How Will Employers Communicate with Exchanges?

We received the proposed regulations for reporting requirements under IRS 6055 and 6056 and they are under review. These reports are meant to inform the IRS, Treasury Department, and individual-covered employees of qualified coverage, and coverage and cost by each month covered. This information will ensure that the appropriate true up can be done at tax filing time, and that employees have what they need to file their 1040 each year.

Wouldn’t it be great if employers were linked to the federal hub—the database where the Exchanges will be able to tap into information from the IRS, DOL, HHS, and SSA—and quickly and easily certify qualified plans and monthly cost, and update employee information in real time? Such “blue-sky” ideas require a direct communication link between employers with both state and federal Exchanges, regardless of their offer of employer-sponsored health coverage.

Employers currently file corporate taxes and supply W-2 data to the IRS for employees and 1099s for its independent contractors. In addition, beginning in 2015, employers will be required to submit very thorough information under 6055 and 6056 regarding every employee and dependent name, SSN, plan coverage, and cost of coverage for every month that the employee is/was employed. All we know right now is the general information that will be needed and when it is due. Given that this information will be held in this government hub, shouldn't it be possible to enable employers, in addition to the state Exchanges, to access this same or a “like” database that will allow for up-to-date information regarding an employee, their eligibility, and the required plan cost information? Not all organizations have long-term employees who have long tenure. Many companies have highly variable employees who, based on the nature of their jobs, have income that changes monthly or even weekly. This fact alone begs the question of how it is that individuals and employers alike will all be providing the most up-to-date and proper information to the entities that are making what may be deemed a very important decision for an individual regarding health coverage and financial assistance?

With some “high-tech” thinking, as an employee submits an application to an exchange, rather than have the applicant return to the employer to gather the required information to take with them, the applicant could complete the application online or submit via paper. The Exchange could then verify employment/eligibility via a database using the applicant’s SSN. A regular feed to this database would occur from participating employers so that all new hires, ongoing employees, and employee status is kept current—thereby ensuring the Exchange knows immediately if the applicant:

1) has been offered affordable coverage of minimum value,
2) is in a measurement or wait period, or
3) has waived an offer of affordable coverage by the employer.


This could be a secure database employers automatically feed information to on their qualified health plans, whether an employee is in a wait or measurement period, and when they became eligible and were offered a qualified plan, or if they had waived coverage. This could allow for an immediate determination of eligibility. In return, the determination could be communicated to the employer without delay, thereby allowing an immediate response should an appeal be required.

The current plan to use a manual process for managing communications with Exchanges will be a heavy and costly burden on employer benefits/HR staffs. And the reconciliation of this issue as a manual process will also be very burdensome.

Health E(fx) is lobbying for the automation of this process, has pre-developed the capability, and is well positioned to deliver employer data directly to Exchanges if/when this automation occurs. But to date, this rests with the Exchanges and nobody is discussing it.