Health Care Information Reporting: Seven Things Employers Can Think About Now

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If your organization is an applicable large employer, you must report information about the health care coverage you offered to your full-time employees. As an employer, it’s not too early to start thinking about these seven facts related to your information reporting responsibilities under the health care law.

  1. The health care law requires ALEs to report information about health insurance coverage offered to its full-time employees and their dependents as well as to the IRS.
  2. ALEs must report information about themselves, the coverage they offered – if any – and the individuals covered under the policy.
  3. ALEs are required to furnish a statement to each full-time employee that includes the same information provided to the IRS by January 31, 2017.
  4. ALEs that file 250 or more information returns during the calendar year must file the returns electronically.
  5. ALEs must file Form 1095-C, Employer-Provided Health Insurance Offer and Coverage with the IRS annually, no later than February 28, 2017 or March 31, 2017 if filed electronically. Forms 1095-C are filed accompanied by the transmittal form, Form 1094-C.
  6. Self-insured employers that are applicable large employers, and therefore are also subject to the information reporting requirements for offers of employer-sponsored health insurance coverage, must combine reporting under both provisions by filing a single information return, Form 1095-C, and transmittal, Form 1094-C.
  7. The ACA Assurance Testing System opened November 7, 2016 for tax year 2016 testing. Software developers – including employers and issuers who passed AATS for tax year 2015 – will not have to retest for tax year 2016; the Tax Year Software Packages will be moved into Production status. New participants need to comply with test requirements for tax year 2016. For more information, see Publication 5165, Guide for Electronically Filing ACA Information Returns for Software Developers and Transmitters.

Applicable large employers can find a complete list of resources and the latest news at the Applicable Large Employer Information Center. 

If you have any questions please do not hesitate to give us a call at our office, 314-993-4285.

This information was received from IRS Tax Tips Issue Number: HCTT 2016-75.

Funding of Affordable Care Act Cost-Sharing Payments found Unconstitutional: A Battle that may well Wage into the Future

A federal district court has found that funding of cost-sharing payments under Section 1402 of the Affordable Care Act (ACA) made by the federal government to insurers is unconstitutional. The ACA created a permanent appropriation for the Code Sec. 36B premium assistance tax credit but not for cost-sharing, the court found.

The court enjoined additional payments under Code Sec. 1402 until a valid appropriation is in place. However, the court stayed its injunction pending appeal. A White House spokesperson predicted that the Obama administration will appeal the decision.

Background

Section 1402 of the ACA provides a discount that lowers the amount individuals pay out-of-pocket for deductibles, coinsurance, and copayments for health insurance obtained through the ACA Marketplace. Generally, the individual must enroll in a qualified health plan (a Silver level plan) and have a household income that exceeds 100 percent but does not exceed 400 percent of the poverty line for a family of the size involved. Individuals with income between 100 and 250 percent of the poverty line qualify for an additional reduction. Eligibility for the Code Sec. 36B credit is also a prerequisite to receiving cost-sharing reductions.

The U.S. Treasury has been making advance payments of cost-sharing reductions to insurers in the ACA Marketplace. In 2014, House Republicans filed suit challenging the payments as unconstitutional.

Court’s analysis

Under Article 1 of the U.S. Constitution, “no money shall be drawn from the Treasury, but in consequence of appropriations made by law.” The expenditure of public funds is proper only when authorized by Congress. Appropriations legislation, the court explained, provides legal authority for federal agencies to incur obligations and to make payments out of the Treasury for specified purposes. Appropriations legislation has the limited and specific purpose of providing funds for authorized programs.

A “permanent” or “continuing” appropriation, once enacted, makes funds available indefinitely for their specified purpose; no further action by Congress is needed. A “current appropriation,” by contrast, allows an agency to obligate funds only in the year or years for which they are appropriated.

The Code Sec. 36B credit was added to a pre-existing list of permanently appropriated tax credits, the court found. Cost-sharing under Section 1402 was not added to that list, the court added.

The court rejected the government’s argument that ACA’s provisions for cost-sharing the Code Sec. 36B credit are economically and programmatically integrated. Premium tax credits are payable under Code Sec. 36B. Cost-sharing reductions are payable under Section 1402 of the ACA. The two are textually and legally distinct, the court found. The cost-sharing reductions, unlike the Code Sec. 36B credit, do not reduce an individual’s tax liability. The payments are made to compensate insurers for the costs that they bear.

Legislation enacted after the ACA also did not support the government’s argument. The 2013 Continuing Appropriations Act required the government to certify eligibility for premium tax credits and reductions in cost-sharing before making the credits and reductions available. However, the court found that the temporary appropriations act merely allowed Congress to require certification of eligibility prior to monies being distributed; it did not create an appropriation for cost-sharing.

If you have any questions, do not hesitate to give us a call at the office, 314-993-4285.

*This information was received from CCH Federal Tax Weekly*

Affordable Care Act Penalty

Under the Affordable Care Act, there is a requirement to maintain minimum essential coverage. A penalty is imposed if an individual does not maintain the minimum coverage for themselves or any of their dependents for 1 or more months. The penalty is added to an individual’s tax return and accounted for as an additional amount of Federal tax owed.

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However, the penalty is treated differently under the Internal Revenue Code than other unpaid taxes. If a taxpayer fails to timely pay the penalty imposed under the Affordable Care Act they will not be subject to any criminal prosecution or penalty with respect to this failure. The use of liens and seizures otherwise authorized for collection of taxes does not apply to this penalty either.

If you have an amount due on your tax return before this penalty would be imposed, you can pay the normal income tax liability and leave the minimum coverage penalty unpaid and you will not be forced to pay it. They may send you threatening letters, but they cannot come after your personal assets or subject your wages to garnishment. Unfortunately, if you are overpaid on your income taxes and owe the penalty, they can reduce your refund by the penalty but not less than zero.

Be aware that the restriction on liens only applies to the filing a notice of federal tax lien, no to the lien itself. A federal tax lien arises automatically whether it is recorded or not. The failure to pay becomes a lien on the taxpayer’s property once assessed, but they cannot enforce that lien. The penalty will accrue interest if it is left unpaid, but once again all a taxpayer will likely receive is a nasty letter stating the balance.

The issue begins once the taxpayer with an unpaid penalty dies. If a taxpayer dies without having paid the penalty then the lien can be enforced upon their estate making the assets in the taxpayer’s estate subject to the penalty and interest that accrued on the balance.

So while you would not be forced to pay the penalty while you are living, your estate would be subject to any outstanding penalty upon your death.


If you have any questions regarding the Affordable Care Act Penalty, please contact us at (314) 993-4285 or office@hkaglobal.com.

Notify your tax preparer if you purchase health insurance through the SHOP Marketplace!

MO Healthcare ExchangeIf you are an employer who has purchased their employee’s health insurance through the “Healthcare Exchange” or the “Small Business Health Options Programs (SHOP) Marketplace”, don’t forget to alert your tax preparer.

Beginning in the 2014 tax year, a new form (Form 1095-A) will be required for you, as will a few changes to your standard Form 1040.

You should also prepare for a delay in the preparation of your tax return, as there is an expected delay in the receipt of the Form 1095-A.

If you have any questions or concerns about the ACA, please call our office at 314-993-4285 or e-mail us at office@hkaglobal.com.

Important change to the small business health insurance tax credit!

IMO Healthcare Changesn accordance with changes to the healthcare law, the Affordable Care Act (ACA), beginning with the 2014 tax year small business employers will be unable to take a credit for employee’s health insurance unless the policies were purchased through the Small Business Health Options Programs (SHOP) Marketplace. However, if employers do purchase their employee’s health insurance through SHOP, the credit has increased from the previous amount of 35% up to a maximum of 50% of premiums paid.

If you have any questions or concerns about the ACA, please call our office at 314-993-4285 or e-mail us at office@hkaglobal.com.

New Bill Passed: Employers Are Not Required to Insure Contraceptives

Veto_Override_1The Missouri Legislature passed a law on September 10th which overrides the Federal mandate on birth control. This new law means that individuals, employers, and insurers can cite religious or moral exemptions from mandatory insurance coverage for abortion, contraception, and sterilization. This law also requires insurers to provide policies without these coverages for any individuals or employers that request it and gives grounds to file a lawsuit against insurers if they refuse to provide such policies. Although oppositions are occurring throughout the state, most provisions of the law have already taken effect.

If you would like to learn how this bill could affect you, please call our office at 314-993-4285.