AFFORDABLE CARE ACT UPDATES
AFFORDABLE CARE ACT UPDATES
START PLANNING NOW FOR 2015 ACA REPORTING REQUIREMENTS
Beginning in 2015 and due in early 2016, plan sponsors of self-insured group health plans (regardless of employee count) and ALEs (Applicable Large Employers) are required under the ACA (Affordable Care Act) Section 6055 and 6056 respectively to submit specific reports to the IRS. Click here for an overview of ACA Employer Reporting Requirements.
Is Your Company an ALE?
By ACA definition, an ALE is an employer that averaged at least 50 FTEs (full-time employees), including full-time equivalent employees, during its designated standard measurement period during the preceding year. An FTE is an employee who was employed, on average, at least 30 hours of service per week. To calculate the number of full-time equivalents, add the total number of hours worked by all part-time and seasonal employees each month and divide each monthly total by 120 (to approximate a 30 hour work week). The standard measurement period is a period between three and twelve consecutive months used to calculate FTEs and determine ALE status. Click here for more information on Determining a Standard Measure Period.
What Reporting is Required?
Any employer that sponsors a self-insured plan, regardless of employee count, must file Forms 1094-B and 1095-B to satisfy the reporting requirements under section 6055.
In addition, ALEs must file one Form 1094-C (transmittal) as well as a Form 1095-C (employee statement) for each full-time employee.
•Form 1094-B and Form 1094-C will be used to transmit the data from the individual 1095-B and 1095-Cs (as applicable) to the IRS. These forms require employers to report full-time and part-time headcounts month by month.
•Form 1095-B will be filed with the IRS and provided to taxpayers by insurers and self-insured health plans. Self-insured plans are required to provide details on covered individuals, including enrolled dependents, such as name, social security number and months of coverage.
•Form 1095-C will be provided by large employers to their employees. This form verifies compliance with the employer “shared responsibility” mandate and will be used to establish whether employees might be eligible for premium tax credits if the insurance provided is not deemed to be affordable and adequate by the ACA’s standards. For employers that provide coverage through a fully-insured plan, the section of Form 1095-C that requires enrollee details will be left blank.
Alternative Reporting Options
IRS regulations contain two alternative methods of reporting under section 6056 that were developed to minimize the cost and administrative tasks for employers. The alternative reporting methods, in certain situations, may permit employers to provide less detailed information than under the general method for reporting. These simplified alternative reporting methods, and the conditions for using them, are described in detail in Subsections A through D of the preamble to the section 6056 regulations . ALEs with fully-insured plans should inquire with their brokers about the possibility of using a simplified employee statement instead of Form 1095-C.
Deadlines and Additional Resources
Forms 1095-C are due to employees by January 31, 2016, and Form 1094-C and Form 1095-C are due to the IRS on or before February 28 or by March 31, 2016 if filed electronically.
For more information about reporting requirements, follow these links to the IRS Section 6056 Q&As and Section 6055 Q&As . Download Instructions for Forms 1094-C and 1095-C
Download the forms here: Form 1094-C and Form 1095-C .
IRS ISSUES FACT SHEET ABOUT UPCOMING CHANGES TO ACA TAX CREDITS
The IRS has issued a fact sheet that lists changes regarding the Small Business Health Care Tax Credit for tax years beginning in 2014 or later, along with a list of return preparer best practices.
To be eligible to claim the credit, small employers are generally required to purchase a QHP (qualified health plan) from a SHOP (Small Business Health Options Program) Marketplace. There is an exception for 2014, in which small employers in certain states may purchase a SHOP QHP directly from an insurance agent or broker.
Changes to the Small Business Health Care Tax Credit are as follows:
•35-50 percent credit percentage increases of employer-paid premiums. For tax-exempt employers, this is 25-35 percent.
•Beginning in tax year 2014, small employers may claim the credit for only two consecutive taxable years.
•The average wage phase-out of $25,000 to $50,000 is adjusted for inflation beginning in 2014, and the beginning and ending phase-out amounts are $25,400 and $50,800, respectively, for 2014.
The IRS fact sheet states that small employers may continue to be eligible to claim the tax credit for tax years beginning in 2010-2013. It goes on to recommend that, if an employer was eligible for the credit in prior years but failed to claim it, an amendment to prior years’ returns should be filed.
For more details, read the Fact Sheet .
IRS ISSUES LIMITED TRANSITION RELIEF FROM ACA PENALTIES
The IRS recently released Notice 2015-17 regarding penalties for employer payments for an individual health insurance policy for an employee.
In addition, the notice also addresses the following:
•Transition Relief for Small Employers from the Code §980D Excise Tax.
•Treatment of S corporation healthcare arrangements for 2-percent shareholder employees.
•Integration of Medicare premium reimbursement arrangement and TRICARE-related HRA with a group health plan.
•Increases in employee compensation to assist with payments of individual market coverage.
•Treatment of an employer payment plan as taxable compensation.
Read the entire notice here: IRS Notice 2015-17