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Remember all the Talk about Government Reporting Requirements Associated with the Affordable Care Act?
On June 25, 2015, the U.S. Supreme Court upheld a key provision of the Affordable Care Act (ACA), allowing eligible Americans in all states to continue receiving federal tax credits toward the purchase of health insurance. The Supreme Court left the existing ACA law and regulations virtually unchanged. This means that the ACA will have a significant impact on many WNDE clients for the calendar year 2015 – both as employers and as individual taxpayers. This month’s newsletter highlights two major areas of concern for employers – IRS information reporting and ACA penalties on certain medical care reimbursement arrangements. Our August newsletter will highlight 2015 ACA developments affecting individual taxpayers.
IRS Information Reporting by Employers. The IRS information reporting requirements for 2015 generally apply to Applicable Large Employers (ALEs). An ALE is an employer that employed an average of at least 50 “full-time employees” during the previous calendar year 2014 (generally employees that worked at least 30 hours per week or at least 130 hours per month). Generally, for employees identified as “full-time” during 2014, an ALE is required to provide such employees and their non-spousal dependents with health coverage (Minimum Essential Coverage or MEC) during the calendar year 2015. There are four new IRS forms that will be used for ACA reporting for the calendar year 2015. Forms 1094-B and 1095-B will be used to report the months of MEC coverage provided to each full-time employee. Generally, these forms will be filed with the IRS by the insurance carrier on behalf of the employer. Forms 1094-C and 1095-C will be used by the employer to report health insurance coverage offered to its full-time employees during 2015. These forms must be provided to employees by January 31, 2016, and to the IRS by February 28, 2016 (or March 31, 2016, if filing electronically).
Caveat: Employers with self-insured group health plans may be subject to certain ACA taxes and fees during 2015 (not discussed herein). Also, small employers (those with an average of less than 50 “full-time employees” during the calendar year 2014) that provide self-insured health coverage to employees during the calendar year 2015 will be responsible for filing Forms 1094-B and 1095-B.
ACA Penalties on Certain Medical Care Reimbursement Arrangements. Generally, under the provisions of the ACA, group health plans cannot place an annual limit on Essential Health Benefits and must provide free preventive care. If employers have separate stand-alone medical care reimbursement arrangements that place annual limits on Essential Health Benefits or do not provide for free preventive care, and if such stand-alone plans are not “integrated” with the group health plan, the employer could be subject to a $100 per day per employee ($36,500 per year per employee) penalty. This requirement applies to both large and small employers. However, employers can avoid or reduce these penalties by:
• Converting stand-alone medical care reimbursement arrangements to ACA-compliant plans, or
• Eliminating the non-compliant plans and increasing the taxable salaries of employees to purchase individual insurance coverage.
Planning Points: Small employers had until June 30, 2015 to make the required changes without being subject to ACA penalties. Also, special rules apply to S Corporations which are not set forth in this newsletter.
If you have questions regarding ACA implementation or new 2015 reporting requirements, please contact your WNDE professional.