On November 18, 2016, the IRS announced (Notice 2016-70) that the deadline for 2016 reporting requirements under Sections 6055 and 6056 have been extended. This extension is applicable to the distribution of the forms to employees and covered individuals only, not the filing of the forms with the IRS. An automatic extension of 30 days is granted if good cause exists with an additional 30 days available via an application to the IRS. The deadline for distribution of Forms 1095-B and 1095-C to employees and covered individuals has been changed from January 31, 2017, to March 2, 2017. While the deadline for filing forms 1094-B, 1095-B, 1094-C, and 1095-C remains February 28, 2017, if filed with the IRS on paper and March 31, 2017, if filed with the IRS electronically.
The notice also confirms that the IRS will continue to apply the good faith standard when it comes to issuing penalties resulting from incomplete or incorrect forms. Employers must make a good faith effort to comply with the requirement and meet the required distribution and filing deadlines.
If you have any questions regarding the extension of time or the ACA reporting requirements, please contact Aronson Compensation and Benefits Practice Director Mark Flanagan, at 301.231.6200.
Retaining talent in an ever-changing market can be a daunting task. With flexible work schedules, healthcare reform and other demands placed on the modern employee, providing a benefit package that is mutually beneficial to both you and them is paramount. In its second year, Aronson’s Employee Benefit Plan Survey is now available thru March 10, 2016. The final report based on the survey findings will help you to determine your strengths and weaknesses, and determine how your plan matches up against the competition. For more information about our Employee Benefit Group and to take the survey, visit here. Stay tuned for the report release in April and join us for our event on March 22, where we will give participants a sneak peak of this year’s survey findings. Visit here to register.
Few things have caused as much handwriting for employers as the new healthcare coverage reporting that was originally due to employees by February 1, 2016. Employers and advisors alike can breathe a temporary sigh of relief given the Internal Revenue Service (IRS)’s recent extension of the due date for Affordable Care Act (ACA) reporting.
IRS Notice 2016-4 provides a two-month extension for employers and insurance companies that are required to report under ACA. New form filing deadlines are as follows:
• Form 1095-B and 1095-C to employees – March 31, 2016
• Electronic transmittal of Forms 1094-B, 1094-C, 1095-B and 1095-C to the IRS – June 30, 2016
• Paper transmittal of Forms 1094-B, 1094-C, 1095-B and 1095-C to the IRS – May 31, 2016
The IRS has indicated that employees do not need to delay filing their 1040 or file an amended 1040 once forms have been received. Copies of the forms should be kept on file with other tax records if needed in the future.
For more information or to discuss the impact of this reporting relief, please contact Aronson Compensation and Benefits Practice Director Mark Flanagan at 301-231-6257.
Under the Patient Protection and Affordable Care Act “PPACA,” certain types of health insurance arrangements are required to pay the Comparative Effectiveness Research Fee, which is also known as the PCORI fee because the monies are used to help fund the Patient-Centered Outcomes Research Institute. The types of arrangements subject to the fee are:
The fee is reported and remitted to the IRS via Form 720 and is due by July 31st of the year following the last day of the plan year.
The fee is based on the average number of covered lives during the plan year. Covered lives include the covered employees of the plan sponsor and all other covered dependents. The IRS has prescribed various methods for determining the average number of lives.
The amount of the fee is $2 per covered life for policy years ending on or after Oct. 1, 2013, and before Oct. 1, 2014; and $2.08 per covered life for plan years beginning on or after Oct. 1, 2014 and ending before Oct. 1, 2015.
In fully insured arrangements, the insurance companies are required to pay the fee and submit Form 720. Self-insured plan sponsors are required to both pay the fee and submit Form 720. Unlike other aspects of the Act, the PCORI fee requirement is applicable to all affected plans, regardless of employer size.
The IRS recently released yet another notice (2015-17) related to health coverage reimbursements for small employers. Small employers (those with 50 or fewer employees or full-time employees in 2014) will be glad to know that this new notice actually brings some good news, as the preceding related notices generally have not.
Under the Affordable Care Act (ACA), virtually all health coverage premium arrangements that are not integrated with an employer sponsored group health plan are deemed “group health plans” on their own. Group health plans are subject to the various ACA rules and the associated penalties for non-compliance. Standalone reimbursement arrangements, by their very nature, are generally not expected to comply with the ACA requirements and will be subject to a fine of $100 per employee per day, capped at $36,500.
Often, the cost of a group health insurance plan does not make fiscal sense for small employers. In lieu of this benefit, many employers provided premium reimbursements to their employees. Employers got a deduction for such reimbursements and employees did not have to include the reimbursements as taxable wages. This worked very well for employers and employees alike for many years. Effective January 1, 2014, these arrangements basically became obsolete. Initially, there was great mystery regarding what arrangements would or would not be deemed a health plan and subject to the ACA requirements. Vendors and employers alike proposed various work-arounds only to be rebuffed by both the IRS and DOL. Further guidance also came out indicating that arrangements whereby employees included reimbursements as taxable wages would also be deemed a health plan, further restricting the use of this technique. In the end, it was determined that, effective January 1, 2014, employers could give employees additional taxable compensation to offset premium expenses but it could not be specifically linked to the payment of health insurance premiums.
Notice 2015-17 provides penalty relief for small employers who have a reimbursement plan in 2014 through June 30, 2015. For now employers can deduct premium and expense reimbursements while excluding them from employee’s taxable income up until June 30, 2015.
While the relief is minor, small employers should enjoy it while they can!
Please contact Mark Flanagan of Aronson’s compensation and benefits practice at 301.231.6257 to further discuss the impact of this relief under the Affordable Care Act.