Deadlines Extended for Furnishing Forms 1095-B and 1095-C in Early 2017

hr-news-alertThe IRS has extended the due dates for furnishing 2016 Forms 1095-B and 1095-C to covered individuals and full-time employees, respectively, from January 31, 2017, to March 2, 2017. In addition, the IRS is also extending good faith penalty relief to reporting entities who can show they made good faith efforts to comply with the calendar year 2016 information reporting requirements.

Who is Required to Report

Applicable large employers (generally those with 50 or more full-time employees, including full-time equivalents or FTEs) must use Forms 1094-C and 1095-C to report information to the IRS and to their full-time employees about their compliance with the employer shared responsibility provisions (“pay or play”) and the health care coverage they have offered in a calendar year. Alternatively, Forms 1094-B and 1095-B are used by insurers, self-insuring employers, and other parties that provide minimum essential health coverage (regardless of size, except for large self-insuring employers) to report information on this coverage to the IRS and to covered individuals. Employers subject to both reporting provisions (generally self-insured employers with 50 or more full-time employees, including FTEs) will satisfy their reporting obligations using Forms 1094-C and 1095-C.

Note: Reporting entities are required to report in early 2017 for coverage offered (or not offered) in calendar year 2016.

Furnishing Deadline Extension

The IRS has extended the due dates for furnishing 2016 Forms 1095-B and 1095-C to covered individuals and full-time employees, respectively, from January 31, 2017, to March 2, 2017. However, the deadline to file 2016 Forms 1094-B, 1095-B, 1094-C, and 1095-C with the IRS was not extended, and remains February 28, 2017 (or March 31, 2017, if filing electronically).

Good Faith Penalty Relief Extension 

Internal Revenue Code sections 6721 and 6722 impose penalties for failing to file and furnish an accurate and complete information return, including Forms 1094 and 1095. However, the IRS is extending penalty relief to reporting entities that can show that they made good faith efforts to comply with the calendar year 2016 information reporting requirements. This relief applies to missing and inaccurate taxpayer identification numbers and dates of birth, as well as other information required on the return or statement.

In determining good faith, the IRS will take into account whether an employer made reasonable efforts to prepare for reporting the required information to the IRS and furnishing it to employees and covered individuals, such as gathering and transmitting the necessary data to an agent to prepare the data for submission to the IRS, or testing its ability to transmit information to the IRS. In addition, the IRS will take into account the extent to which the employer is taking steps to ensure that it will be able to comply with the reporting requirements for calendar year 2017.

Extensions Apply to Calendar Year 2016 Reporting Only

The extensions for furnishing Forms 1095-B and 1095-C apply to calendar year 2016 reporting only and have no effect on the requirements for other years or on the effective dates or application of the pay or play provisions. Specifically, the IRS does not anticipate extending due dates or good faith penalty relief to reporting for calendar year 2017.

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Applicable Dollar Amount Used to Determine PCORI Fee Adjusted to $2.26

The Internal Revenue Service (IRS) recently issued guidance that increases the applicable dollar amount used to determine the Patient-Centered Outcomes Research Institute (PCORI) fee, for plan years that end on or after October 1, 2016 and before October 1, 2017.

Background

PCORI fees are imposed on plan sponsors of applicable self-insured health plans for each plan year ending on or after October 1, 2012 and before October 1, 2019. The fees support research to evaluate and compare health outcomes and the clinical effectiveness of certain medical treatments, services, procedures, and drugs.

For plan years ending on or after October 1, 2015 and before October 1, 2016, the fee for an employer sponsoring an applicable self-insured plan was $2.17 multiplied by the average number of lives covered under the plan. Details on how to determine the average number of lives covered under a plan, as well as various examples, are included in final regulations.

Fee Increase
Pursuant to IRS Notice 2016-64, for plan years ending on or after October 1, 2016 and before October 1, 2017, the fee is $2.26 (multiplied by the average number of lives covered under the plan).

For plan years ending on or after October 1, 2017 and before October 1, 2019, the fee will be further adjusted to reflect inflation.

Be sure to check out our PCORI Fees for Self-Insured Plans section for more information.

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Maximum Individual Mandate Payment Amount for 2016 Released

health-care-reformThe Affordable Care Act’s “individual mandate” provision requires every individual to have minimum essential health coverage for each month, qualify for an exemption, or make a penalty payment when filing his or her federal income tax return. Recently, the Internal Revenue Service (IRS) issued Revenue Procedure 2016-43, which provides information needed to determine the maximum penalty that may be due for 2016.

Calculating the Payment
For tax year 2016, individuals will generally pay whichever of the following penalty amounts is higher:

  • 2.5% of the individual’s yearly household income above his or her applicable filing threshold; or
  • $695 per person for the year ($347.50 per child under age 18).

The maximum penalty is capped at the cost of the national average premium for a bronze-level health plan available through a Health Insurance Marketplace in 2016. According to the IRS, the monthly national average premium for qualified health plans that have a bronze level of coverage and are offered through a Health Insurance Marketplace in 2016 is:

  • $223 per individual; and
  • $1,115 for a family with five or more members.

Our section on the Individual Mandate (Individual Shared Responsibility) provides information on the statutory exemptions from the individual mandate requirement.

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ACA Information Reporting Reminder: First Employee Statements Due by End of March

health-care-reform-road-sign-1As a reminder, employers subject to the new Affordable Care Act (ACA) information reporting requirements must furnish the first statements for the 2015 calendar year to employees on or before March 31, 2016.

Information Reporting Requirements
The ACA requires applicable large employers (ALEs)–generally those with 50 or more full-time employees, including full-time equivalents–to report information to the IRS and to their employees about their compliance with the “pay or play” provisions and the health care coverage they have offered, using Forms 1094-C and 1095-C.

Self-insuring employers that are not considered ALEs, and other parties that provide minimum essential health coverage, also must report information on this coverage to the IRS and to covered individuals, using Forms 1094-B and 1095-B.

Compliance Deadlines
The deadlines for calendar year 2015 are as follows:

  • ALEs must furnish employee statements (Form 1095-C) to employees no later than March 31, 2016. The first IRS information returns (Forms 1094-C and 1095-C) must be filed no later than May 31, 2016 (or June 30, 2016 if filing electronically).
    • ALEs with fully insured plans must furnish the Form 1095-C to each employee who was a full-time employee for any month of the calendar year (and who was not in a limited non-penalty period).
    • ALEs with self-insured plans must furnish the Form 1095-C to any employee who enrolls in the health coverage, whether or not the employee was a full-time employee for any month of the calendar year.
  • Small self-insuring employers that are not considered ALEs must furnish statements (Form 1095-B) to covered individuals no later than March 31, 2016. The first IRS information returns (Forms 1094-B and 1095-B) must be filed no later than May 31, 2016 (or June 30, 2016 if filing electronically).

Be sure to review our Information Reporting section for additional information, guidance, and Q&As.

New Template Generally Expected to Apply to Plan Years Beginning On or After April 1, 2017

A new Affordable Care Act (ACA) Implementation FAQ regarding the applicable date for using the new proposed summary of benefits and coverage (SBC) template and associated documents is now available.

Background
Under the ACA, group health plans and health insurance issuers are generally required to provide a written SBC to plan participants and beneficiaries at specified times during the enrollment process and upon request.

While final regulations to amend the existing rules related to the SBC notice requirements were previously released in June of 2015, at that time federal agencies announced that a new SBC template and associated documents would be finalized separately. On February 26, 2016, the new proposed SBC template and instructions, an updated uniform glossary, and other associated materials were released.

New FAQ
The intended implementation date for SBCs using the new proposed template and associated documents is as follows:

  • Health plans and issuers that maintain an annual open enrollment period will be required to use the new SBC template and associated documents beginning on the first day of the first open enrollment period that begins on or after April 1, 2017 with respect to coverage for plan years beginning on or after that date.
  • For health plans and issuers that do not use an annual open enrollment period, the new proposed SBC template and associated documents would be required beginning on the first day of the first plan year that begins on or after April 1, 2017.

Visit the U.S. Department of Labor’s webpage on the SBC and Uniform Glossary for the latest updates and to access all available templates.

Delays Announced for ACA Information Reporting Deadlines (Forms 1094 & 1095) and ‘Cadillac Tax’ on High-Cost Employer-Sponsored Health Coverage

Employers affected by two significant provisions of the Affordable Care Act (ACA) should take note of delays announced at the end of last month.

health-care-reform-road-signDeadlines Extended for 2015 ACA Information Reporting Requirements
IRS Notice 2016-4 extends the due dates for the 2015 ACA information reporting requirements under sections 6055 and 6056 of the Internal Revenue Code, as follows:

  • Forms 1094-B and 1095-B. Self-insuring employers that are not considered applicable large employers, and other parties that provide minimum essential health coverage, must file the first IRS information returns no later than May 31, 2016 (or June 30, 2016 if filing electronically), and furnish individual statements no later than March 31, 2016.
  • Forms 1094-C and 1095-C. Applicable large employers—generally those with 50 or more full-time employees, including full-time equivalents or FTEs—must file the first IRS information returns no later than May 31, 2016 (or June 30, 2016 if filing electronically), and furnish employee statements no later than March 31, 2016.
  • Note: Employers subject to both reporting provisions (generally self-insured employers with 50 or more full-time employees, including FTEs) will satisfy their reporting obligations using Forms 1094-C and 1095-C. Form 1095-C includes separate sections for reporting under each provision.

These extensions apply for calendar year 2015 only and have no effect on the requirements for other years or on the effective dates or application of the ACA “pay or play” provisions. Employers or other coverage providers that do not comply with these extended due dates may be subject to penalties.

Cadillac Tax Delay
A new law provides a two-year delay of the ACA’s excise tax on high-cost employer-sponsored health coverage (commonly referred to as the “cadillac tax” and governed by Internal Revenue Code section 4980I). Prior to the delay, the 40% tax was set to take effect in 2018 and would generally be imposed on plans that cost more than $10,200 (for self-only coverage) and $27,500 (for family coverage). As a result of the new law, this tax will not be effective until 2020.

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2015 Forms 1094-B, 1095-B, 1094-C, and 1095-C

health-care-reform-road-sign-1The Internal Revenue Service (IRS) has released finalized forms and instructions for 2015 to help employers prepare for compliance with the new information reporting provisions under the Affordable Care Act (ACA). Employers are required to report for the first time in early 2016 for calendar year 2015.

Who is Required to Report
As a reminder, Forms 1094-B and 1095-B will be used by insurers, self-insuring employers, and other parties that provide minimum essential health coverage (regardless of size, except for large self-insuring employers) to report information on this coverage to the IRS and to covered individuals.

Large employers (generally those with 50 or more full-time employees, including full-time equivalents or FTEs) will use Forms 1094-C and 1095-C to report information to the IRS and to their employees about their compliance with the employer shared responsibility provisions (“pay or play”) and the health care coverage they have offered.

Note: Employers subject to both reporting provisions (generally self-insured employers with 50 or more full-time employees, including FTEs) will satisfy their reporting obligations using Forms 1094-C and 1095-C. Form 1095-C includes separate sections for reporting under each provision.
2015 Forms and Instructions

Final versions of the 2014 forms were previously released for those employers that chose to voluntarily comply for the 2014 calendar year. The following forms and instructions are now available for 2015:

Forms 1095-B and 1095-C must be electronically filed if the employer is required to file at least 250 of the specific form.

For More Information

Additional details on the information reporting requirements for providers of minimum essential coverage, including self-insuring employers, are available in IRS Questions and Answers. More information about the information reporting requirements for large employers subject to “pay or play” is available in separate IRS Questions and Answers.

Final Rules Revise Summary of Benefits and Coverage (SBC) Requirements

paperworkNew final regulations amend the existing rules on the summary of benefits and coverage (SBC) notice requirements under Health Care Reform for SBCs with respect to coverage that begins on or after September 1, 2015.

Among other things, the new regulations place additional obligations on group health plans that enter into a binding contract with another party to provide the SBC (such as the insurer). To satisfy the requirement to provide the SBC, such a plan must:

  • Monitor performance under the contract;
  • Correct noncompliance as soon as practicable, if the plan has knowledge that the SBC is not being provided in a manner that complies with the law and has all information necessary to correct the noncompliance; and
  • Communicate with affected participants and beneficiaries and begin taking significant steps as soon as practicable to avoid future violations, if the plan has knowledge that the SBC is not being provided in a manner that complies with the law and does not have all information necessary to correct the noncompliance.

A new SBC template and associated documents are expected to be finalized, separately from the final regulations, by January 2016 and will apply to SBCs for coverage beginning on or after January 1, 2017. Until then, the previously authorized templates may be used without penalty (including the original template), provided the SBC is furnished with a cover letter or similar disclosure that includes additional language indicating whether the plan provides “minimum essential coverage” and “minimum value.”

Be sure to visit our Summary of Benefits and Coverage (SBC) section for additional information.

Reminder: PCORI Fees Due by July 31 for Employers Sponsoring HRAs and Other Self-Insured Plans

health-care-reform-road-sign-1Fees to fund the Patient-Centered Outcomes Research Institute (PCORI) are due July 31 from employers that sponsor certain self-insured health plans, including health reimbursement arrangements (HRAs) that are not treated as excepted benefits. The fee, which is required under Health Care Reform, applies to plan years ending on or after October 1, 2012, and before October 1, 2019.

Calculating the Fee
For plan years ending on or after October 1, 2014 and before October 1, 2015, the fee for an employer sponsoring an applicable self-insured plan is $2.08 (two dollars for plan years ending on or after October 1, 2013 and before October 1, 2014) multiplied by the average number of lives covered under the plan. Fee increases are based on increases in the projected per capita amount of National Health Expenditures.

Details on how to determine the average number of lives covered under a plan, as well as various examples, are included in the final regulations.

Reporting and Payment Deadline

Plan sponsors of applicable self-insured health plans are required to report and pay the fee no later than July 31 of the calendar year immediately following the last day of the plan year to which the fee applies. Fees are reported and paid using IRS Form 720, Quarterly Federal Excise Tax Return. The final regulations do not permit or include rules for third-party reporting or payment of the PCORI fee.

Updated 2015 Pay or Play Penalty Calculators Now Available

pay-or-playThe Pay or Play Penalty Calculators in your online HR library have been updated to include the inflation-adjusted penalty amounts for 2015. There are two separate calculators for 2015, depending on an employer’s number of full-time employees (including full-time equivalents):

To use the updated calculators, simply enter data on the number of full-time employees and employees receiving a premium tax credit or cost-sharing reduction for a month, and the spreadsheet will calculate the estimated penalty for the month.

Compliance Timeline

As a reminder, employers with 100 or more full-time employees (including full-time equivalents) are subject to the pay or play requirements starting in 2015, while those with 50 to 99 full-time employees (including full-time equivalents) do not need to comply until 2016 if they meet certain eligibility criteria related to workforce size, maintenance of workforce and overall hours of service, and maintenance of previously offered health coverage.

More tools, checklists, and notices are available in our section on Health Care Reform.