Certification for Individual Shared Responsibility Mandate

With the beginning of the tax filing season, many employers have been getting inquiries from employees whose tax preparers are asking for proof of minimum essential coverage for purposes of the individual mandate requirement in filing their 2014 tax returns.

This is one of those ripples in the pond that was caused by delaying the employer portion of the shared responsibility mandate (and its reporting requirements) until 2015, but leaving the individual mandate with its original 2014 effective date.  As a result employers and insurers are not required to provide anything to covered individuals until 2016 (reporting is voluntary in 2015, but the forms are still yet to be finalized by the IRS).

Individuals are required to certify that they were enrolled in minimum essential coverage (basically any employer-sponsored medical coverage will qualify) during the 2014 calendar year to avoid a penalty when filing their taxes this year.  According to the IRS and healthcare.gov, individuals enrolled in an employer-sponsored plan just need to check a box on their federal return (line 61 on Form 1040).  This will not be an issue for those employees who are doing their own taxes, however some tax preparers are claiming that proof of coverage is required (presumably as indemnification in case of a discovered misrepresentation upon audit).

This can leave certain employees in a bind with tax preparers asking for documentation of coverage that neither employers nor insurers will be providing.  In this case, although there is no legal obligation to do, employers may wish to assist those employees by creating a simple form letter stating that an employee (and dependents, if applicable) had coverage with the group plan, specifying dates of coverage or at least indicating if coverage was in effect during the entire 2014 calendar year, indicating the applicable medical carrier and group policy number.

Any individuals claiming a tax credit for coverage obtained through a state/federal exchange (healthcare.gov) will receive a Form 1095-A directly from the exchange detailing coverage for enrolled individuals, monthly premiums and advance tax credit payments received.  No information is required from employers for individuals claiming a tax credit on their 2014 taxes.

If you need more information or have more specific questions, please contact a member of your account team or our consulting services department.

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About Dawn Kramer

Dawn is an attorney and Certified Employee Benefit Specialist (CEBS) in J.W. Terrill’s Consulting Services department. She advises clients on legal and regulatory issues affecting their employee benefit plans.

View all posts by Dawn Kramer

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