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IRS Reporting Deadlines Fast Approaching

01/12/17

  05:23:00 pm, by MedBen5   , 784 words,  
Categories: Health Care Reform, Taxes, Reporting, IRS

IRS Reporting Deadlines Fast Approaching

IRS building

Hard though it may be to believe, here we are in January 2017... and if you're a self-funded employer plan sponsor, it's time to get serious about preparing your IRS Form 1095s.

As you know, the Affordable Care Act (ACA) and its supporting regulations require that all employers offering health benefits to their employees report certain health coverage information to those employees as well as the Internal Revenue Service (IRS). And just like last year, employers sponsoring health plans must collect, aggregate and distribute this information via Form 1095. These are due to employees no later than March 2, 2017.

Additionally, employers must transmit copies of their employee 1095s to the IRS (via Form 1094) no later than February 28, 2017 (for paper filers) and March 31, 2017 (for electronic filers). Applicable Large Employers (those with 50 or more employees) must report using the IRS’ C-series forms, while small employers offering coverage (those with fewer than 50 employees) must report using the IRS’ B-series forms.

This year, the IRS has put out a good Q&A on how to complete the forms, including answers to coding questions. You can find the Q&A at the IRS website.

While the forms are pretty much the same as last year, the following changes should be considered when completing your forms:

Affordability Safe Harbor Percentages
The percentage for determining affordability under the affordability safe harbors increases to 9.66% for 2016 reporting. The three safe harbor options (W-2 wages, rate of pay, or federal poverty level) remain the same. However, this year, the affordability safe harbor can only be used for months during which the employer offered coverage to at least 95% of its full-time employee population. (The 2015 percentage was 70%.)

Reporting Deadlines
Last year’s reporting deadline delays will not apply to this year’s reporting. However, the IRS has offered an extension for the distribution of 1095s to employees; no similar extension is available for filing the forms with the IRS.

  • March 2, 2017 – Deadline for distribution of Form 1095-C to employee
  • February 28, 2017 – Deadline for paper filing of Forms 1094-C/1095-C with IRS.(Note: An employer can only file paper copies if it distributed fewer than 250 1095s.)
  • March 31, 2017 – Deadline for electronic filing of Forms 1094-C/1095-C with IRS.(Note: employers with 250 or more Form 1095-Cs must file electronically.)


No More Transitional Relief

The following transition relief offered to employers last year is no longer available in 2016:

  • Good Faith effort for completion of forms and filing returns
  • 4980H calendar year transition relief (this is still available for 2015 plan year months which fall in the 2016 calendar year for non-calendar year plans)

Increase in Reporting Penalties
Penalties for untimely or inaccurate filing have been increased to $260 for employee distribution and $260 for IRS filing (for a total of $520 for each Form 1095).

Terminated Codes
Code 1I (Qualifying Offer Transition Relief 2015) and 2I (Non-Calendar Year Transition Relief) will no longer be used for 2016 reporting.

New Codes
Code 1J (employee and spouse coverage option) and Code 1K (employee, spouse and dependent coverage option) have been added for 2016 to identify offers of coverage that contain contingencies on spousal coverage (i.e., spousal waivers). If the plan offers coverage to employees and spouses (Code 1J) or to employees, spouses and dependents (Code 1K), the employer must use the applicable new code anytime it offers a full-time employee spousal coverage – regardless of whether the spouse takes the coverage or doesn’t. That is because the code is for an “offer” – even if the plan offers spousal coverage based on the condition set forth in the spousal waiver provisions of the plan.

New Coding Clarifications

  • COBRA for Continuing Employees – This applies to employees on COBRA due to a reduction in hours. The correct offer of coverage code for COBRA offers to continuing employees is dependent upon which individuals were eligible to enroll in the COBRA offer (employee, spouse and/or dependent) and not which coverage options are available to eligible employees under the health plan.
  • Post-Employment Offers of Coverage – This applies to employees on COBRA due to termination of employment. Post-employment offers of coverage shall be coded using codes 1H / 2A on lines 14 and 16, respectively, during each month of the year the employee was terminated from employment.
  • Non-Employee/Non-Full-Time Employee Enrollment (Self-Insured Plans Only) – Code 1G shall apply for the entire year for purposes of coding offers of coverage to individuals, who were non-employees and/or non-full-time employees throughout the entire reporting year, but who enrolled in the employer’s self-insured health coverage during the entire year.

Again, the IRS’ Questions and Answers about Information Reporting by Employers on Form 1094-C and Form 1095-C has many answers and lots of helpful examples about how to complete the 1095s based on varying employment situations.

As always, if you have any questions about preparing or distributing these forms, please contact Vice President of Compliance Caroline Fraker at 800-851-0907 or cfraker@medben.com.

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