible from an employee's income, and is not taxable.
While reporting is not required until at least 2012, an employer may choose to report earlier. Employers that report early should refer to IRS Notice 2011-28 for guidance on the various reporting requirements, including the determination of the cost of reportable coverage. In addition, the 2011 Form W-2 is available for viewing on www.irs.gov. The form includes the codes that employers may use to report the cost of coverage under an employer-sponsored group health plan.
Detailed information about the interim rules for this reporting requirement and the additional transition rules for certain employers and with respect to certain types of coverage can be found in IRS Notice 2011-28 and the instructions for the 2011 Form W-2.
If you have any questions on these or any of the other provisions of the Patient Protection and Affordable Care Act, please let us know.