Auto-Enroll Mandate Removed from ACA

Finally, some good news for employers when it comes to ACA compliance. Today, President Obama signed the Bipartisan Budget Act of 2015. Included, was a provision repealing the auto-enrollment requirement for organizations with over 200 employees.

This change comes as a relief for most large employers. Fears of “defaulting” employees into a medical plan they didn’t want were a significant cause of stress. Thankfully, there’s one less thing to worry about or implement.

Please note: This communication is designed for introductory informational purposes. The contents are summaries and are not intended to cover every aspect of the topic, law or regulation being discussed. The information contained in this post and website does not constitute legal or tax advice. To ensure full compliance based on your unique organizational requirements, discussion with your attorney or tax professional is recommended.

NYC Mandates Pre-Tax Transportation Benefits

NYC Mandates Pre-Tax Transportation Benefits for 1/1/16

If your organization has an office in New York City, it’s time to review your benefits package. Effective January 1, 2016, companies with 20 or more employees in NYC must offer a pre-tax transportation benefit.

The new legislation does not apply to every employer. Your organization may be exempt if you:

  • are Federal, State or Local Government
  • are not required to pay federal or state taxes
  • have a collective bargaining agreement in place that meets certain guidelines

Non-exempt employers who fail to offer the required pre-tax transportation fringe benefit could face fines and penalties.

 

The Clock Is Ticking On ACA Compliance

Is your organization digging into your benefits data yet? We are only a few weeks away from the compliance deadlines imposed by the Affordable Care Act (ACA).

For the current 2015 tax year, Applicable Large Employers (ALEs) with 50 or more Full Time or Full Time Equivalent employees must file new forms with the IRS and provide them to employees to be in compliance with the ACA.

Form 1094 and 1095

Form 1094 is titled “Transmittal of Employer Provided Health Insurance Offer and Cover Information Returns.” While the title is long, it will likely prove to be the easier of the forms to complete. It provides data about the employer, the months where “Minimum Essential Coverage” was offered, the number of full time employees, and whether the employer qualifies for Transition Relief (50-99 lives).

Form 1095 titled “Employer-Provided Health Insurance Offer and Coverage Insurance” is far more onerous. This is the form that must be provided to each full time employee that was eligible for coverage, AND any part time employees (under 30 hours a week) who elected medical benefits. Coverage, cost, and appropriate codes must be detailed BY MONTH for each employee.

Below is an example of the data required for a Fully Insured Health Plan:

Employee Example:

Tina was a full time employee at XYZ Company during part of tax year 2015. She was enrolled in the Health Plan from January 1 through February 28, 2015 and when she terminated employment. Tina’s Form 1095-C would need to indicate she received an offer of coverage on line 14 for January and February. (XYZ Company might use Code 1C – coverage offered to Tina and all dependents.) The remaining 10 months on the form would require a different code be utilized to show no qualifying offer was made (Code 1H).

Self Insured Plans Require More Data

If your medical plan is self-insured, employers have an additional data reporting burden. Spousal and dependent data is required to be reported by month on form 1095, not just employee data.

Transmission to the IRS

Form 1094 and copies of every Form 1095 provided to employees must be transmitted to the IRS. If the employer produces 250 or more returns, you MUST file electronically through a special system the IRS has created called AIR (ACA Information Returns.) If you are required to file electronically and fail to do so, you can be penalized $250 per paper return in excess of the 250 threshold. These fines can add up quickly.

Please note: This communication is designed for introductory informational purposes. The contents are summaries and are not intended to cover every aspect of the topic, law or regulation being discussed. The information contained in this post and website does not constitute legal or tax advice. To ensure full compliance based on your unique organizational requirements, discussion with your attorney or tax professional is recommended.

Important Plan Limits for 2016

Every year, the IRS announces important plan limits for High Deductible Health Plans, Health Savings Accounts, Flexible Spending Accounts and 401(k) plans. Important limits for 2016 are summarized below.

Flexible Spending Accounts:

The maximum deferral to a Medical Flexible Spending Account remains at $2,250.

Qualified Transportation Benefits

2016 Limits Change from 2015
Commuter vehicle and transit pass $130 No change
Qualified Parking $255 +$5

 

 

High Deductible Health Plans

For 2016, the IRS has indicated the minimum deductibles for a plan to be considered “qualified” remain unchanged, however, the Maximum Out of Pocket limits have increased.

2016 Limits Change from 2015
HDHP minimum deductibles $1,300 single only

$2,600 family

No changes
HDHP out of pocket maximum $6,650 single only

$13,100 family

+$100 single only

+$200 family

HSA Contribution Limits $3,350 single only

$6,750 family

 

Combination of employer and employee contributions

No change single only

+$100 family

 

Please keep in mind, the out of pocket limits listed by the Affordable Care Act are higher than the permissible IRS maximums. To qualify for a Health Savings Account, OOP Maximums may not be higher than those listed above.

Is your single HDHP deductible greater than $6,650 for 2016?

If so, you may need to make plan design changes to allow an embedded self-only deductible for those electing family plans to comply with the ACA.

Retirement Plan Maximums

On October 21,2015 the IRS announced limits for 401k plans will remain the same for 2016.

2016 Limits
Maximum employee deferral $18,000
Catch Up Contribution Limits

(Employees 50+)

$6,000

 

FAQ’s on the ACA Employer Reporting Requirements

The IRS recently released revised forms and instructions on completing the necessary Affordable Care Act reporting requirements.

Q 1. Why is the Federal Government requiring additional reporting from employers?

The government needs to collect data from both insurance companies and employers to administer several key provisions of the Affordable Care Act:

  1. The Employer Mandate – penalty assessment of employers who fail to offer appropriate coverage. (Also known as the “Pay or Play” provision.)
  2. The Individual Mandate – taxes imposed on individuals who fail to obtain or maintain the required coverage in 2015.
  3. The Federal Premium Tax Credit – verification that individuals who claimed financial assistance in purchasing health care through a State or Federal Exchange were not offered employer sponsored coverage that eliminates eligibility to qualify during 2015.

Q 2. What types of reporting is required?

There are two separate types of reporting that are required. These are found in IRS Code 6055 and Code 6056.

Code 6055 – Minimum Essential Coverage Data

Purpose: Enforcement of the individual mandate

Applies to: Insurance companies providing fully insured coverage, Self-Insured Plan Sponsors     and governmental entities

Forms: Form 1094-B and 1095-B

Data Required: Data by person, by month for all individuals covered by “Minimum Essential Coverage”

Who receives: IRS and each employee covered

Code 6056– Employer Mandate Data

Purpose: Enforcement of the employer mandate

Applies to: All Applicable Large Employers with 50 or more Full Time or Full Time Equivalent employees. (ALEs) The employer is responsible for completion regardless of fully insured or self funded status of the plan.

Forms: 1094-C and 1095-C

Data Required: Employer and employee data, cost of coverage data, months provided. Data also required for full time employees who were offered coverage but declined to enroll.

Q 3. Can self-insured employers combine reporting requirements under 6055 and 6056?

Yes. Self-insured plan sponsors can satisfy their requirements by completing Form 1094-C and filling out all three sections of Form 1095-C.

Q 4. If I am in the 50-99 employer size, do I need to report for 2015?

Yes. All employers subject to the employer mandate must report or face potential penalties for failure to do so. Employers in this size range may qualify for transition relief of the Employer Mandate Penalty, but do still need to furnish the reporting required by the deadlines in early 2016 or risk steep penalties for failure to report.

Q 5. Are Non-Profit entities required to produce the reports?

Yes. All employers with 50 or more FTEs / FT Equivalents are required to provide the reports.

Q 6. When is the reporting due?

Form 1095-C must be provided to employees by January 31st. However, January 31st 2016 falls on a Sunday, so it must be provided no later than Monday, February 1, 2016 for coverage provided in the 2015 tax year.

Employers must also submit Form1094-C and copies of 1095-C to the IRS by February 28 (if using paper) or by March 31 if filing electronically.

Employers who generate more than 250 Form 1095-Cs must file electronically or face additional penalties.

Q 7. Are there any other alternative ways to comply?

Yes. If your organization meets certain requirements, it may qualify for certain types of reporting relief. This relief does not mean employers can neglect to report data – however, it may change the eligible methods of completion and how data is permitted to be provided to employees.

Alternatives Are:

Qualifying Offer Method

98% Offer Method

Section 4980H Transition Relief

The IRS has provided significant information on each of the Alternatives and strict requirements on how to qualify.

Q 8. What are the potential reporting penalties?

Employers can be penalized $250 per form for failure to file. For 2015 tax data, employers may be exempt from penalties if they make a “good faith effort” to provide the necessary data.

The IRS FAQ’s indicate that “No relief is provided in the case of ALE members that cannot show a good faith effort to comply with the information reporting requirements or that fail to timely file an information return or furnish a statement.” 

To learn more about the IRS FAQ’s on the reporting and tax provisions of the Affordable Care Act

Please note: This communication is designed for introductory informational purposes. The contents are summaries and are not intended to cover every aspect of the topic, law or regulation being discussed. The information contained in this post and website does not constitute legal or tax advice. To ensure full compliance based on your unique organizational requirements, discussion with your attorney or tax professional is recommended.