Tag Archives: affordable care act

Is Your IRS Notice Real?

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The latest incarnation of aggressive scammers impersonating IRS agents features fake IRS notices arriving by e-mail or snail mail.

According to the IRS, the fake notices labeled as “CP2000”, purport to be related to the Affordable Care Act and request information related to 2014. For further details, see the IRS announcement on this topic.

The CP2000 is a legitimate notice number that is mailed to taxpayers, which makes it even harder for you to realize it could be fraudulent. When in doubt, show the notice to your tax advisor, or call the IRS at 1.800.829.1040 to ask about the status of your account. Do not call the number shown on a notice you are uncertain about.

Any payments made to the IRS by check should be payable to United States Treasury. Such a check is far less likely for a recipient other than the IRS to cash. Better to be safe than sorry! Consider making all payments directly to the IRS online using DirectPay or setting up an EFTPS account. Online payments provide a confirmation number at the time payment is made, and enough information to your bank that in the event of a problem, the destination of the funds can be traced.

For further information or to discuss your circumstances, please contact Larry Rubin, CPA, at 301.231.6200 or lrubin@aronsonllc.com.

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IRS Releases Draft Forms for ACA’s Coverage Reporting Requirements

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One of the fundamental goals of the Affordable Care Act “ACA” is health coverage for all. With that goal comes new reporting requirements for employers and insurance companies offering health coverage. The IRS recently released drafts of the forms that will be used to report 2015 coverage information in early 2016.

Employers with more than 50 full-time equivalent employees will be required to use Form 1095-C  to report whether or not they offered health coverage to their employees. The Form 1095-C that employees receive from their employer will include information on the months the employee was offered coverage and the employee’s share of the lowest cost monthly premium for self-only “minimum value” coverage. The employer will transmit the Form 1095-Cs, via Form 1094-C, to the IRS.

Regardless of their size, employers that sponsor self-insured health plans and insurers are required to report on the individuals covered by their health plans. Form 1095-B will be provided to all primary insureds to show the months the primary insured and his or her family members had coverage under the plan. The plan sponsor/insurance company will transmit the forms to the IRS via Form 1094-B.

These reporting requirements are designed so that the IRS can monitor several key features of the ACA: compliance with the individual and employer mandates as well as eligibility for the premium tax credits associated with purchasing coverage through an exchange.

While these new requirements are not effective until the end of 2015, employers should begin to make sure systems and procedures will be modified in time to ensure compliance.

Please contact Mark Flanagan of Aronson’s compensation and benefits practice at 301.231.6257 to further discuss the impact of this requirement under the new healthcare reform rules.

About the Author: Mark Flanagan is a director in Aronson’s Specialty Tax Group. He has over 25 years of experience in the compliance and technical aspects of qualified and non-qualified benefit plans, including plan design, consulting, and technical administration

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Reimbursement for Health Insurance Premiums Under ACA

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As companies continue to look for the most cost effective ways to provide health insurance to their employees, they may be tempted to reimburse the employees for coverage obtained outside of the business. Even before the ACA, it was not uncommon for employers to reimburse tax-free some or all of the premiums employees incurred to acquire their own health insurance.

However, under the ACA, such reimbursements constitute a group health plan. As such, the employee reimbursement arrangement will cause the business to be subject to a $100 per day per employee penalty. This applies to any business, no matter how small.

This rule was designed to discourage a company from telling its employees to go to the government’s Health Insurance Marketplace to get a policy, possibly subsidized on the backs of taxpayers, and reimburse for that lower premium amount instead of the company obtaining group insurance on its own.

This penalty will not apply if the reimbursement is added to the employee’s W-2 (i.e., not tax-free to the employee). Thus, businesses can still offer these reimbursement arrangements, but such reimbursements will need to be treated as wages, replete with all associated withholdings and employment taxes.

For further information or to discuss your specific situation, please contact your Aronson tax advisor at 301.231.6200.

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Changes to the Healthcare Tax Credit for Small Business Employers

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As small businesses work to keep up with the evolving state of healthcare in the U.S., recent tax changes may be a double-edged sword for employers. The good news is that the available tax credit, for plan years beginning after December 31, 2013, has increased from 35 percent up to 50 percent of premiums paid by small business employers. The bad news is that, to be eligible, plans must be offered through a Small Business Health Options Program Marketplace (i.e., through healthcare.gov or a state-run marketplace). A second new limitation is that the credit may only be taken for two consecutive years.

Other eligibility requirements remain the same. To qualify:

  • A small employer must have fewer than 25 full-time equivalent employees (e.g., two half-time employees count as a full-time equivalent employee).
  • The average wages for employees (excluding owners) must be less than $50,000 per year (total wages divided by the number of full-time equivalent employees).
  • The employer must pay at least half of the cost of the employees’ individual (not family) health insurance premiums.

For small employers who qualify, the credit can be a significant tax savings. For “flow-through” businesses, like a small medical practice partnership, the credit would flow through to the individual owners’ tax returns.

If the credit exceeds the 2014 tax liability, it may be carried back to a prior year for a refund or carried forward to reduce next year’s taxes. For employers who missed the credit in 2012 or 2013, a quick calculation may help determine if amending a prior year return to claim the credit would be worthwhile.

For more information, please contact your Aronson tax advisor or Ellen Boulle-Lauria of Aronson’s Professional Services Industry Group at 301.231.6200.

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Mid-Size Employers Get Another One-Year Reprieve from Health Coverage Penalty

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As part of the new final regulations under the Affordable Care Act, the IRS announced a second delay in the “shared-responsibility” requirement for employers with 50 to 99 full-time equivalent employees (FTEs). Employers of this size can now wait until 2016 to offer health care coverage to their employees before being subject to the shared-responsibility payments if they chose not to provide coverage. In order to be eligible for the delay, employers cannot reduce their workforce or reduce the number of hours of service required to be eligible for coverage. Additionally, employers must maintain their previous coverage.

These employers are still required to meet the reporting requirements for their employees’ healthcare coverage starting in 2015.

The regulations also provide some shared-responsibility penalty relief for employers with 100 or more full-time equivalent employees. In 2015, in order to avoid the shared-responsibility penalty, 70% of full-time workers must be offered minimum essential coverage. Prior to the new regulations the percentage was 95%. In 2016 and beyond, 95% coverage will be required to avoid the penalty.

Employers and employees alike should pay close attention as additional guidance and regulations are likely to continue to be released on the Affordable Care Act.

If you should have any questions, please contact Mark Flanagan of Aronson LLC’s Specialty Tax Group at 301.231.6257.

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