Are your employees asking you for documentation of their employer-sponsored health coverage in 2014? Under the Affordable Care Act (ACA) employers may voluntarily, but are not required to, provide this information for 2014.

For the 2014 tax year, the IRS does not require employers to provide this documentation. However, individual taxpayers have to report on their 2014 tax returns whether they and their household had health coverage for each month in 2014.

If a professional tax preparer completes an individual’s tax return, and the individual states he or she had employer-sponsored health coverage in 2014, the preparer just might request documentation of employer-sponsored health coverage in 2014 instead of taking the individual’s word for it. The documentation requested could include a letter from the employer or health plan stating what health coverage was provided to the employee and dependents during 2014 and for how long. That’s one reason your employees might ask you for this type of letter.

[Related: Required ACA Reporting: Minimum Essential Coverage (MEC) and Applicable Large Employer (ALE)]

In 2016, employers will be required under Internal Revenue Code Sections 6055 and 6056 to report to the IRS and to employees on the health coverage they provided in 2015. (See previous blog.)

For now, I suggest being proactive. Have a plan in place so you are ready to respond to employee requests.

Resources: 

IRS – ACA Information Center for Tax Professionals
(See last bullet point under “Information for your Individual Client”.  This links to: IRS – Gathering Your Health Coverage Documentation).The last sentence of the first paragraph under “Documentation individuals can gather in advance” states, “While your employer may be able to assist you in verifying your coverage, your employer is not required to provide documentation specific to your health care coverage for the 2014 tax year.” )

IRS – publication on tax return preparer best practices regarding 2014 health coverage
(See Section 1, Question & Answer 1 for IRS advice to professional tax preparers.)