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ACA Taxes Affected by the Spending Resolution

On Jan. 22, 2018, President Donald Trump signed into law a short-term continuing spending resolution to end the government shutdown and continue funding through Feb. 8, 2018. The continuing resolution impacts three taxes and fees under the Affordable Care Act (ACA).

Specifically, the continuing resolution:

  • Delays implementation of the Cadillac tax on high-cost group health coverage until 2022;
  • Provides an additional one-year moratorium on the health insurance providers fee for 2019 (although the fee continues to apply for 2018); and
  • Extends the moratorium on the medical device excise tax for an additional two years, through 2019.

Employers should be aware of the evolving applicability of existing ACA taxes and fees so that they know how the ACA affects their bottom lines. Broad Reach Benefits, Inc will continue to keep you informed of changes.

Cadillac Tax Delayed

The ACA imposes a 40 percent excise tax on high-cost group health coverage, also known as the “Cadillac tax.” This provision taxes the amount, if any, by which the monthly cost of an employee’s applicable employer-sponsored health coverage exceeds the annual limitation (called the employee’s excess benefit). The tax amount for each employee’s coverage will be calculated by the employer and paid by the coverage provider who provided the coverage.

Although originally intended to take effect in 2013, the Cadillac tax was immediately delayed until 2018 following the ACA’s enactment. A federal budget bill enacted for 2016 further delayed implementation of this tax until 2020, and also:

  •      Removed a provision prohibiting the Cadillac tax from being deducted as a business expense; and
  •      Required a study to be conducted on the age and gender adjustment to the annual limit.

The continuing […]

By |January 24th, 2018|Uncategorized|Comments Off on ACA Taxes Affected by the Spending Resolution

2017 ACA Reporting Furnishing Deadline Delayed

The Internal Revenue Service (IRS), on Dec. 22, 2017, issued Notice 2018-06 to:

  • Extend the due date for furnishing forms under Sections 6055 and 6056 for 2017 for 30 days, from Jan. 31, 2018, to March 2, 2018; and
  • Extend good-faith transition relief from penalties related to 2017 information reporting under Sections 6055 and 6056.

Notice 2018-06 does not extend the due date for filing forms with the IRS for 2017. The due date for filing with the IRS under Sections 6055 and 6056 remains Feb. 28, 2018 (April 2, 2018, if filing electronically).

Action Steps

The IRS is encouraging reporting entities to furnish statements as soon as they are able. No request or other documentation is required to take advantage of the extended deadline.

Section 6055 and 6056 Reporting

Sections 6055 and 6056 were added to the Internal Revenue Code (Code) by the Affordable Care Act (ACA).

  • Section 6055 applies to providers of minimum essential coverage (MEC), such as health insurance issuers and employers with self-insured health plans. These entities will generally use Forms 1094-B and 1095-B to report information about the coverage they provided during the previous year.
  • Section 6056 applies to applicable large employers (ALEs)­­—generally, those employers with 50 or more full-time employees, including full-time equivalents, in the previous year. ALEs will use Forms 1094-C and 1095-C to report information relating to the health coverage that they offer (or do not offer) to their full-time employees.

Extended Furnishing Deadline

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By |December 22nd, 2017|Uncategorized|Comments Off on 2017 ACA Reporting Furnishing Deadline Delayed

Legal Alert: IRS Updates Employer Mandate FAQs: Indicates that Penalty Letters are Imminent

The Internal Revenue Service (IRS) has updated its list of frequently asked questions (FAQs) on the Affordable Care Act’s employer shared responsibility provisions – also known as the “pay or play” mandate. In particular, questions 55 through 58 provide guidance for employers who may be subject to shared responsibility payments.   The FAQs indicate that the IRS will begin sending penalty letters to applicable large employers (ALEs) that owe penalties for calendar year 2015 “in late 2017.” Around this time last year, the IRS had indicated that penalty letters for 2015 would be coming “in early 2017;” however, those letters never materialized.   Based on the latest update to its FAQs, it appears that the IRS has worked out the kinks in its systems and is prepared to begin sending penalty letters.

Background

Starting in 2015, the ACA requires ALEs to either “play” by offering affordable health coverage to their full-time employees, or “pay” a penalty if the employer fails to provide affordable health coverage and at least one full-time employee receives a premium tax credit to help purchase coverage through the Health Insurance Marketplace. ALEs are generally those with 50 or more full-time employees, including full-time equivalent employees. Transitional relief was available for 2015 (and, for non-calendar year plans, any portion of the 2015 plan year that fell in 2016) for ALEs with fewer than 100 full-time employees that satisfied the conditions of such transitional relief.

In general, there are two potential penalties (both non-deductible for tax purposes) that could be imposed on an ALE for failure to satisfy the mandate. The first penalty, known as the “no coverage” penalty, is based on whether an ALE fails to offer group health plan coverage to […]

By |November 7th, 2017|Compliance, Employee Benefits, Human Resources, Legislation, Medical, Uncategorized|Comments Off on Legal Alert: IRS Updates Employer Mandate FAQs: Indicates that Penalty Letters are Imminent

Church-affiliated Plans Are Exempt from ERISA- Supreme Court Ruling

The U.S. Supreme Court issued a decision on June 5. 2017 holding that an employee benefit plan may be exempt from the Employee Retirement Income Security Act (ERISA) as a “church plan” even if a church did not establish it. The court held that the ERISA exemption for church plans applies to certain organizations that are affiliated with churches, regardless of how their benefit plans were established.

Because this is consistent with how federal agencies currently interpret and enforce ERISA, the ruling does not change any obligations for most employers. The decision does, however, settle and resolve a recent wave of litigation involving employers with religious affiliations, such as hospitals.

Action Steps

Employers with church affiliations should be aware of the specific criteria an employee benefit plan must meet to qualify for ERISA’s church-plan exemption. All employers that sponsor employee benefit plans should ensure that their plans either meet the criteria for an ERISA exemption or comply with all applicable ERISA requirements.  […]

By |June 15th, 2017|Uncategorized|Comments Off on Church-affiliated Plans Are Exempt from ERISA- Supreme Court Ruling

Cafeteria Plans: Allowing Midyear Election Changes

If you work in human resources the following scenario should sound familiar: An employee wanders in and starts to complain bitterly that they can no longer afford the medical or dental coverage they signed up for and demand you let them drop the coverage immediately (midyear).  Good luck explaining that it’s not you who won’t let them drop their coverage.  It’s those pesky rules in place within the IRS Section 125 plan you have in place.

Internal Revenue Code Section 125 cafeteria plans state that participant elections must be made before the first day of the plan year or the date taxable benefits would currently be available, whichever comes first. These elections are generally irrevocable until the beginning of the next plan year. This means that participants cannot make changes to their cafeteria plan elections during a plan year just because they no longer want the coverage.

IRS regulations do permit employers to design their cafeteria plans to allow employees to change their elections during the plan year if certain conditions are met. The IRS clearly lists permitted or qualifying events that allow participants to change his or her election midyear as long as the change is consistent with the event.  Some examples are an employee has a spouse who loses or gains employment, birth of a child, marriage and divorce.  Also, the IRS did expand the midyear election change rules in response to certain Affordable Care Act (ACA) provisions.

Download our Compliance Overview Brief, Cafeteria Plans: Midyear Election Changes, for all the details on permitted election changes:

Cafeteria Plans Midyear Election Changes 06 28 16

By |March 28th, 2017|Uncategorized|Comments Off on Cafeteria Plans: Allowing Midyear Election Changes

What Employers Need to Know About Telemedicine and HSA Eligibility

Telemedicine is becoming a popular method of providing a variety of medical services. Telemedicine benefits allow employees to interact with their doctor via phone, video chat, email or text for diagnosis, consultation, and treatment.

Employers that offer high-deductible health plans (HDHPs) that are compatible with health savings accounts (HSAs) need to understand how a telemedicine benefit may impact participants’ HSA eligibility.

The Internal Revenue Service (IRS) has not specifically addressed the impact of telemedicine on HSA eligibility. However, the general rules for HSA contributions strictly limit the types of health plan coverage that eligible individuals may have. Whether telemedicine is disqualifying coverage for HSA purposes depends on how the telemedicine benefit is structured. Employers that want to offer a telemedicine benefit while preserving HSA eligibility will need to make sure that the telemedicine benefit is designed in a way that is HSA–compatible.

Telemedicine Benefits

Telemedicine is a way for health care professionals to provide patient care through technology (such as a web-based communication or phone/video chat) rather than in-person consultations. For example, through telemedicine, a patient may be able to communicate in real-time with his or her doctor from home via phone, video chat, email or text for the purpose of medical evaluation, diagnosis, and treatment.

While telemedicine is not a new type of employee benefit, it is growing in popularity with employers and employees. Telemedicine can provide easier access to health care services for employees who live in rural areas and employees who travel frequently for work. By accessing health care professionals through telemedicine, employees can avoid having to take time off from work for in-person office visits. Also, because telemedicine consultations are generally less expensive than in-person visits, incorporating a telemedicine benefit may help control health coverage costs. In some states, health insurance policies are required to cover at least some telemedicine services.

Before implementing a telemedicine benefit, employers should consider the compliance issues associated with this type of benefit. Employers that sponsor HDHPs will also want to consider whether the telemedicine coverage could disqualify employees from making HSA contributions.

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By |March 22nd, 2017|Uncategorized|Comments Off on What Employers Need to Know About Telemedicine and HSA Eligibility

Legal Alert: IRS Increases Health FSA Contribution Limit for 2017, Adjusts Other Benefit Limits

On October 25, 2016, the Internal Revenue Service (IRS) released Revenue Procedure 2016-55, which raised the health Flexible Spending Account (FSA) salary reduction contribution limit to $2,600 for plan years beginning in 2017. The Revenue Procedure also released the cost-of-living (COLA) adjustments that apply to dollar limitations in certain […]

By |November 1st, 2016|Uncategorized|Comments Off on Legal Alert: IRS Increases Health FSA Contribution Limit for 2017, Adjusts Other Benefit Limits

Department of Labor Compliance Assistance

You receive a letter in the mail notifying you that your company is being audited by the Department of Labor. Once the shock wears off you immediately start thinking back, is my benefit plan in compliance, did that last notice about the ACA go into effect, did I make the update, what about fines and penalties, am I subject to those? Why was my company selected to be audited? Instead of staying up at night worrying about whether your organization is […]

By |October 17th, 2016|Uncategorized|Comments Off on Department of Labor Compliance Assistance

EMPLOYER ALERT – IRS EMAIL SCAM

The newest scam involving a fraudulent email notice from the Internal Revenue (IRS) may have your employees coming to you asking about their insurance coverage for […]

By |September 28th, 2016|Human Resources, Uncategorized|Comments Off on EMPLOYER ALERT – IRS EMAIL SCAM

What You Need To Know about Narrow Provider Networks

So what’s a narrow network?  Narrow networks are health plans that offer their subscribers a limited choice in health care providers compared to their larger national or regional network.  These plans contract with a smaller group of doctors, specialists and hospitals, and those entities are then considered in-network.

Because all plan participants are directed toward certain facilities and physicians, these providers can then reduce the cost for each visit and service—operating under the idea of “buying in bulk.” This, in turn, results in lower premiums for the consumer and cost savings for insurers.

In recent years, narrow networks have gained popularity.  Many unsuspecting consumers have purchased health plans in the market and were unaware that the plan they purchased had one of these narrow networks.

On the employer side do these narrow network options makes sense?  They can in the right situations such as using a narrow network plan as a low-cost employee option alongside your other medical plan offerings.  And of course, you absolutely need to effectively educate your employees.

Why are narrow networks becoming more popular?

Narrow networks have been around long before the Affordable Care Act (ACA). In fact, 23 percent of employer-sponsored health plans offered narrow networks in 2012. However, their popularity has accelerated since the ACA was signed into law and the Health Insurance Marketplace was created.

Since insurers can no longer compete to cover the healthiest group of individuals or raise deductibles past the ACA’s limits, some have turned to narrow networks as a way to manage expenses. According to a study by McKinsey & Co., a consulting firm, 70 percent of the plans sold on the Marketplace in 2014 featured a limited network. Premiums for those plans were 17 percent cheaper than those with […]

By |July 20th, 2016|Employee Benefits, Employee Benefits Adviser, Uncategorized|Comments Off on What You Need To Know about Narrow Provider Networks