As written, revised Better Care Reconciliation Act will not operate to eliminate either of the reporting requirements on 1094/1095 series forms.
The Senate’s second draft of the Better Care Reconciliation Act would employer information reporting obligations under Internal Revenue Code §§ 6055 and 6056. Changes to minimum essential coverage provisions may give rise to a potential modification of those reporting requirements at some point in the future – as the law would allow individuals to maintain coverage that does not comply with federal regulations.
The revised BCRA includes several new provisions primarily aimed at swaying wary conservatives who initially withheld their support, while also assuaging the concerns of moderate holdouts. Although, like the previous version, this bill would nullify the employer and individual mandate marketplace penalties, it would not have any effect on employer reporting. As written, it will not operate to eliminate either of the reporting requirements on 1094/1095 series forms.
An amendment offered by Senator Cruz does have the potential to impact minimum essential coverage reporting in the indeterminate future. By permitting off-exchange plans that are not compliant with ACA regulations, the IRS could conceivably relax these reporting obligations to ease the burdens on providers of basic catastrophic coverage plans. The bill by itself, however, will not eliminate this reporting requirement; it would require an additional act of Congress and IRS executive action to relieve providers from these obligations. Congress is not currently contemplating such plans.
Because this bill maintains the current premium tax credits, the IRS will maintain the employer information reporting regime in order to properly administer the credits for individuals who are not offered plans through their employers. Like the prior version of the BCRA, this new version would phase out the premium tax credit in 2020.
The Senate is expected to consider the procedural measure on whether to bring this bill to the floor following the CBO report early next week.
About the Author
Tom Hospod is a member of the Tax Research Team for the Direct Tax division at Sovos Compliance, where his main areas of focus are Tax Withholding and Automatic Exchange of Information (AEOI). Prior to Sovos, Tom worked as a legislative aide in the Massachusetts House of Representatives. He also has experience in securities law—focusing on broker-dealer disputes and representing clients in FINRA arbitration. Tom is a member of the Massachusetts Bar, earned his B.A. from Boston College and his J.D. from the University of Miami.More Content by Tom Hospod