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Affordable Care Act Update: IRS Extends ACA Reporting Deadline and Good-Faith Relief from Penalties

Setnor Byer Insurance & Risk

This seemingly endless year is almost over…finally. That means it’s time for Applicable Large Employers (ALEs) to start focusing on the Affordable Care Act’s annual information-reporting requirements. Fortunately, the Internal Revenue Service extended the deadline for ALEs to furnish 2020 information statements to employees. However, the deadline for ALEs to file information returns with the IRS has not been extended.

Applicable Large Employers, which are generally employers with 50 or more full-time or full-time equivalent employees in the previous year, must do the following to comply with the ACA’s annual reporting requirements.

Furnish Information Statements to Employees. The IRS extended the deadline to furnish 2020 Form 1095-C (Employer-Provided Health Insurance Offer and Coverage) to employees from January 31, 2021 to March 2, 2021. This is the sixth consecutive year the IRS has extended this deadline.

File Information Returns and Transmittals with the IRS. Each 2020 Form 1095-C must also be filed with the IRS on or before February 28, 2021 (March 31, 2021, if filed electronically). The IRS did NOT extend this filing deadline. However, employers may request an automatic 30-day extension by filing Form 8809 before the ACA filing deadline.

The IRS also extended the good-faith relief from penalties that may be levied against ALEs for failing to comply with the ACA’s filing and furnishing requirements, which can be up to $280 per form. To be eligible for this relief, employers must make a good-faith effort to comply. In determining good faith, the IRS will consider whether reasonable efforts were made to prepare the required reports.

It’s important to note that this relief applies to forms with missing or inaccurate information. ALEs that fail to timely file or furnish the required reports are not eligible. According to the IRS, this is the last year they intend to provide good-faith relief from the ACA’s penalties.

Please contact us if you would like to learn more about ACA-compliant group health plans.

Scam Alert: Tax Season Is Identity Theft Season

Should you be concerned about taxpayer identity theft? Here’s a hint. Tax Identity Theft Awareness Week starts February 3, 2020. As a general rule, anything worthy of having its own dedicated Awareness Week deserves your full attention.

Tax-related identity theft occurs when someone uses stolen personal information to file a tax return claiming a fraudulent refund. The problem has become so serious that the Internal Revenue Service has issued numerous publications about safeguarding taxpayer data and preventing identity theft. According to the IRS, you should be alert to possible tax-related identity theft if:

you get a letter from the IRS inquiring about a suspicious tax return that you did not file;
you can’t e-file your tax return because of a duplicate Social Security number;
you get a tax transcript in the mail that you did not request;
you get an IRS notice that an online account has been created in your name or that your existing account has been accessed or disabled when you took no action;
you get an IRS notice that you owe additional tax or refund offset, or that you have had collection actions taken against you for a year you did not file a tax return; or
IRS records indicate you received wages or other income from an employer you didn’t work for.

To protect against taxpayer identity theft, the IRS recommends that taxpayers:

Use current security software (firewalls, virus/malware protection, file encryption). Make sure it updates automatically.
Treat personal information like cash. Don’t leave it lying around.
Use strong, unique passwords and 2-Factor Authentication.
Avoid phishing scams and malware that often come in emails that appear to come from a trusted source and emails with urgent messages.

Finally, the IRS wants everyone to know that they will never:

initiate contact by email, text or social media to request personal or financial information;
call taxpayers with threats of lawsuits or arrests; or
call, email or text to request taxpayers’ Identity Protection PINs.

When preventative measures fail, insurance is available to help victims through the often expensive and time-consuming process of recovery. Please contact us if you would like more information about insurance specifically designed to protect against identity theft.

Affordable Care Act: IRS Extends 2019 Reporting and Filing Deadline

It’s that time of year again. Large employers must turn their attention to the Affordable Care Act’s annual information-reporting requirements. The good news is that the Internal Revenue Service extended the deadline for large employers to furnish 2019 information statements to employees. However, the deadline to file information returns with the IRS has NOT been extended.

Applicable Large Employers, which are generally those with 50 or more full-time or full-time equivalent employees in the previous year, must do the following to comply with the ACA’s 2019 annual reporting requirements.

Furnish Information Statements to Full-Time Employees. The IRS extended the deadline to provide Form 1095-C (Employer-Provided Health Insurance Offer and Coverage) to full-time employees from January 31, 2020 to March 2, 2020. This is the fifth consecutive year that the IRS has extended this deadline.

File Information Returns and Transmittals with the IRS. Every Form 1095-C along with Form 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns) must be filed with the IRS on or before February 28, 2020 (March 31, 2020, if filed electronically). The IRS did NOT extend this filing deadline. However, employers may request an automatic 30-day extension by filing Form 8809 before the ACA filing deadline.

For 2019, the IRS also extended the good-faith relief from penalties that may be levied against employers for failing to properly file or furnish these forms, which can be $270 per form. The maximum penalty can be $3,339,000. To be eligible for this relief, employers must make a good-faith effort to comply.

According to the IRS, this relief applies to missing and inaccurate taxpayer identification numbers and dates of birth, as well as other information required on the return or statement. Employers that fail to file an information return with the IRS or furnish a statement to an employee by the extended deadline are not eligible for the extended the good-faith relief from ACA penalties.

Please contact us if you would like to learn more about ACA-compliant group health plans.

Affordable Care Act Update: IRS Announces Affordability Threshold for 2020

The Internal Revenue Service announced that the Affordable Care Act’s affordability threshold will be 9.78 percent in 2020. This is important because employers with 50 or more full-time or full-time equivalent employees in the preceding calendar year (Applicable Large Employers or ALEs) must offer their full-time employees minimum essential health care coverage that is affordable. Otherwise, they may have to pay the ACA’s employer shared responsibility (employer mandate) penalty.

Affordability under the ACA is calculated as a percentage of household income. So, to satisfy the ACA’s affordability requirement in 2020, the lowest-cost, self-only coverage option offered by Applicable Large Employers may not exceed 9.78 percent of an employee’s household income. The affordability threshold is adjusted annually. In 2019, it was 9.86 percent.

ALEs can use one of the ACA’s affordability safe harbors to determine the most employees can be required to pay without exceeding the affordability threshold. For example, if Pat earned $10 per hour in 2020 and worked 40 hours per week for 52 weeks, Pat’s monthly payment cannot exceed:

W-2 Safe Harbor: $169.52 ($170.91 in 2019);
Rate of Pay Safe Harbor: $127.14 ($128.18 in 2019); or
Federal Poverty Line Safe Harbor: $101.79 ($99.75 in 2019).

Despite being small, these changes can still be significant. To ensure compliance with the ACA’s affordability requirement in 2020, ALEs need to evaluate and possibly adjust their health plan pricing options, cost-sharing structure, and in some cases, compensation levels.

Please contact us if you would like to learn more about ACA-compliant group health plans.

IRS Extends Deadline to Furnish ACA Forms to Individuals and Good-Faith Relief from ACA Reporting Penalties

On November 18, 2016, the Internal Revenue Service gave employers averaging at least 50 full-time or full-time equivalent employees in 2015 (Applicable Large Employers or ALEs) an early holiday gift. The IRS extended the Affordable Care Act’s due date to furnish 2016 Forms 1095-C to individuals from January 31, 2017 to March 2, 2017. The IRS also extended last year’s transition relief to protect ALEs from penalties if they make a good-faith effort to comply with the ACA’s 2016 information and reporting requirements.

The IRS did NOT extend the due date for ALEs to file their 2016 Forms 1094-C and 1095-C, which must still be filed with the IRS by February 28, 2017 (March 31, 2017, if filed electronically).

Under the ACA, ALEs are required to annually furnish Form 1095-C (Employer-Provided Health Insurance Offer and Coverage) to individuals on or before January 31 of the following calendar year. ALEs must also file Forms 1095-C and 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns) with the IRS on or before February 28 (March 31 if filed electronically) of the following calendar year.

The IRS determined that a substantial number of employers need additional time beyond January 31, 2017 to prepare and furnish their 2016 Forms 1095-C to individuals, which is why the due date was extended to March 2, 2017. This extension does not require the submission of a request or other documentation. However, the IRS determined that employers do not need additional time to meet filing deadline, so the due date to file 2016 Forms 1095-C and 1094-C with the IRS remains February 28, 2017 (March 31, 2017, if filed electronically).

Perhaps more important is the extension of last year’s transition relief from penalties that may be imposed for failing to comply with the ACA’s 2016 information and reporting requirements, which can be substantial. The penalty for failing to timely furnish correct Forms 1095-C to individuals is generally $250 per individual. The penalty for failing to timely file correct Forms 1095-C with the IRS is generally $250 per form.

To avoid these penalties, an ALE must show that it made a good-faith effort to comply with the ACA’s 2016 requirements to furnish information about employer-provided health insurance coverage to individuals and file this information with the IRS. This relief only applies to forms with incorrect or incomplete information, such as missing or inaccurate taxpayer identification numbers, dates of birth, etc. It does not apply to ALEs that do not make a good-faith effort to comply with the reporting requirements or that fail to file or furnish forms by the due dates.

In determining good faith, the IRS will consider whether an ALE made reasonable preparation efforts to furnish and file the necessary forms, such as gathering and transmitting the necessary data to an agent to prepare the data for filing with the IRS or testing its ability to transmit information to the IRS. The IRS will also consider the extent to which an ALE is taking steps to ensure that it will be able to comply with the 2017 reporting requirements.

These extensions only apply to the ACA’s 2016 reporting requirements. The IRS does not anticipate extending this transition relief, either with respect to the due dates or with respect to good faith relief from penalties, to reporting for 2017.

Setnor Byer Insurance & Risk is committed to helping clients protect their businesses and navigate the ACA’s reporting requirements. Please contact us for more information about our online tool for preparing, furnishing and filing ACA forms.

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Automatic Deadline Extensions Now Available for Affordable Care Act Information Reports

For the first time, all applicable large employers must comply with the Affordable Care Act’s annual healthcare reporting requirements. Employers that averaged at least 50 full-time or full-time equivalent employees in 2014 must report specific 2015 healthcare information to the Internal Revenue Service. Reports for the calendar year 2015 are due in early 2016, so time is running out. Or is it?

The IRS recently amended Form 8809–Application for Extension of Time to File Information Returns–so applicable large employers can now request an automatic 30-day extension to file the following forms with the IRS:

Form 1095-C (Employer-Provided Health Insurance Offer and Coverage); and
Form 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns).

The deadline to request an extension is the due date of the ACA form for which an extension is being requested. In other words, employers cannot request an extension after missing the original IRS filing deadline. For the calendar year 2015, the deadline to file Forms 1095-C and 1094-C with the IRS is February 29, 2016 (March 31st if filed electronically), so this is also the deadline to request an IRS filing extension. To avoid missing the deadline, employers should request an extension as soon as they realize more time is needed.

However, Form 8809 only extends IRS filing deadlines, not deadlines to furnish copies to recipients. Applicable large employers must furnish the calendar year 2015 Form 1095-C to each full-time employee by February 1, 2016. Form 8809 cannot be used to extend this deadline. Instead, employers must request an extension by submitting a letter to the IRS. These extension requests are not automatically approved and must include an explanation.

There are other nuances to requesting an IRS filing extension, such as:

Form 8809 can be filed on paper, online or electronically through the IRS’s FIRE system.

No explanation is necessary.

The automatic extension is 30 days from the original due date.

Employers may request a second 30-day extension before the end of the first extension period by submitting a second Form 8809; however, these requests are not automatically granted and generally require a showing of extenuating circumstances.

IRS previously stated that employers making a good faith effort to comply with the ACA’s information reporting requirements for the calendar year 2015 will not be penalized for incomplete or incorrect information reports filed with the IRS or furnished to employees in 2016. However, employers will not be able to show a good faith effort if they fail to timely file information returns with the IRS or furnish statements to employees. Though incorrect reports may be forgiven by the IRS, late reports will not.

In addition to other valuable resources, Setnor Byer Insurance &Risk has an online tool to help clients complete their ACA information reports. If you have any questions or would like to discuss how we can help you navigate the constantly changing healthcare landscape, please contact us.

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Are You Ready for the New Affordable Care Act Reporting Requirements?

The Affordable Care Act (ACA) requires Applicable Large Employers (ALEs) with 50 or more full-time or full-time equivalent employees to file information returns with the Internal Revenue Service and provide statements to their full-time employees about employer-offered health insurance coverage. This information will be used to administer the ACA’s employer shared responsibility provisions (employer mandate) and to determine whether an employee is eligible for the premium tax credit.

Filing Forms (Drafts)

In 2014, the IRS released non-final draft versions of two forms that ALEs can use to satisfy these reporting requirements.

Form 1095-C (Employer-Provided Health Insurance Offer and Coverage)
Form 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns)

Filing Deadlines

ALEs must file these forms with the IRS on or before February 28 (March 31 if filed electronically) of the year immediately following the calendar year for which the offer of coverage information is reported. For calendar year 2014, there is no filing requirement. For calendar year 2015, these forms must be filed by February 29, 2016 (or March 31, 2016 if filed electronically).

ALEs must also furnish a Form 1095-C to each full-time employee by January 31 of the following year. The first Forms 1095-C are due to these individuals by February 1, 2016.

Form 1095-C

ALEs must file a Form 1095-C (or a substitute form) for each employee who was a full-time employee for any month of the calendar year. This form is used to report specific health insurance coverage information for each full-time employee to the IRS, such as:

which months the employee was a full-time employee
any offers of health coverage that meet the minimum value standard made to the employee and family members each month
the employee’s share of the monthly premium for the lowest-cost insurance that offers minimum value health coverage
whether any safe harbors are applicable to the employee
whether the employee was enrolled in the plan

Form 1094-C

ALEs must use Form 1094-C to transmit its Forms 1095-C to the IRS. A Form 1094-C must be attached to any Forms 1095-C filed by an ALE. One transmittal form can be used to cover all Forms 1095-C filed by an ALE or multiple transmittal forms can be used. The information reported with this form includes:

the total number of Forms 1095-C submitted with this particular transmittal
the total number of Forms 1095-C that will be filed by the ALE
whether the ALE is a member of an aggregate group (multiple employers treated as a single employer)
whether special rules or transition relief apply to the ALE

Though these ACA reporting forms are not due until 2016, large employers cannot wait until the last minute. Given the technical nature and complexity of the new ACA reporting requirements, legal and tax professionals should be consulted when preparing any forms filed with the IRS.

At Setnor Byer Insurance & Risk, we are committed to guiding you through the health care reform process. Check back with us periodically for future informational updates about the Affordable Care Act. If you have specific questions about the Act or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.

If you’d like to subscribe to our weekly newsletters please click here.

How Can You Prevent Identity Theft?

According to the Federal Trade Commission, identity theft continues to top the list of consumer complaints. In 2013, American consumers reported losing more than $1.6 billion to fraud, which is approximately $2,294 per incident. The highest reported age group for identity theft is 20-29, and the most common form of identity theft is tax- or wage-related, followed by credit card fraud, utilities fraud and bank fraud. Florida has the highest per capita rate of reported identity theft complaints, followed by Georgia and California.

Since October is National Cyber Security Awareness Month, now is the perfect time to learn about preventing identity theft. Here are some tips from the Insurance Information Institute.

Don’t carry unnecessary personal information (social security card, passport, etc.).
Prevent ‘shoulder surfers’ from seeing credit card numbers or PINs.
Always take credit card or ATM receipts.
Don’t give out personal information, whether on the phone, via mail or online, unless you initiated contact or you know the transmission will be secure.
Only use authenticated websites to conduct business online. Check for the locked padlock image or look for ‘https://’ rather than ‘http://’ in your browser window.
Be aware of phishing and pharming scams that use fake emails and websites to impersonate legitimate organizations. Exercise caution when opening emails and instant messages from unknown sources.
Never send personal, financial or password-related information via email.
Use up-to-date firewall, anti-spyware and anti-virus programs.
Monitor all financial accounts and review monthly statements to make sure all transactions are accurate.
Immediately contact your credit card or bank if you suspect a problem.
Order your credit report from the three major credit bureaus to make sure it’s accurate and includes only authorized activities. You are entitled to one free credit report per year.
Place passwords on your credit card, bank and phone accounts.
Don’t use passwords containing easily available information (mother’s maiden name, birth date, phone number, etc.) or any series of consecutive numbers.
Change passwords if you suspect a problem.
Shred documents containing personal information such as credit card numbers, bank statements, charge receipts or credit card applications.

In the event of identity theft, early detection is the key to limiting the damage. Here are some clues from the FTC that someone may have stolen your identity.

You see withdrawals from your bank account that you can’t explain.
You stop getting bills or other mail.
Debt collectors call you about debts that aren’t yours.
You find unfamiliar accounts or charges on your credit report.
The IRS notifies you that a tax return was already filed in your name.
A company where you do business or have an account suffers a data security breach.

Despite taking preventative measures, identity theft can still happen. However, insurance may be purchased to help victims of identity theft through the often expensive and time consuming battle to clear their name. Depending on the insurance company, identity theft coverage may be included under a homeowners’ policy, or it may be added by endorsement or obtained under a separate, stand-alone policy.

If you would like to learn more about identity theft insurance coverage, please contact us.

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Affordable Care Act’s Employer Mandate Delayed Until 2015

Shortly before the July 4th holiday, the U.S. Department of the Treasury announced that enforcement of the Employer Shared Responsibility requirement under the Affordable Care Act (Act) will be delayed until 2015. The employer mandate, which generally requires employers with at least 50 full-time or full-time equivalent employees to offer health care benefits or pay a penalty, was scheduled to go into effect on January 1, 2014.

Through a dialogue with businesses about the Act’s employer and insurer reporting requirements, the administration learned of concerns about the complexity of the requirements and the need for more time to implement them effectively. As a result, the administration decided to delay the Act’s mandatory employer and insurer reporting requirements.

According to the announcement, this delay is designed to:

Provide the administration more time to consider ways to simplify the new reporting requirements consistent with the law.
Provide more time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.

The administration recognized that delaying the Act’s mandatory employer and insurer reporting requirements will make it impractical to determine which employers owe shared responsibility payments for 2014. As a result, the administration decided to also delay enforcement of the employer mandate, stating that “these payments will not apply for 2014. Any employer shared responsibility payments will not apply until 2015.”

The Treasury says it will be publishing formal guidance regarding the delayed enforcement soon and that proposed rules will be published this summer. Once these rules have been issued, the administration says it will work with employers, insurers and other reporting entities to strongly encourage them to voluntarily implement this information reporting in 2014, in preparation for the full application of the provisions in 2015.

So what should employers be doing now? The Employer Shared Responsibility provision is still the law, it just isn’t being enforced. Not surprisingly, talking heads are making predictions and debating whether it’s really speeding if nobody can pull you over. Unfortunately, the manner in which employer’s will be affected by the delay will not be known until additional guidance is issued.

At Setnor Byer Insurance & Risk, we are committed to guiding you through the changing health care reform landscape. Check back with us periodically for future informational updates about the Affordable Care Act. If you have specific questions about the Act or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.

If you’d like to subscribe to our weekly newsletters please click here.

The Affordable Care Act’s Individual Mandate

The Affordable Care Act’s Individual Shared Responsibility provision requires nonexempt individuals to obtain minimum essential coverage for themselves and any nonexempt dependents. Starting January 1, 2014, those failing to get the required health insurance will have to pay a monthly penalty.

Who is subject to the penalty?

The penalty, which is calculated monthly, applies to individuals of all ages, including senior citizens and children. An individual is liable for the penalty assessed against any other individual who can be claimed as a dependent for federal income tax purposes. If an individual files a joint return, that individual and their spouse are jointly liable for the penalty. Penalties will be paid by including them with an individual’s tax return.

What is Minimum Essential Coverage?

Minimum essential coverage generally includes:

Employer-sponsored coverage (including COBRA coverage and retiree coverage)
Coverage purchased in the individual market
Grandfathered health plans
Medicare and Medicaid coverage
Children’s Health Insurance Program (CHIP) coverage
Certain types of Veterans’ health coverage
TRICARE (Department of Defense health care program)

How much is the penalty?

The Individual Shared Responsibility penalty is calculated monthly by using a flat dollar amount or a percentage of household income, whichever is greater. Under the flat dollar amount method, each nonexempt individual is penalized a fixed amount. For individuals under the age of 18, the penalty is one-half the fixed amount. If an individual is responsible for multiple dependents, the total penalty cannot be more than 300% of the applicable fixed amount.

The fixed amounts used to calculate the penalty are:

$95 in 2014 ($7.92 per month)
$325 in 2015 ($27.08 per month)
$695 in 2016 ($57.92 per month)
$695 + cost-of-living increase in 2017 and beyond.

Under the percentage of income method, the penalty is a percentage of an individual’s household income, less specific deductions. To calculate household income, add the individual’s modified adjusted gross income to the modified adjusted gross incomes of the individual’s family members.

The percentages used to calculate the penalty are:

1% in 2014
2% in 2015
2.5% in 2016 and beyond.

For example, in 2014, the annual penalty will be $95 per adult and $47.50 per child, but no more than $285 (300% of $95) or 1% of the household income, whichever is greater.

Is there a maximum limit for the penalty?

Yes. The Individual Shared Responsibility penalty cannot be more than the national average premium for bronze-level (covering 60% of costs) qualified health plans offered through Affordable Insurance Exchanges. The Congressional Budget Office estimates that in 2016, the national average will be approximately $5,000 for individuals and $12,500 for families of four.

Are there any exemptions from the Minimum Essential Coverage requirement?

Yes. The following individuals are not required to obtain Minimum Essential Coverage:

Members of a religious sect that is legally recognized as being conscientiously opposed to accepting any insurance benefits.
Members of a recognized health care sharing ministry.
Individuals who are not U.S. Citizens, U.S. Nationals or lawfully present aliens.
Individuals incarcerated following disposition of criminal charges.
Members of a recognized Indian tribe.
Individuals with income below the threshold for filing a tax return.
Individuals whose required contribution for coverage exceeds 8% of their household income.
Individuals who have been certified as suffering a hardship.
Individuals with a gap in health insurance coverage of less than three consecutive months during the year.

Though proposed regulations explaining the Individual Shared Responsibility penalty have been published by the Internal Revenue Service and the Department of Health and Human Services, they are not final and may change.

At Setnor Byer Insurance & Risk, we are committed to guiding you through Health Care Reform. Check back with us periodically for future informational updates about the Affordable Care Act. If you have specific questions about the Act or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.

If you’d like to subscribe to our weekly newsletters please click here.