Tag Archives: ACA

Employer Relief: Affordable Care Act Reporting

Employer Relief, Affordable Care ActEmployer relief has been issued for ACA reporting. Starting the 2015 tax year, Applicable Large Employers (ALEs) were required to file Forms 1095-C and 1094-C with the IRS. They were also required to provide a copy of the 1095-C to each of their employees. An ALE is generally an employer with 50 or more equivalent full time employees (EFTEs) in the prior year. Even though ALE’s with 99 or fewer EFTEs are not subject to the insurance mandate for 2015, they are subject to the 1094-C and 1095-C filing requirements for 2015.

Employer Relief and Due Date Requirement

This is the first year for this requirement. The IRS has decided to provide first year (2015) filing relief for Forms 1095-B and 1095-C. The due dates for furnishing these forms are extended as follows:

  • The due date for providing the 2015 Form 1095-B and the 2015 Form 1095-C to the insured and employees is extended from February 1, 2016, to March 31, 2016.
  • The due date for health coverage providers and employers to furnish the 2015 Form 1094-B and the 2015 Form 1094-C to the IRS is extended from February 29, 2016, to May 31, 2016 if not filing electronically.
  • The due date for health coverage providers and employers electronically filing the 2015 Form 1094-B and the 2015 Form 1094-C with the IRS is extended from March 31, 2016, to June 30, 2016.

Those Who Cannot Meet the Original Deadline

The IRS is prepared to accept information reporting. For returns beginning in January 2016, employer relief is available for those who cannot meet the original deadlines are encouraged to furnish statements and file the information returns as soon as they are ready. This is true for other coverage providers, as well.

The information provided to individuals on their copy of Form 1095-B or 1095-C is generally used to confirm that the individual had minimum essential coverage. This allows them to avoid the penalty that applies when not covered for the full year. However, with the extension of the filing dates for these forms, individuals may not have the forms in hand before filing their 2015 returns. For 2015 only, individuals who rely on other information received from their coverage providers about their coverage for purposes of filing their returns do not need to amend their returns once they receive Form 1095-B or Form 1095-C or any corrections, according to the IRS.

Likewise, individuals who, when filing their 2015 income tax returns, rely upon other information received from employers about their offers of coverage for purposes of determining eligibility for the premium tax credit need not amend their returns once they receive their Forms 1095-C or any corrected Forms 1095-C.

Are you ready to file, but you don’t have your 1095-B or 1095-C Forms yet?

Alex Franch, BS EA is more than a tax advisor. Alex is a tax expert who can give you the tax advise you need. Worthtax provides ultra-convenient service and guaranteed pricing. We have locations in Quincy, Weymouth and Dedham. He can be reached at 781.849.7200 to answer your tax questions.

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Learn more information about 1095 forms here.

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Health Reimbursement Plans: Beware of Penalties

2015_08_20 Health Reimbursement Plans2m Health Reimbursement Plans, Healthcare, Health, Reimbursement PlansHealth reimbursement plans and rules have been very interesting these days. They can save you a lot of money, if used appropriately.

Beginning in 2015, large employers defined as those with 100 or more full-time employees must begin offering health insurance coverage to their employees. Then, in 2016, employers with 50 or more full-time employees must do the same or face penalties. These are called the “large employer health coverage excise tax.”

Employers with fewer than 50 full-time employees are never required to offer their employees an insurance plan. However, qualified small employers who do provide coverage may qualify for the small business health insurance credit.

In the past, many smaller employers have simply reimbursed their employees for the cost of insurance. They found it less expensive. And, they had fewer administrative costs than having a group insurance plan. However, under the Affordable Care Act (ACA, or Obamacare for short), a group health plan that reimburses employees for the employees’ substantiated individual insurance policy premiums must satisfy the market reforms for group health plans. Most commentators believe an employer payment plan will fail to comply with the ACA annual dollar limit prohibition. This is because an employer payment plan is considered to impose an annual limit up to the cost of the individual market coverage purchased through the arrangement. Also, an employer payment plan cannot be integrated with any individual health insurance policy purchased under the arrangement. Thus, reimbursement plans may be subject to a very draconian penalty.

Small Business Employers, Did You Get the Notice?

Back in February, the IRS issued Notice 2015-17. This provides small employers limited relief from the stiff $100 per day, per participant, penalties under IRC §4980D for health insurance reimbursement plans that had been addressed in Notice 2013-54. In particular, that notice provided:

    • Transitional relief for employers that do not meet the definition of large employers (i.e., employers with 50 or more employees). This relief is granted for all of 2014 and for January 1 through June 30, 2015; and
  • Relief for S corporations that pay for or reimburse premiums for individual health insurance coverage for 2% shareholders, as previously addressed in Notice 2008-1. The relief period is indefinite, and the IRS states that taxpayers may continue to rely on Notice 2008-1 “unless and until additional guidance” is provided.

The Small Employer Health Reimbursement Relief is Expired

2015_08_20 Health Reimbursement Plans QuoteWell, June 30, 2015 has come and gone. So has the small employer relief. Therefore, employers who still reimburse employees for their medical expenses are in danger of being subject to the $100 per day ($36,500 a year) per employee penalty. Compared to the annual $2,000 penalty that large employers face for not providing insurance to their full-time employees, the penalties on small employers are substantial enough to bankrupt them. What does this mean? The large employer who fails to provide any insurance pays a penalty of only $2,000 per year per employee while the employer who helps employees by reimbursing them for the cost of insurance gets hit with an up to $36,500-per-employee penalty.

This is true even if the employer is a small employer (50 or fewer full-time employees) who is under no legal obligation to provide health insurance plans for its employees. They just want to offer reimbursements simply to help the employees. Does this seem fair? We will let you form your own opinion. You are welcome to leave a comment below to go over to our Facebook or Google+ pages to express your thoughts.

Will Congress step in to alleviate the problem? Maybe yes and maybe no. Employers must decide if it is worth the risk to depend on Congress to act.

There is one firm, Zane Benefits, which claims to have solved the problem with a reimbursement plan that complies with the code. Of course, there are others who argue that it does not.

Bottom Line: Understand your risks if your business has a medical reimbursement plans and consider other options.

If you have questions related to your business and employees or about the tax consequences or benefits regarding health reimbursement plans, please give Alex a call at 781-848-7200. He can help you sort through the tax treatments for you or your business large or small.

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2014 Income Tax Impact of the Affordable Care Act (ACA) in a Nutshell

By: Cindy Toran, MBA, BA

Affordable Care Act ACAThe Affordable Care Act (ACA), also known as Obamacare, will add a new level of complexity in preparing 2014 U.S. Income Tax Returns. Massachusetts taxpayers are familiar with state reporting requirements to verify coverage on their MA individual tax returns, however, the ACA criteria includes anyone:

  • Covered through the Marketplace, or
  • Claiming an exemption from health insurance coverage, or
  • Who had no coverage for any month out of the year.

Are new tax forms required with the Affordable Care Act in effect?

Yes. The following new tax forms may be required:

  • Form 1095-A, Health Insurance Marketplace Statement (issued by Marketplace insurer by 1/31/15)
  • Form 8965, Health Coverage Exemptions (file with 2014 tax return)
  • Form 8962, Premium Tax Credit (file with 2014 tax return)

Simplest Case with the Affordable Care Act:

Taxpayers whose entire household had qualifying health coverage for each month of their tax year will simply check a box on their federal income tax return. No further action is required.

Affordable Care Act Health Coverage Exemption(s):

If anyone in the taxpayer’s household did not have coverage for any month of the year and claims an exemption, Form 8965 will need to be attached indicating the individual’s name, Social Security number, and exemption type or reason. Exemptions include:

  • Cost of coverage exceeding 8% of household income*
    • A coverage gap of less than 3 consecutive months
    • Household income below threshold for filing a tax return
    • Coverage gap at the beginning of 2014 when purchased coverage through the Marketplace
  • Religious exemption*
  • American Indian or Alaska Native
  • Ineligible for Medicaid because your state does not participate in expansion under the Affordable Care Act*
  • Hardship, including foreclosure, unpaid medical bills, death of a close family member, eviction, domestic violence, abandonment*
  • Incarceration
* Exemption Certificate Number required from Marketplace

Shared Responsibility Payment (SRP)

If anyone in the taxpayer’s household had no coverage for any month and no exemption, the Shared Responsibility Payment (SRP) is calculated and paid as follows, allocated monthly. Form 8965 includes a worksheet to assist in the calculations.

The Shared Responsibility Payment for 2014 is the greater of:

  • 1% of the household income above the filing threshold based on filing status, or
  • $95 per adult and $47.50 per child under age 18, with a maximum of $285.

The Good News

Massachusetts residents may be familiar with the state-level penalty for not having health insurance. The good news is, if you have to pay the federal penalty (Shared Responsibility Payment), you may not have to pay the full Massachusetts penalty.

According to the Massachusetts Department of Revenue, if the federal penalty is greater than the state penalty, then no state penalty is due. If the state penalty is greater, then the amount due to the state is the difference between the two.

Premium Tax Credit and Advanced Payments

If anyone in the taxpayer’s family enrolled in a health plan through the Marketplace and received advance credit payments, Form 8962 must be completed to reconcile the advance credit payments (which was based on an estimate) with the actual premium tax credit. If no advance credit payment was received, Form 8962 will calculate the amount of credit due to you, which will be claimed as a tax credit on your tax return. Generally you will be eligible for a premium tax credit for 2014 if your household income is 100% to 400% of the federal poverty line in the 48 contiguous states:

affordable care act aca healthcare

Summing up the Affordable Care Act

Your 2014 tax reporting due to the ACA may be quite simple, or it may be very complex. This is just a synopsis. For more information, visit the Affordable Care Act Information Center on our website or feel free to give us a call.

What about your thoughts?

Do you have any thoughts, questions or concerns regarding the Affordable Care Act? Please feel free to leave your comments below or post to on our FacebookGoogle+ or LinkedIn pages.

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Tax Season is Here!

Time flies – before it slips away, call Alex Franch, EA at 781-849-7200 for your appointment and learn about our client discounts here.

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