IRS Notice 2016-70 extends the 2017 deadline from Jan. 31 to March 2 for employers and insurers to furnish individual statements on 2016 health coverage and full-time employee status (Forms 1095-B and 1095-C). The notice also extends 2015 penalty relief to 2016 incorrect or incomplete reports due in 2017 if the preparer has made good-faith efforts to comply. The extension does not change the Feb. 28 (paper) and March 31 (electronic) IRS filing deadlines.
Final Department of Labor rules explain the nonretaliation protections for employees seeking subsidized health coverage from a public exchange, reporting certain ACA violations by an employer's group health plan, cooperating in ACA investigations or enforcement proceedings, or refusing to engage in activities that could violate the ACA. The rules leave intact interim regulations from 2013, with a few clarifications about complaint procedures and the scope of the law's protections.
IRS has released final instructions and forms for 2016 minimum essential coverage (MEC) reporting (Forms 1094-B and 1095-B) which health insurers and some self-insured employers will use to report MEC provided to individuals in 2016. IRS uses MEC reported on the forms to determine whether individuals owe assessments under the ACA's shared-responsibility provisions. IRS has apparently made only minor changes to the 2016 instructions from the version used for 2015 reporting. Drafts of the 2016 employer shared-responsibility forms and instructions that applicable large employers will use to report on coverage offered to employees and their dependents came out earlier this summer.
Compliance is a never-ending process. The key is in the timing – planning for future deadlines while making sure you meet the more pressing ones. I recently sat down with the Financial Management Network to talk about all things compliance. Here’s where I would focus employers’ attention:
- Employer should have already started preparing for their 2016 ACA reporting, since there is no longer a “good faith compliance” standard, and the timeframes to disclose individual statements and IRS transmittal returns revert back to the original deadlines (e.g., Jan. 31, 2017 for the Form 1095-C; March 31, 2017 for the electronic Form 1094-C)
- Employers that offer flex credits, opt-out payments and/or wellness incentives must reassess their health plan’s affordability for purposes of employer-shared responsibility (ESR) affordability calculations and ACA reporting
- Employers that offer wellness programs should review such programs in light of the EEOC’s fine ADA and GINA wellness program rules.
You can listen to the complete interview here.
The IRS has released draft instructions for 2016 Forms 1094-C and 1095-C, highlighting changes that employers can expect when reporting health coverage offered to full-time employees and dependents in 2016. The instructions give more detail about the minor revisions shown on the 2016 draft forms issued last month. The IRS uses data from this reporting to administer Affordable Care Act (ACA) assessments on employers and individuals, as well as eligibility for premium subsidies on the public insurance exchanges.
Last week the IRS issued a statement encouraging entities unable to submit their ACA information returns by the June 30 deadline to complete their filing after the deadline. The ACA Information Returns (AIR) system will continue to allow completion of required system testing and submission of information returns. So if you’re currently correcting errors or working on replacement submissions, keep going! The IRS may not assess a late filing penalty if the employer has made a legitimate effort to file the returns and completes the process as soon as possible.
The e-file deadline for ACA reporting (Form 1094-C) is just days away. But before we take a collective sigh of relief, I would be remiss not to talk about corrections. After all, how often do you submit an electronic file to a third-party with zero errors? For 2015 reporting, the IRS will not penalize you for making a “good faith” effort to comply with the reporting requirements and error correction is part of that good faith effort.
If you haven’t seen it yet, you might check out this helpful video from the IRS on ACA information returns corrections. It covers:
- information reporting requirements
- what the IRS means by a corrected return
- how errors are identified; what errors require filing a correction and examples of corrected errors
- the timing for making corrections
- the electronic correction process
- penalties for ACA Information Returns
The deadline for ACA reporting to the IRS about coverage in 2015 was extended from March to June, and at this point most employers have a handle on their results. As reported in our recent survey – Living with Health Reform – virtually none of the nearly 650 survey respondents believe they will be liable for the “a” assessment – meaning they all offered coverage to substantially all employees working 30 or more hours per week. And just 8% thought they might be at risk for the “b” assessment – meaning that some of their employees might qualify for and obtain subsidized coverage on the exchange because their employer’s plan did not offer affordable contributions or meet minimum plan value requirements.
However, the requirement to offer coverage to “substantially all” employees working 30 or more hours per week will get harder to meet in 2016 when the definition of “substantially all” increases from 70% to 95%. Employers with limited-duration employees, like long-term temps and interns, might become liable for an assessment. About one in four respondents say they will pull back on use of these workers, and another 16% are considering it.
Are you interested in learning more about the ACA’s impact on employers and how they are responding? Join us for our April 28 webcast where we’ll share more of the highlights and insights from our latest survey.
ERISA pre-empts Vermont's all-payer claims database (APCD) reporting law, the US Supreme Court has ruled. The court held the state statute imposes duties that are inconsistent with ERISA's central design of providing a uniform national scheme for plan administration without interference from multiple state laws. Vermont's law requires all health plan payers to report to state regulators an array of claims and other data about their plans. APCD laws have taken effect or are planned in at least 18 states and several other states have considered such a program. The ruling limits state databases' potential to improve health care transparency but relieves ERISA plan sponsors of complying with multiple APCD laws.
Now that W-2's are out, individual tax preparation is under way. 2015 was the first year Americans were required to have health insurance or pay a fine. With the delay of the ACA reporting requirements, many will not have the 1095 form – proof that they were insured – at the time they file their taxes. The IRS says everyone should go ahead and file, even if you do not have a form. Depending on your timing to provide the 1095 forms to your employees, now would be a good time to communicate with them about what to expect when they file their taxes – it could cut down on calls and e-mails.
Earlier this month, employers let out a sigh of relief when the delay of the Cadillac tax was announced. And they’ve just been given some more breathing room with the extension of deadlines to provide and file required IRS information returns and employee statements. Employers now have until March 31, 2016 to distribute 1095 forms and provide minimum essential coverage (MEC) and employer shared-responsibility (ESR) statements to individuals (the previous deadline was February 1). In addition, the deadline for transmittal of the 1094 forms to the IRS has been extended from March 31 to June 30, 2016 for electronic filings, and from February 29 to May 31, 2016 for non-electronic (paper) filings.
What this means for employers is more time to provide and file these forms. However, you’ll need to be diligent about meeting those deadlines as the IRS has stated that, in light of these extensions, “provisions regarding automatic and permissive extensions of time for filing information returns and permissive extensions of time for furnishing statements will not apply to extended due dates.” In other words, timeliness is important! Penalties will apply for employers who miss the new deadlines (although the IRS will take into account efforts made to meet the deadline when determining penalties in the event that the deadline is not met).
What this means for employees is not quite as straightforward. While most employees with employer-sponsored coverage will not be affected, it’s possible that individuals who enroll in coverage through the public exchange will be impacted if they do not receive their 1095-C forms before they file their income tax returns. Form 1095-C provides information regarding affordability of the employer-sponsored plans which affects the employee’s eligibility to receive premium tax credits for coverage through the public exchange. If an individual does not have the 1095-C form when filing their income tax return, they will need to rely upon other information regarding their coverage. For 2015 only, the IRS will allow premium tax credits to be determined based on the information provided by the individual in their income tax return, even if they did not have their 1095-C at the time, and individuals will not be required to amend their return if the 1095-C form they ultimately receive provides different information than what they provided in their income tax return. This one-time provision also applies to form 1095-B. Employees’ tax preparers are likely to request the 1095 forms as part of the information needed to complete the Form 1040. Thus, it’s important to communicate to employees about the revised timing for distributing these statements.
So take a little time to be thankful for the excise tax delay and the reporting deadline extensions. If you’re ready already, congratulations! If not, get out your calendar and make a new plan that will keep you on top of the upcoming deadlines and safe from any penalties.
This Business Insurance article highlights new survey data showing that most respondents aren’t prepared for the 2016 play-or-pay and minimum essential coverage reporting. The results are concerning considering the complexity of the reporting requirements and the fact that employers must compile monthly data in 2015 to comply. This is what we learned when we polled close to 1000 employers in early March:
- Only 21% of respondents are well under way in establishing their reporting processes — 55% are just starting and 24% haven’t started yet.
- When asked how they will prepare and distribute the Forms 1094-C and 1095-C, 45% of respondents didn’t know yet — 21% planned to handle in-house, 17% were going to use their payroll vendor, 9% were using a different third party, and 7% were going to use their enrollment vendor.
- When asked if they would be able to use a “simplified” employer reporting method, 37% said they didn’t know yet.
The good news is that since early March we have seen increased employer activity to comply with the reporting requirements. But, we’ve also seen some employers who thought they would handle the reporting in-house change course and seek third-party assistance after learning more about the requirements. If you haven’t figured out how to handle ACA reporting in 2016, the data shows you are not alone. However, it’s best to get started — the requirements are complex!