Thursday, 26 February 2015
Virtus Featured in NBJ - What the midterm elections could mean for the ACA
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What the midterm elections could mean for the ACA

To lightly beat a dead horse, the U.S. Senate now consists of 53 Republicans and 46 Democrats with the Louisiana seat still in play but favoring a Republican win. The U.S. House now consists of 244 Republicans and 184 Democrats, with seven seats still in play. Call the Nov. 4 election whatever you wish, but the simple fact is that it was a Republican victory and can result in a meaningful impact on the ACA over the next two years.

But will it? Trust me, no one knows. Everyone is playing Nostradamus.

However, you should know what couldhappen and what its impact might have on your business, your employees and their families. Below is a summary of those most talked about.

  • There's Repeal and Replace doesn't that read as if it's a greater initiative than passing Obamacare to begin with? Furthermore, the Republicans still don't have the right solution to replace it.
  • The SCOTUS review of Halbig/King cases, which addresses whether subsidies may be provided within theFederal Exchange of which there are 36. ACA could effectively be struck down if the Court rules subsidies are not available.
  • Employer mandate set to kick in for employers with 100 employees in 2015. The Robert Wood Johnson Foundation projections show that with the mandate or without the mandate, the number of people insured would be the same in 2016.
  • "You can keep the plan you have…" promise and the 30-hour work week requirement we all know now that keeping the plan we have has evolved to being quite difficult, and the 30-hour work week requirement is compromising businesses and employees across the country.
  • Taxes, penalties, or whatever label you wish the ACA is fraught with them. Every employer beginning this year is paying a $63 per covered person fee to stabilize the individual health insurance market. There's also the Health Insurance Tax, which is about another 2 percent over your current premium. There's more.
  • Reporting: Code Sections 6055 and 6056 if you haven't heard of them, you will. When you do, you'll wish you hadn't.

The times are changing and will be changing. Some will be good and some possibly not. Be watchful.

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Posted on 02/26/2015 12:39 PM by David Johnson
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Wednesday, 25 February 2015
Virtus Legal Alert - IRS Releases Final ACA Reporting Forms for Employers and Health Insurance Issuers
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ADVISORY:

IRS Releases Final ACA Reporting Forms for Employers and Health Insurance Issuers

On Monday, February 9, 2015, the Internal Revenue Service (IRS) released final forms that applicable large employers and health insurance issuers will use to report information regarding employees' full-time status and health coverage, as required under the Affordable Care Act (ACA) starting in 2015. The first reporting will be due in the first quarter of 2016, reflecting the 2015 calendar year. 

The forms may be found by following these links:

  • Form 1094-B: Transmittal of Health Coverage Information Returns

​www.irs.gov/pub/irs-pdf/f1094b.pdf

  • Form 1095-B: Health Coverage

​www.irs.gov/pub/irs-pdf/f1095b.pdf

  • Instructions for Forms 1094-B and 1095-B

www.irs.gov/pub/irs-pdf/i109495b.pdf

  • Form 1094-C: Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Return

www.irs.gov/pub/irs-pdf/f1094c.pdf

  • Form 1095-C: Employer Provided Health Insurance Offer and Coverage

www.irs.gov/pub/irs-pdf/f1095c.pdf

  • Instructions for Forms 1094-C and 1095-C

www.irs.gov/pub/irs-pdf/i109495c.pdf 

Applicable large employers-generally those with 50 or more full-time equivalent employees on average during the prior calendar year-will satisfy their reporting requirements by filing Form 1094-C (a transmittal to the IRS) and Form 1095-C (a statement to employees). Applicable large employers that sponsor self-insured plans will complete all parts of Form 1095-C (Part I, II and III), as applicable, to satisfy their obligation, whereas an employer sponsoring a fully insured plan will complete only the top half (Parts I and II) of Form 1095-C, and generally only for full-time employees.

The IRS will use Form 1095-C to assess an employer's compliance with the pay-or-play mandate as well as whether an employee is eligible for premium tax credits to purchase coverage through the Health Insurance Marketplace. Employers must file Form 1094-C with the IRS by February 28 following the reporting year (March 31 if filing electronically) and must provide Form 1095-C to full-time employees by January 31 following the reporting year. Employers with self-insured plans provide Form 1095-C to all covered employees, as well as all full-time employees regardless of enrollment status (Part III is only completed for covered employees). 

Health insurance issuers will satisfy their reporting obligations by filing Form 1094-B with the IRS and by providing Form 1095-B to covered employees, who will use the information to report compliance with the individual mandate on their federal income tax return. The IRS will use Form 1095-B (and Form 1095-C, when provided by a self-insured plan) to verify whether individuals have the minimum essential coverage necessary to comply with the ACA's individual mandate.

 

 

Peter Marathas, Esq.

Compliance Director

 

This e-mail is a service to our clients and friends. It is designed only to give general information on the developments actually covered. It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.

Benefit Advisors Network and its smart partners are not attorneys and are not responsible for any legal advice. To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.

© Copyright 2015 Benefit Advisors Network. Smart Partners®. All rights reserved.

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Posted on 02/25/2015 11:31 AM by David Johnson
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Wednesday, 25 February 2015
Virtus Legal Alert - Inform on Reform
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ADVISORY:

IRS Clarifies Prior Guidance on Premium Reimbursement Arrangements; Provides Limited Relief

Continuing its focus on so-called "premium reimbursement" or "employer payment plans", the Internal Revenue Service (IRS) released IRS Notice 2015-17 on February 18, 2015.  In this Notice, which was previewed and approved by both the Department of Labor (DOL) and Department of Health and Human Services (collectively with the IRS, the "Agencies") clarifies the Agencies' perspective on the limits of certain employer payment plans and offers some limited relief for small employers. 

Prior guidance, released as DOL FAQs Part XXII and described in our November 7, 2014 Practice Center Blog entry, established that premium reimbursement arrangements are group health plans subject to the Affordable Care Act's (ACA's) market reforms.  Because these premium reimbursement arrangements are unlikely to satisfy the market reform requirements, particularly with respect to preventive services and annual dollar limits, employers using these arrangements would be required to self-report their use and then be subject to ACA penalties, including an excise tax of $100 per employee per day.

Since DOL FAQs Part XXII was released, the Agencies' stance has been the subject of frequent commentary and requests for clarification.  With Notice 2015-17, it appears that the Agencies have elected to expand on the prior guidance on a piecemeal basis, with IRS Notice 2015-17 being the first in what may be a series of guidance.  The following are the key aspects of Notice 2015-17:

  • Wage Increases In Lieu of Health Coverage.  The IRS confirmed the widely-held understanding that providing increased wages in lieu of employer-sponsored health benefits does not create a group health plan subject to market reforms, provided that receipt of the additional wages is not conditioned on the purchase of health coverage.  Quelling concerns that any communication regarding individual insurance options could create a group health plan, the IRS stated that merely providing employees with information regarding the health exchange marketplaces and availability of premium credits is not an endorsement of a particular insurance policy.  Although this practice may be attractive for a small employer, an employer with more than 50 full-time employees (i.e., an "applicable large employer" or "ALE") should be mindful of the ACA's employer shared responsibility requirements if it adopts this approach.  ALEs are required to offer group health coverage meeting certain requirements to at least 95% (70% in 2015) of its full-time employees or potentially pay penalties under the ACA.  Increasing wages in lieu of benefits will not shield ALEs from those penalties.
  • Treatment of Employer Payment Plans as Taxable Compensation.  Some employers and commentators have tried to argue that "after-tax" premium reimbursement arrangements should not be treated as group health plans.  In Notice 2015-17, the IRS confirmed its disagreement. In the Notice, the IRS acknowledges that its long-standing guidance excluded from an employee's gross income premium payment reimbursements for non-employer provided medical coverage, regardless of whether an employer treated the premium reimbursements as taxable wage payments.  However, in Notice 2015-17, the IRS provides a reminder that the ACA, in the Agencies' view, has significantly changed the law, including, among other things, by implementing substantial market reforms that were not in place when prior guidance had been released.  The result:  the Agencies have reiterated and clarified their view that premium reimbursement arrangements tied directly to the purchase of individual insurance policies are employer group health plans that are subject to, and fail to meet, the ACA's market reforms (such as the preventive services and annual limits requirements).  This is the case whether or not the reimbursements or payments are treated by an employer as pre-tax or after-tax to employees. (This is in contrast to simply providing employees with additional taxable compensation not tied to the purchase of insurance coverage, as described above.)
  • Integration of Medicare and TRICARE Premium Reimbursement Arrangements.  On the other hand, although the Notice confirms that arrangements that reimburse employees for Medicare or TRICARE premiums may be group health plans subject to market place reforms, the Agencies also provide for a bit of a safe harbor relief from that result.  As long as those employees enrolled in Medicare Part B or Part D or TRICARE coverage are offered coverage that is minimum value and not solely excepted benefits, they can also be offered a premium reimbursement arrangement to assist them with the payment of the Medicare or TRICARE premiums.    (The IRS appropriately cautions employers to consider restrictions on financial incentives for employees to obtain Medicare or TRICARE coverage.)
  • Transition Relief for Small Employers and S Corporations.  Although many comments on the prior guidance concerning employer payment plans requested an exclusion for small employers (those with fewer than 50 full-time equivalent employees), the IRS refused to provide blanket relief.  The IRS notes that the SHOP Marketplace should address the small employers' concerns.   However, because the SHOP Marketplace has not been fully implemented, no excise tax will be incurred by a small employer offering an employer payment plan for 2014 or for the first half of 2015 (i.e., until June 30, 2015).  (This relief does not cover stand-alone health reimbursement arrangements or other arrangements to reimburse employees for expenses other than insurance premiums.)  This is welcome relief to small employers who adopted these arrangements notwithstanding the Agencies' prior guidance that they violated certain ACA marketplace provisions.
  • In addition to granting temporary relief to small employers, the IRS also provided relief through 2015 for S corporations with premium reimbursement arrangements benefiting 2% shareholders.  In general, reimbursements paid to 2% shareholders must be included in income, but the underlying premiums are deductible by the 2% shareholder.  The IRS indicated that additional guidance for S corporations is likely forthcoming. 

The circumstances under which premium reimbursement arrangements are permitted appears to be rapidly dwindling, and the IRS indicated that more guidance will be released in the near future.  Employers offering these arrangements should consult with qualified counsel to ensure continuing compliance with applicable laws.

 

 

Peter Marathas, Esq.

Compliance Director

This e-mail is a service to our clients and friends. It is designed only to give general information on the developments actually covered. It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.

Benefit Advisors Network and its smart partners are not attorneys and are not responsible for any legal advice. To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.

© Copyright 2015 Benefit Advisors Network. Smart Partners®. All rights reserved.

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Posted on 02/25/2015 11:33 AM by David Johnson
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