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.
Beginning January 1, 2014, as a result of Patient Protection and Affordable Care Act (ACA), most individuals are required to have health insurance coverage.
The ACA requires that an applicable individual and any dependent must maintain a “minimum essential coverage” (MEC) for each month during 2014. Most individuals who now have coverage through an employer-sponsored plan (including COBRA coverage) or a government-sponsored program (e.g., Medicare, Medicaid, TRICARE, Children’s Health Insurance Program, etc.) will meet the MEC requirements. However, those individuals without MEC can purchase it in the Marketplace (formerly referred to as the “Exchange”).
Certain individuals are exempt from the ACA coverage requirements:
For some exemptions to be recognized, an application with supporting documentation must be submitted to the Marketplace to obtain an exemption code required for 2014 tax return filing.
Individuals that do not have MEC coverage and do not qualify for one of the above exemptions will be subject to the shared responsibility payment (“penalty”), which is reported and due with the 2014 tax return of such individuals. For 2014, the penalty is the greater of:
The maximum penalty cannot exceed the annual premium cost of the national average bronze-level health plan. For 2014, the average annual premium for a bronze-level health plan available through the Marketplace is $2,448 per individual ($204 per month per individual), and $12,240 for a family with five or more members ($1,020 per month).
For more information on how the Affordable Care Act affects your tax situation, please contact your Aronson advisor or Anatoli Pilchtchikov of Aronson’s Personal Financial Services Group at 301.231.6200.
The IRS released fact sheets 2014-09 discussing the Affordable Care Act (ACA) as it pertains to individuals, and 2014-10 discussing the ACA as it pertains to employers. These fact sheets provide a helpful overview in gaining a broad understanding of essence of the ACA.
In short, all individuals, with very limited exceptions, must have insurance meeting minimum standards, and all employers with 50 or more full-time employees must offer affordable insurance. Businesses with part-time employees should be especially cautious to compute the number of full-time equivalent employees, which could very well push the business over the compliance threshold.
Due to the complexity of the ACA, professional guidance should be sought. One misstep can result in significant penalties. For further information or to discuss your specific situation, please contact your Aronson tax advisor at 301.231.6200.