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IRS Issues Drafts of Forms 1094-C, 1095-B and 1095-C for 2016

August 19, 2016

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IRS Issues Drafts of Forms 1094-C, 1095-B and 1095-C for 2016

August 19, 2016

Authored by: benefitsbclp

FormLast month, the IRS issued proposed changes to the ACA reporting and disclosure forms for 2016. As a reminder, Forms 1094-B and 1095-B are used by insurance providers to report on the number of individuals enrolled in health care coverage during a tax year, while Forms 1094-C and 1095-C are used by Applicable Large Employers (“ALEs”) to report on the health insurance coverage which they must offer to all their full-time employees during a tax year. We previously discussed the forms in depth here, here and here.

The drafts are subject to change, but we have provided some highlights of the proposed changes below.

Form 1094-C

  • Line 22, Box B is now “Reserved.” The Qualifying Offer Method Transition Relief was only available for 2015 coverage and is not applicable for 2016.
  • “Section 4980H” has been inserted before “Full-Time Employee Count for ALE Member” in Part III, column B in an apparent attempt to distinguish a “full-time employee” for ACA purposes from a “full-time employee” as defined in the plans and policies of an ALE.

Form 1095-B

  • Line 9 is now “Reserved.” On the 2015 version of the form, this line was to report the Small Business Health Options Program (SHOP) Marketplace identifier, if applicable, but should have been left blank according to the 2015 instructions.
  • The draft instructions provide that

Update on the Apparent Demise of the Determination Letter Program

IRSAs we previously reported, the IRS had said last year that determination letter program for retirement plans would largely be going away. Rev. Proc. 2016-37 includes information with respect to the future of the determination letter program.  As highlighted in a recent IRS webcast, a noteworthy development is that “subject to IRS resources” that post-initial determination letters may be available after 2017 in specified circumstances:

(1) significant law changes,

(2) new plan designs, and

(3) Plan types that can’t convert to a pre-approved format.

Number 3 means complex plans that do not fit on a pre-approved document may, ‘subject to IRS resources’ as published annually, be able to be submitted for a ruling under the determination letter program.  Therefore, complex individually designed plans may still have hope that the IRS will continue to rule on their qualified status.

There were two other key points in the webcast.  First, the IRS will publish a “required amendments” list and that employers will have until the end of the second calendar year after the date the list is published to amend their plans.  Second, there will also be an operational compliance list issued annually that will be accessible on the IRS website, not published. The purpose of the operational list is to focus on the operation of the plan prior to the date of adoption of the amendment.  These lists will include information that

We Received an Exchange Subsidy Notice…Now What?

ACA Blue HighlightThe Affordable Care Act exchanges/marketplaces are required to notify employers of any employees who have been determined eligible for advance payments of the premium tax credit or cost-sharing reductions (i.e., subsidy) and enrolled in a qualified health plan through the exchange.

A few weeks ago the U.S. Department of Health and Human Services (HHS) began issuing these notices to employers for 2016. If you received such a notice, this means that at the time of applying for health care coverage through the exchange, the employee indicated that:

  • you made no offer of health coverage;
  • you offered health coverage, but it either wasn’t affordable or didn’t offer minimum value; or
  • he or she was unable to enroll in the health coverage due to a waiting period.

Now, receipt of such a notice does not mean that you are liable for the play-or-pay employer mandate penalty. In fact, HHS is required to notify all employers, whether or not they are subject to the employer mandate, so small employers (i.e., less than a total of 50 full-time employee and full-time equivalents) have also received notices. The subsidy eligibility determination by an exchange and the IRS penalty assessment are entirely separate programs.

Employers do not have to appeal a determination of an employee’s eligibility for a subsidy and the grounds for an appeal are limited. As described

The Contraceptive Saga Continues

August 5, 2016

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The Contraceptive Saga Continues

August 5, 2016

Authored by: benefitsbclp

BC PillsIn Zubik v. Burwell, the justices vacated and remanded six federal appellate judgements on whether an accommodation (described below) for employers with religious objections to providing coverage for some or all contraception under the Affordable Care Act’s (ACA) preventive services coverage mandate violated the Religious Freedom Restoration Act (RFRA).  The Court took no position on the merits and stated that the parties should have the opportunity to find an approach that accommodates the petitioners’ religious exercise and ensures that women covered by the petitioners’ health plans receive full coverage for preventive care.   Essentially, as the Court awaits confirmation of a 9th justice they decided to kick the can down the proverbial road.

Enter the Departments of Health and Human Services (HHS), Labor, and Treasury, the agencies responsible for implementation of the ACA. On July 21, 2016, they released a “request for information” (RFI) intended to provide all interested stakeholders an opportunity to comment on several specific issues raised by the supplemental briefing and Supreme Court decision in Zubik v. Burwell.  Broadly, the RFI asks for suggestions on ways to further accommodate objections by religious non-profits to furnishing their employees coverage for some or all contraceptive services in their health plans.

Under the current accommodation, employers that object to providing contraceptives to their employees for religious reasons may either:

  1. Self-certify their objection (EBSA Form 700) to their

Good News! New 409A Regulations (Yes, Really!) – Part 5: If it Ain’t Broke, Don’t Fix It (and Other Minor Changes)

Good NewsOn the TV show Futurama, the aged proprietor of the delivery company Planet Express, Professor Hubert J. Farnsworth, had a habit of entering a room where the other characters were gathered and sharing his trademark line, “Good news, everyone!”  Of course, his news was rarely good.  More often, it was the beginning of some misadventure through which the other characters would inevitably suffer, often to great comedic effect.  So we can forgive you for thinking that we may be standing in his shoes when we tell you that new 409A regulations are good news, but really, hear us (read us?) out.

The IRS released proposed changes to both the existing final regulations and the proposed income inclusion regulations.  And the news is mostly good.  Additionally, taxpayers can rely on the proposed regulations.

The changes are legion, so we are breaking up our coverage into a series of blog posts. This last in our series is about the changes to the proposed income inclusion regulations and the other minor changes and clarifications made by the regulations.  See our prior posts, “Firing Squad,” “Taking (and Giving) Stock,” “Don’t Fear the (409A) Reaper,” and “Getting Paid.”

Preventing Waste, Fraud, and Abuse (Okay, well, mostly just abuse). The only change to the proposed income inclusion regulations was to “fix” the anti-abuse rule that applied

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