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HR360::Health Care Reform
  • IRS Releases Final 2016 1094-B and 1095-B Forms & Instructions

    Posted on September 28, 2016
    Print

    Form 1095-B Due to Individuals on January 31, 2017

    The Internal Revenue Service (IRS) has released the final forms and instructions for Forms 1094-B and 1095-B for calendar year 2016 reporting. Employers are required to report in early 2017 for calendar year 2016.

    Who is Required to Report
    Forms 1094-B and 1095-B are used by insurers, self-insuring employers, and other parties that provide minimum essential health coverage (regardless of size, except for large self-insuring employers) to report information on this coverage to the IRS and to covered individuals. Applicable large employers (generally those with 50 or more full-time employees, including full-time equivalents or FTEs) will use Forms 1094-C and 1095-C to report information to the IRS and to their full-time employees about their compliance with the employer shared responsibility provisions ("pay or play") and the health care coverage they have offered. 

    Employers subject to both reporting provisions (generally self-insured employers with 50 or more full-time employees, including FTEs) will satisfy their reporting obligations using Forms 1094-C and 1095-C. The final forms and instructions for Forms 1094-C and 1095-C have not yet been released for calendar year 2016 reporting.

    2016 Forms and Instructions
    The following forms and instructions are now available for calendar year 2016 reporting:

    Information Reporting Deadlines
    According to the instructions, filers of Form 1095-B must furnish a copy of the form by January 31, 2017, to the person identified as the “responsible individual” on the form for coverage in 2016. The responsible individual is the person who, based on a relationship to the covered individuals, the primary name on the coverage, or some other circumstances, should receive the statement. Forms 1094-B and 1095-B are also required to be filed with the IRS by February 28, 2017 (or March 31, 2017, if filing electronically). Please be advised that Forms 1095-B and 1095-C must be electronically filed if the employer is required to file at least 250 of the specific form.


    © 2012 - 2013 HR 360, Inc.
  • Understanding the Rules on 'Employer Payment Plans' Under the Affordable Care Act

    Posted on September 27, 2016
    Print

    'Employer Payment Plans' Violate Market Reforms, Give Rise to Significant Penalties

    An employer payment plan is an arrangement under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy or uses its funds to directly pay the premium for an individual health insurance policy covering the employee. As part of the implementation of the Affordable Care Act (ACA), new rules apply to employer payment plans. The summary below is intended to help employers understand these new rules and remain compliant with the ACA.

    ACA Market Reforms
    The ACA contains certain "market reforms" that apply to group health plans, including the:

    • Annual Dollar Limit Prohibition: A prohibition on any annual limit on the dollar amount of benefits for any individual; and
    • Preventive Services Requirement: A requirement that non-grandfathered plans provide certain preventive services without imposing any cost-sharing requirements for these services.

    Application of the ACA Market Reforms to Employer Payment Plans
    An arrangement under which an employer provides reimbursements or payments that are dedicated to providing medical care, such as cash reimbursements for the purchase of an individual market policy, is itself a group health plan under the ACA. Accordingly, the arrangement is subject to the ACA market reforms without regard to whether the employer treats the money as pre-tax or post-tax to the employee.

    If a group health plan does not itself comply with the market reforms, the plan must be integrated with a group health plan that is in compliance. However, the Internal Revenue Service (IRS) has stated that an employer payment plan cannot be integrated with an individual market policy to satisfy the market reforms. Consequently, employer payment plans may be subject to an excise tax penalty of $100 per day per applicable employee ($36,500 per year, per employee) under the Internal Revenue Code.

    Alternative to Employer Payment Plans
    According to IRS Notice 2015-17, if an employer increases an employee’s compensation, but does not condition the payment of the additional compensation on the purchase of health coverage (or otherwise endorse a particular policy, form, or issuer of health insurance), this arrangement is not an employer payment plan.

    © 2012 - 2013 HR 360, Inc.
  • IRS Warns of Fake Affordable Care Act Tax Bills

    Posted on September 23, 2016
    Print

    Fraudulent CP2000 Notices Being Sent by E-mail

    The Internal Revenue Service has issued an alert to taxpayers and tax professionals to be on guard against fake e-mails purporting to contain an IRS tax bill related to the Affordable Care Act (ACA). The IRS has received numerous reports around the country of scammers sending fraudulent versions of CP2000 notices for tax year 2015. Generally, the scam involves an e-mail that includes a fake CP2000 as an attachment.
     
    The fraudulent notices have the following characteristics:

    • These notices are being sent electronically, even though the IRS does not initiate contact with taxpayers by e-mail or through social media platforms;
    • The CP2000 notices appear to be issued from an Austin, Texas, address;
    • The underreported issue is related to the Affordable Care Act (ACA) requesting information regarding 2014 coverage; and
    • The payment voucher lists the letter number as 105C.

    The fraudulent CP2000 notices include a payment request that taxpayers mail a check made out to “I.R.S.” to the “Austin Processing Center” at a Post Office Box address. This is in addition to a “payment” link within the e-mail itself.

    A genuine CP2000 is generated by the IRS Automated Underreporter Program when income reported from third-party sources such as an employer does not match the income reported on the tax return. This notice is commonly mailed to taxpayers through the U.S. Postal Service, and is never sent as part of an e-mail to taxpayers. To determine if a received CP2000 notice is real, please see the IRS's Understanding Your CP2000 Notice page, which includes an image of a real notice.

    Taxpayers or tax professionals who receive this scam e-mail should forward it to phishing@irs.gov and then delete it from their e-mail account.

    © 2012 - 2013 HR 360, Inc.
  • Understanding the Rules on HRAs Under the Affordable Care Act

    Posted on September 22, 2016
    Print

    HRAs Satisfy Market Reforms Under Certain Circumstances

    A health reimbursement arrangement (HRA) is a popular benefit that employers offer to reimburse employees for certain medical expenses. As part of the implementation of the Affordable Care Act (ACA), new rules apply to HRAs. The summary below is intended to help employers understand these new rules and remain compliant with the ACA. 

    HRAs Explained
    An HRA is an arrangement that is funded solely by an employer and that reimburses an employee for qualified medical care expenses incurred by the employee, or his spouse, dependents, and any children who, as of the end of the taxable year, have not attained age 27, up to a maximum dollar amount for a coverage period. This reimbursement is excludable from the employee’s income, and amounts that remain at the end of the year generally can be used to reimburse expenses incurred in later years. In general, HRAs are considered to be group health plans under the ACA.

    ACA Market Reforms
    The ACA contains certain "market reforms" that apply to group health plans, including the:

    • Annual Dollar Limit Prohibition: A prohibition on any annual limit on the dollar amount of benefits for any individual; and
    • Preventive Services Requirement: A requirement that non-grandfathered plans provide certain preventive services without imposing any cost-sharing requirements for these services.

    Application of the Market Reforms to HRAs
    In order to comply with the ACA market reforms, an HRA must be "integrated" with other coverage as part of a group health plan that alone complies with the market reforms. An HRA is integrated with a group health plan for purposes of the market reforms if it meets the requirements under one of two integration methods. Under the first method, the market reforms are satisfied if:

    • The employer offers a group health plan (other than the HRA) to the employee that does not consist solely of excepted benefits (such as limited-scope dental and vision benefits);
    • The employee receiving the HRA is actually enrolled in a group health plan (other than the HRA) that does not consist solely of excepted benefits, regardless of whether the employer sponsors the plan (non-HRA group coverage);
    • The HRA is available only to employees who are enrolled in non-HRA group coverage, regardless of whether the employer sponsors the non-HRA group coverage;
    • The HRA is limited to reimbursement of one or more of the following—co-payments, co-insurance, deductibles, and premiums under the non-HRA group coverage, as well as medical care that does not constitute essential health benefits; and
    • Under the terms of the HRA, an employee (or former employee) is permitted to permanently opt out of and waive future reimbursements from the HRA at least annually and, upon termination of employment, either the remaining amounts in the HRA are forfeited or the employee is permitted to permanently opt out of and waive future reimbursements from the HRA.

    Alternatively, the market reforms are also satisfied if:

    • The employer offers a group health plan to the employee that provides minimum value (MV);
    • The employee receiving the HRA is actually enrolled in a group health plan that provides minimum value, regardless of whether the employer sponsors the plan (non-HRA MV group coverage);
    • The HRA is available only to employees who are actually enrolled in non-HRA MV group coverage, regardless of whether the employer sponsors the non-HRA MV group coverage; and
    • Under the terms of the HRA, an employee (or former employee) is permitted to permanently opt out of and waive future reimbursements from the HRA at least annually, and, upon termination of employment, either the remaining amounts in the HRA are forfeited or the employee is permitted to permanently opt out of and waive future reimbursements from the HRA.

    Note: A group health plan, including an HRA, used to purchase coverage on the individual market is not integrated with that individual market coverage for purposes of the market reforms.

    For more information on the ACA rules that apply to HRAs, please read IRS Notices 2013-54 and 2015-87

    © 2012 - 2013 HR 360, Inc.
  • Understanding the Rules on Health FSAs Under the Affordable Care Act

    Posted on September 20, 2016
    Print

    Health FSAs Exempt From Market Reforms Under Certain Circumstances

    A health flexible spending arrangement (health FSA) is a popular benefit that employers offer to reimburse employees for certain medical expenses. As part of the implementation of the Affordable Care Act (ACA), new rules apply to health FSAs. The summary below is intended to help employers understand these new rules and remain compliant with the ACA.  

    Health FSAs Explained
    In general, a health FSA is a benefit designed to reimburse employees for qualified medical care expenses (other than premiums) incurred by the employee, or the employee’s spouse, dependents, and any children who, as of the end of the taxable year, have not attained age 27. Contributions to a health FSA offered through a section 125 cafeteria plan do not result in gross income to the employee. Employees electing coverage under a health FSA typically choose to enter into a salary reduction agreement in order to make contributions to the health FSA. For taxable years beginning in 2016, salary reduction contributions to a health FSA are limited to $2,550.

    In general, health FSAs are considered group health plans under the ACA, and thus are subject to the ACA market reforms explained below.

    ACA Market Reforms
    The ACA contains certain market reforms that apply to group health plans, including the:

    • Annual Dollar Limit Prohibition: A prohibition on any annual limit on the dollar amount of benefits for any individual; and
    • Preventive Services Requirement: A requirement that non-grandfathered plans provide certain preventive services without imposing any cost-sharing requirements for these services.

    These market reforms, however, do not apply to a group health plan in relation to its provision of "excepted benefits.” Excepted benefits include, among other things, accident-only coverage, disability income, certain limited-scope dental and vision benefits, certain long-term care benefits, and certain health FSAs.

    Health FSAs as 'Excepted Benefits'
    Although a health FSA is generally considered a group health plan, a health FSA may be considered to provide only excepted benefits if:

    • Other group health plan coverage not limited to excepted benefits is made available for the year to employees by the employer; and
    • The health FSA is structured so that the maximum benefit payable to any participant cannot exceed two times the participant’s salary reduction election for the arrangement for the year (or, if greater, cannot exceed $500 plus the amount of the participant’s salary reduction election).

    If an employer provides a health FSA that does not qualify as excepted benefits, the health FSA is generally subject to the market reforms. Furthermore, a health FSA that is not offered through a section 125 cafeteria plan is subject to the annual dollar limit prohibition and will fail to comply with the annual dollar limit prohibition.

    For more information on the ACA rules that apply to health FSAs, please read IRS Notice 2013-54.

    © 2012 - 2013 HR 360, Inc.
  • IRS Offers Free Webinar on Determining 'Full-Time Employees' Under 'Pay or Play' Provisions

    Posted on September 15, 2016
    Print

    Webinar Will Also Cover Look-Back and Monthly Measurement Methods

    The Internal Revenue Service is offering a free webinar for employers interested in learning more about how to determine 'full-time employees' for purposes of the employer shared responsibility ("pay or play") provisions of the Affordable Care Act (ACA). The webinar will take place on Thursday, September 22 at 2 p.m. Eastern Time (1 p.m. Central Time; 12 p.m. Mountain Time; 11 a.m. Pacific Time).

    Webinar attendees will also learn about:

    • How to determine full-time status for employees who are seasonal, part-time, or work non-traditional schedules;
    • Using the look-back and monthly measurement methods; and
    • Initial measurement, stability, standard measurement, and administrative periods.

    Click here to register for the webinar.

    © 2012 - 2013 HR 360, Inc.

    HR News and Alerts

    HR360::Health Care Reform
    • IRS Releases Final 2016 1094-B and 1095-B Forms & Instructions

      Posted on September 28, 2016
      Print

      Form 1095-B Due to Individuals on January 31, 2017

      The Internal Revenue Service (IRS) has released the final forms and instructions for Forms 1094-B and 1095-B for calendar year 2016 reporting. Employers are required to report in early 2017 for calendar year 2016.

      Who is Required to Report
      Forms 1094-B and 1095-B are used by insurers, self-insuring employers, and other parties that provide minimum essential health coverage (regardless of size, except for large self-insuring employers) to report information on this coverage to the IRS and to covered individuals. Applicable large employers (generally those with 50 or more full-time employees, including full-time equivalents or FTEs) will use Forms 1094-C and 1095-C to report information to the IRS and to their full-time employees about their compliance with the employer shared responsibility provisions ("pay or play") and the health care coverage they have offered. 

      Employers subject to both reporting provisions (generally self-insured employers with 50 or more full-time employees, including FTEs) will satisfy their reporting obligations using Forms 1094-C and 1095-C. The final forms and instructions for Forms 1094-C and 1095-C have not yet been released for calendar year 2016 reporting.

      2016 Forms and Instructions
      The following forms and instructions are now available for calendar year 2016 reporting:

      Information Reporting Deadlines
      According to the instructions, filers of Form 1095-B must furnish a copy of the form by January 31, 2017, to the person identified as the “responsible individual” on the form for coverage in 2016. The responsible individual is the person who, based on a relationship to the covered individuals, the primary name on the coverage, or some other circumstances, should receive the statement. Forms 1094-B and 1095-B are also required to be filed with the IRS by February 28, 2017 (or March 31, 2017, if filing electronically). Please be advised that Forms 1095-B and 1095-C must be electronically filed if the employer is required to file at least 250 of the specific form.


      © 2012 - 2013 HR 360, Inc.
    • Understanding the Rules on 'Employer Payment Plans' Under the Affordable Care Act

      Posted on September 27, 2016
      Print

      'Employer Payment Plans' Violate Market Reforms, Give Rise to Significant Penalties

      An employer payment plan is an arrangement under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy or uses its funds to directly pay the premium for an individual health insurance policy covering the employee. As part of the implementation of the Affordable Care Act (ACA), new rules apply to employer payment plans. The summary below is intended to help employers understand these new rules and remain compliant with the ACA.

      ACA Market Reforms
      The ACA contains certain "market reforms" that apply to group health plans, including the:

      • Annual Dollar Limit Prohibition: A prohibition on any annual limit on the dollar amount of benefits for any individual; and
      • Preventive Services Requirement: A requirement that non-grandfathered plans provide certain preventive services without imposing any cost-sharing requirements for these services.

      Application of the ACA Market Reforms to Employer Payment Plans
      An arrangement under which an employer provides reimbursements or payments that are dedicated to providing medical care, such as cash reimbursements for the purchase of an individual market policy, is itself a group health plan under the ACA. Accordingly, the arrangement is subject to the ACA market reforms without regard to whether the employer treats the money as pre-tax or post-tax to the employee.

      If a group health plan does not itself comply with the market reforms, the plan must be integrated with a group health plan that is in compliance. However, the Internal Revenue Service (IRS) has stated that an employer payment plan cannot be integrated with an individual market policy to satisfy the market reforms. Consequently, employer payment plans may be subject to an excise tax penalty of $100 per day per applicable employee ($36,500 per year, per employee) under the Internal Revenue Code.

      Alternative to Employer Payment Plans
      According to IRS Notice 2015-17, if an employer increases an employee’s compensation, but does not condition the payment of the additional compensation on the purchase of health coverage (or otherwise endorse a particular policy, form, or issuer of health insurance), this arrangement is not an employer payment plan.

      © 2012 - 2013 HR 360, Inc.
    • IRS Warns of Fake Affordable Care Act Tax Bills

      Posted on September 23, 2016
      Print

      Fraudulent CP2000 Notices Being Sent by E-mail

      The Internal Revenue Service has issued an alert to taxpayers and tax professionals to be on guard against fake e-mails purporting to contain an IRS tax bill related to the Affordable Care Act (ACA). The IRS has received numerous reports around the country of scammers sending fraudulent versions of CP2000 notices for tax year 2015. Generally, the scam involves an e-mail that includes a fake CP2000 as an attachment.
       
      The fraudulent notices have the following characteristics:

      • These notices are being sent electronically, even though the IRS does not initiate contact with taxpayers by e-mail or through social media platforms;
      • The CP2000 notices appear to be issued from an Austin, Texas, address;
      • The underreported issue is related to the Affordable Care Act (ACA) requesting information regarding 2014 coverage; and
      • The payment voucher lists the letter number as 105C.

      The fraudulent CP2000 notices include a payment request that taxpayers mail a check made out to “I.R.S.” to the “Austin Processing Center” at a Post Office Box address. This is in addition to a “payment” link within the e-mail itself.

      A genuine CP2000 is generated by the IRS Automated Underreporter Program when income reported from third-party sources such as an employer does not match the income reported on the tax return. This notice is commonly mailed to taxpayers through the U.S. Postal Service, and is never sent as part of an e-mail to taxpayers. To determine if a received CP2000 notice is real, please see the IRS's Understanding Your CP2000 Notice page, which includes an image of a real notice.

      Taxpayers or tax professionals who receive this scam e-mail should forward it to phishing@irs.gov and then delete it from their e-mail account.

      © 2012 - 2013 HR 360, Inc.
    • Understanding the Rules on HRAs Under the Affordable Care Act

      Posted on September 22, 2016
      Print

      HRAs Satisfy Market Reforms Under Certain Circumstances

      A health reimbursement arrangement (HRA) is a popular benefit that employers offer to reimburse employees for certain medical expenses. As part of the implementation of the Affordable Care Act (ACA), new rules apply to HRAs. The summary below is intended to help employers understand these new rules and remain compliant with the ACA. 

      HRAs Explained
      An HRA is an arrangement that is funded solely by an employer and that reimburses an employee for qualified medical care expenses incurred by the employee, or his spouse, dependents, and any children who, as of the end of the taxable year, have not attained age 27, up to a maximum dollar amount for a coverage period. This reimbursement is excludable from the employee’s income, and amounts that remain at the end of the year generally can be used to reimburse expenses incurred in later years. In general, HRAs are considered to be group health plans under the ACA.

      ACA Market Reforms
      The ACA contains certain "market reforms" that apply to group health plans, including the:

      • Annual Dollar Limit Prohibition: A prohibition on any annual limit on the dollar amount of benefits for any individual; and
      • Preventive Services Requirement: A requirement that non-grandfathered plans provide certain preventive services without imposing any cost-sharing requirements for these services.

      Application of the Market Reforms to HRAs
      In order to comply with the ACA market reforms, an HRA must be "integrated" with other coverage as part of a group health plan that alone complies with the market reforms. An HRA is integrated with a group health plan for purposes of the market reforms if it meets the requirements under one of two integration methods. Under the first method, the market reforms are satisfied if:

      • The employer offers a group health plan (other than the HRA) to the employee that does not consist solely of excepted benefits (such as limited-scope dental and vision benefits);
      • The employee receiving the HRA is actually enrolled in a group health plan (other than the HRA) that does not consist solely of excepted benefits, regardless of whether the employer sponsors the plan (non-HRA group coverage);
      • The HRA is available only to employees who are enrolled in non-HRA group coverage, regardless of whether the employer sponsors the non-HRA group coverage;
      • The HRA is limited to reimbursement of one or more of the following—co-payments, co-insurance, deductibles, and premiums under the non-HRA group coverage, as well as medical care that does not constitute essential health benefits; and
      • Under the terms of the HRA, an employee (or former employee) is permitted to permanently opt out of and waive future reimbursements from the HRA at least annually and, upon termination of employment, either the remaining amounts in the HRA are forfeited or the employee is permitted to permanently opt out of and waive future reimbursements from the HRA.

      Alternatively, the market reforms are also satisfied if:

      • The employer offers a group health plan to the employee that provides minimum value (MV);
      • The employee receiving the HRA is actually enrolled in a group health plan that provides minimum value, regardless of whether the employer sponsors the plan (non-HRA MV group coverage);
      • The HRA is available only to employees who are actually enrolled in non-HRA MV group coverage, regardless of whether the employer sponsors the non-HRA MV group coverage; and
      • Under the terms of the HRA, an employee (or former employee) is permitted to permanently opt out of and waive future reimbursements from the HRA at least annually, and, upon termination of employment, either the remaining amounts in the HRA are forfeited or the employee is permitted to permanently opt out of and waive future reimbursements from the HRA.

      Note: A group health plan, including an HRA, used to purchase coverage on the individual market is not integrated with that individual market coverage for purposes of the market reforms.

      For more information on the ACA rules that apply to HRAs, please read IRS Notices 2013-54 and 2015-87

      © 2012 - 2013 HR 360, Inc.
    • Understanding the Rules on Health FSAs Under the Affordable Care Act

      Posted on September 20, 2016
      Print

      Health FSAs Exempt From Market Reforms Under Certain Circumstances

      A health flexible spending arrangement (health FSA) is a popular benefit that employers offer to reimburse employees for certain medical expenses. As part of the implementation of the Affordable Care Act (ACA), new rules apply to health FSAs. The summary below is intended to help employers understand these new rules and remain compliant with the ACA.  

      Health FSAs Explained
      In general, a health FSA is a benefit designed to reimburse employees for qualified medical care expenses (other than premiums) incurred by the employee, or the employee’s spouse, dependents, and any children who, as of the end of the taxable year, have not attained age 27. Contributions to a health FSA offered through a section 125 cafeteria plan do not result in gross income to the employee. Employees electing coverage under a health FSA typically choose to enter into a salary reduction agreement in order to make contributions to the health FSA. For taxable years beginning in 2016, salary reduction contributions to a health FSA are limited to $2,550.

      In general, health FSAs are considered group health plans under the ACA, and thus are subject to the ACA market reforms explained below.

      ACA Market Reforms
      The ACA contains certain market reforms that apply to group health plans, including the:

      • Annual Dollar Limit Prohibition: A prohibition on any annual limit on the dollar amount of benefits for any individual; and
      • Preventive Services Requirement: A requirement that non-grandfathered plans provide certain preventive services without imposing any cost-sharing requirements for these services.

      These market reforms, however, do not apply to a group health plan in relation to its provision of "excepted benefits.” Excepted benefits include, among other things, accident-only coverage, disability income, certain limited-scope dental and vision benefits, certain long-term care benefits, and certain health FSAs.

      Health FSAs as 'Excepted Benefits'
      Although a health FSA is generally considered a group health plan, a health FSA may be considered to provide only excepted benefits if:

      • Other group health plan coverage not limited to excepted benefits is made available for the year to employees by the employer; and
      • The health FSA is structured so that the maximum benefit payable to any participant cannot exceed two times the participant’s salary reduction election for the arrangement for the year (or, if greater, cannot exceed $500 plus the amount of the participant’s salary reduction election).

      If an employer provides a health FSA that does not qualify as excepted benefits, the health FSA is generally subject to the market reforms. Furthermore, a health FSA that is not offered through a section 125 cafeteria plan is subject to the annual dollar limit prohibition and will fail to comply with the annual dollar limit prohibition.

      For more information on the ACA rules that apply to health FSAs, please read IRS Notice 2013-54.

      © 2012 - 2013 HR 360, Inc.
    • IRS Offers Free Webinar on Determining 'Full-Time Employees' Under 'Pay or Play' Provisions

      Posted on September 15, 2016
      Print

      Webinar Will Also Cover Look-Back and Monthly Measurement Methods

      The Internal Revenue Service is offering a free webinar for employers interested in learning more about how to determine 'full-time employees' for purposes of the employer shared responsibility ("pay or play") provisions of the Affordable Care Act (ACA). The webinar will take place on Thursday, September 22 at 2 p.m. Eastern Time (1 p.m. Central Time; 12 p.m. Mountain Time; 11 a.m. Pacific Time).

      Webinar attendees will also learn about:

      • How to determine full-time status for employees who are seasonal, part-time, or work non-traditional schedules;
      • Using the look-back and monthly measurement methods; and
      • Initial measurement, stability, standard measurement, and administrative periods.

      Click here to register for the webinar.

      © 2012 - 2013 HR 360, Inc.