Category: Abentras Blog

IRS Extends Forms 1095-B/C Reporting Deadline and Good Faith Effort Relief

On Nov. 28, 2018, the IRS published Notice 2018-94, which delays the date by which informational statements must be provided to individuals. The notice also provides transitional good faith relief for reasonable mistakes made in reporting Sections 6055 and 6056 information about 2018.

Specifically, the due date for providing individuals with Form 1095-B (by a carrier or self-insured employer) and Form 1095-C (by an applicable large employer) has been extended from Jan. 31, 2019, to March 4, 2019. The deadline for filing these forms with the IRS hasn’t changed. That date remains April 1, 2019, if filing electronically, or Feb. 28, 2019, if not filing electronically. If an employer doesn’t comply with the deadlines, the employer could be subject to penalties. The notice also states that because the automatic extension of the due date to furnish is as generous as the permissive 30-day extension to provide notices to individuals/employees, the IRS will not formally respond to any request for such an extension.

Despite the extended due date, employers and other coverage providers are encouraged to furnish 2018 statements as soon as they’re able. But if individuals haven’t received these forms by the time they file their individual tax returns, they may rely upon other information received from employers or coverage providers to attest that they had minimum essential coverage as required by the individual mandate. Individuals need not amend their returns once they receive the forms, but they should keep them with their tax records.

In addition, Notice 2018-94 extends good faith effort relief to employers for incorrect or incomplete returns filed in 2019 (as to 2018 information). The IRS previously provided relief for penalties stemming from 2018 reporting failures (as to 2017 information). Accordingly, for 2018 and prior filings, relief is available to entities that could show that they made good faith efforts to comply with the information reporting requirements, even if they reported incorrect or incomplete information. In determining what constitutes a good faith effort, the IRS will take into account whether an employer or other coverage provider made reasonable efforts to prepare for reporting, such as gathering and transmitting the necessary data to a reporting service provider or testing its ability to use the Affordable Care Act Information Return Program (AIR) electronic submission process. This relief doesn’t apply to a failure to timely furnish or file a statement or return, and it doesn’t extend to employer mandate penalties (for large employers that didn’t offer affordable, minimum value coverage to full-time employees pursuant to the ACA’s employer mandate).

Lastly, the notice states that the IRS is reviewing whether the repeal of the individual mandate tax penalty (which takes effect in 2019) will change the reporting requirements under IRC Section 6055 for self-insured employers and other coverage providers (such as an insurer of a fully insured plan) to report on all covered individuals under the plan on either Form 1095-B or 1095-C. NFP’s Benefits Compliance division will continue to monitor any developments that might impact employer reporting obligations in future years.

IRS Notice 2018-94 »

Filed under: Abentras Blog

Treasury and IRS Issue HRA Guidance

On Nov. 19, 2018, the IRS released IRS Notice 2018-88, which provides guidance on the proposed regulations related to HRAs. The regulations, which were released Oct. 23, 2018, provide for two separate arrangements called individual coverage HRAs (ICHRAs) and excepted benefit HRAs. The new notice focuses on ICHRAs, which are employer-sponsored HRAs integrated with individual health insurance policies. The notice specifically discusses how the IRC Section 105, employer mandate and premium tax eligibility rules apply to ICHRAs.

IRC Section 105 generally requires employer contributions to be uniform for all participants. Otherwise, the HRA is at risk for discrimination. The Department of the Treasury and IRS anticipate releasing guidance providing that employer ICHRA contributions may vary by class as long as all participants in a class receive uniform contributions.

IRC Section 105 also prohibits the variance of contributions based on age. However, the cost of individual health coverage increases with age. It is reasonable that older employees may require increased ICHRA contributions in order to pay for the increased premium cost. To resolve this issue, the Treasury and IRS expect to issue future guidance permitting employer contributions to increase based on participant age.

The employer mandate requires an applicable large employer (or ALE, an employer with 50 or more full-time employees including equivalents) to offer minimum essential employer-sponsored coverage to at least 95 percent of full-time employees (known as Penalty A). If an ALE offers an ICHRA to at least 95 percent of full-time employees, it will comply with Penalty A.

As a reminder, individuals are not eligible for a premium tax credit (PTC) for any month they are covered by an employer-sponsored plan, which includes an HRA. Thus, any participants covered by an ICHRA will not be eligible for a PTC.

Further, individuals are not eligible for a PTC if they are eligible for an employer-sponsored plan that is affordable and meets minimum value. The notice provides guidance on how affordability will be calculated on an ICHRA. The employee’s required contribution is the premium amount for self-only coverage under the lowest cost silver plan offered by the Exchange for the rating area in which the employee resides minus the employer’s ICHRA contribution.

The Treasury and IRS recognize the burden on an employer to determine affordability for each individual employee, considering separate rating areas. For this reason, they anticipate proposing a location safe harbor that would permit an employer to base affordability on the cost of coverage in the worksite’s rating area (as opposed to each employee’s residential location).

Additionally, because of the late date on which individual policy premium rates are typically released each year, the Treasury and IRS are requesting comments related to a safe harbor that would permit an employer to base affordability on the previous year’s cost of exchange coverage.

An ICHRA that is determined to be affordable would also be considered to provide minimum value. Thus, an employee who is offered coverage in an affordable ICHRA would not be eligible for a PTC, even if they waived coverage.

Comments on the proposed guidance are due by Dec. 28, 2018.

IRS Notice 2018-88 »

 

Source: NFP BenefitPartners

Filed under: Abentras Blog

IRS Issues 2019 Limits on Benefits and Contributions Under Qualified Retirement Plans

On Nov. 1, 2018, the IRS issued Notice 2018-83, which relates to certain cost-of-living adjustments for a wide variety of tax-related items, including retirement plan contribution maximums and other limitations for tax year 2019.

For 2019, the elective deferral limit for employees who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan increases to $19,000 (up from $18,500 in 2018).

Additionally, the catch-up contribution limit for employees age 50 and over who participate in any of those plans remains at $6,000. The annual limit for Savings Incentive Match Plan for Employees (SIMPLE) retirement accounts will increase from $12,500 to $13,000.

The annual limit for defined contribution plans under Section 415(c)(1)(A) increases to $56,000 (from $55,000), and the annual limit on compensation that can be taken into account for contributions and deductions increased from $275,000 to $280,000. The threshold for determining who is a “highly compensated employee” (HCE) increases to $125,000 (from $120,000).

The annual benefit for a defined benefit plan under Section 415(b)(1)(A) increased from $220,000 to $225,000, and the dollar limitation concerning the definition of key employee in a top-heavy plan and the limitation on IRA contributions increased from $175,000 to $180,000.

Cost-of-living adjustments are effective Jan. 1, 2019. Sponsors and administrators of benefits with limits that are changing will need to determine whether their plans automatically apply the latest limits or must be amended (if desired) to recognize the changes. Any changes in limits should also be communicated to employees.

Notice 2018-83 »

 

Source: NFP BenefitPartners

Filed under: Abentras Blog

Agencies Issue Final Rules to Broaden Exemption from Contraceptive Coverage

On Nov. 7, 2018, the HHS, the Treasury Department and the DOL (the Departments) jointly released advanced copies of two final regulations that broaden the exemption from the ACA’s contraceptive mandate. The final rules are effective 60 days following publication in the Federal Register (expected Nov. 15, 2018).

As background, the ACA requires plans to cover certain preventive services with no cost-sharing. However, a number of religious institutions objected to being required to cover certain contraceptives, prompting the Obama administration to provide a waiver and accommodation process for those institutions. The Supreme Court’s decision in Burwell v. Hobby Lobby Stores, Inc. ruled in favor of Hobby Lobby, holding that closely held for-profit employers could also choose not to cover certain contraceptives.

Then, in Oct. 2017, the Trump administration issued two interim final rules which broadened the exemption for sincerely held religious beliefs and sincerely held moral convictions. Further litigation spawned from the interim final rules and two federal courts issued preliminary injunctions blocking the federal government from enforcement of these rules as a result (see Jan. 9, 2018, edition of Compliance Corner). It remains to be seen how the courts’ injunctions will impact the finalized rules.

After considering over 100,000 public comments, the final rules remain largely unchanged from the interim final rules issued back in Oct. 2017 (see article in Oct. 17, 2017, edition of Compliance Corner).

Here is a general overview of both final rules:

First, the final rule on religious exemptions expands the exemption that previously applied only to churches and similar religious organizations. This particular exemption will be available to non-governmental employers and institutions of higher education, nonprofits, for-profits, insurers and individuals with religious objections where the employer plan sponsor and/or issuer (as applicable) are willing to offer a plan omitting certain contraceptive coverage. The religious exemption does not apply to governmental plans, and no publicly-traded employers are expected to invoke the religious exemption.

Second, the final rule on moral exemptions is more restrictive than the religious exemption. Under the moral exemptions rule, only nonprofits, privately held for-profit employers, insurers, institutions of higher education, and individuals can invoke an exemption to the contraceptive mandate based on sincerely held moral objections. This could encompass association health plans where the plan sponsor is a nonprofit or a privately-held for-profit entity. However, the moral final rule does not extend to governmental plans or publically traded for-profit employers.

Both rules maintain the availability of an optional accommodation where the entity’s insurer or third-party administrator is responsible for providing contraceptive services to plan participants and beneficiaries on a voluntary basis. In other words, an otherwise exempt employer could decide to take advantage of the accommodation, which would provide contraceptive coverage to its employees and their dependents on an optional basis. Businesses that object to covering some, but not all, contraceptives would be exempt with respect to only those methods to which they’re opposed.

Under both final rules, if an employer objects to contraceptive coverage on a religious or moral basis, the group health plan, the insurer, and the coverage itself are exempt from the full ACA guidelines on contraceptive methods. Those entities are not subject to a penalty for failure to cover contraceptives for plan enrollees. Employers who claim an exemption do not have to provide any sort of self-certification or notice to the government.

Several states currently require insurers to cover contraceptives and several others have religious exemptions of some kind, but it should not be assumed that these are comparable with the new federal exemption. The departments state that the final rules only apply to the federal contraceptive mandate and do not regulate, preempt or otherwise address various state contraceptive mandates or religious exemptions. Therefore, if a plan is exempt under the final rule on religious or moral exemptions that does not necessarily exempt the plan or insurer from applicable state laws. Of course, state mandates do not apply to self-funded plans, but they apply to fully-insured plans.

Importantly, though, ERISA requires employers to outline the plan’s covered services in the plan document. As such, employers should keep in mind that the rules require employers to notify employees of any change in contraceptive coverage, in accordance with current ERISA rules. So, for example, where the decision not to cover certain contraceptives is a material modification or reduction in covered services, the employer will need to provide employees with Summaries of Material Modification. In addition, if that decision is made outside of open enrollment/renewal, the employer may also be responsible for an advance notice under the summary of benefits and coverage (SBC) rules, which may require 60-days advance notice of the change.

The final rules are effective 60 days following publication on the Federal Register (presumably effective Jan. 15, 2019). However, as these various legal challenges work their way through the courts, employers wishing to avail themselves of these exemptions should work with legal counsel to ensure that they implement the exemptions in a compliant manner, paying special attention to applicable state laws.

Press Release »
Fact Sheet »
Final Regulations for Religious Exemptions »
Final Regulations for Moral Exemptions »

 

Source: NFP BenefitPartners

Filed under: Abentras Blog

PCOR Fee Increased for 2018-2019 Plan Years

On Nov. 5, 2018, the IRS released Notice 2018-85, which announces that the adjusted applicable dollar amount for PCOR fees for plan and policy years ending on or after Oct. 1, 2018, and before Oct. 1, 2019, is $2.45. This is a $.06 increase from the $2.39 amount in effect for plan and policy years ending on or after Oct. 1, 2017, but before Oct. 1, 2018.

As a reminder, PCOR fees are payable by insurers and sponsors of self-insured plans (including sponsors of HRAs). The fee doesn’t apply to excepted benefits such as stand-alone dental and vision plans or most health FSAs. The fee, however, is required of retiree-only plans. The fee is calculated by multiplying the applicable dollar amount for the year by the average number of lives and is reported and paid on IRS Form 720 (which hasn’t yet been updated to reflect the increased fee). It’s expected that the form and instructions will be updated prior to July 31, 2019, since that’s the first deadline to pay the increased fee amount for plan years ending between Oct. and Dec. 2018. The PCOR fee is generally due by July 31 of the calendar year following the close of the plan year.

The PCOR fee requirement is in place until the plan years ending after Sept. 30, 2019.

Notice 2018-85 »
IRS Form 720 »
IRS Form 720 Instructions »

Filed under: Abentras Blog

Unauthorized Disclosure of PHI Leads to Nearly $1 Million in HIPAA Settlements

On Sept. 20, 2018, the HHS and OCR announced a settlement with the Boston Medical Center, Brigham Women’s Hospital and Massachusetts General Hospital totaling $999,000 in penalties for compromising the privacy of protected health information (PHI) during the filming of a documentary. In this breach, OCR alleged that these hospitals allowed ABC television network to film a documentary series without first obtaining authorization from patients. As part of the settlements, each hospital must create a corrective action plan that includes implementing a staff training on the topic and developing policies and procedures around photography, video and audio recording. The policies must include how to evaluate and approve requests from the media to film areas that aren’t otherwise open to the public.

As background, OCR guidance doesn’t allow health care providers to invite or allow media personnel into treatment or other areas of their facilities where patients’ PHI will be accessible in written, electronic, oral, or other visual or audio form, or to otherwise make PHI accessible to the media, without prior written authorization from each individual who is or will be in the area of whose PHI otherwise will be accessible to the media. Only in very limited circumstances does the HIPAA privacy rule permit health care providers to disclose PHI to members of the media without prior authorization signed by the individual. A similar (but more substantial) fine was imposed by OCR against New York Presbyterian hospital back in 2016 for a similar TV series with the same network.

Though each hospital denied wrongdoing and argued that they did receive consent from the patients, the OCR disagreed and stated that they will not permit covered entities to compromise their patients’ privacy by allowing news or television crews to film the patients without their authorization.

While employers don’t need to take any action based on this new assessed penalty, it’s a good reminder that PHI can come in many forms and all covered entities should be diligent to ensure HIPAA compliance.

HHS Posting »

 

Source: NFP BenefitPartners

Filed under: Abentras Blog

IRS Outlines FY 2019 Compliance Strategies and Priorities

On Oct. 4, 2018, the IRS issued a Program Letter outlining its compliance strategies and priorities for fiscal year 2019. They include:

  • Determining whether workers have been misclassified as independent contractors rather than employees. While this is primarily an employment law issue, it can impact employee benefits. An employer who has misclassified an employee as an independent contractor could have liability under ERISA for excluding an otherwise eligible employee from coverage under the group health plan. Also, an applicable large employer must offer coverage to substantially all full-time employees working 30 hours or more per week. If employers misclassify workers as independent contractors and exclude them from group health plan eligibility, employers could be opening themselves up to risk, specifically under employer mandate Penalty A.
  • Verifying that retirement plans are following correct distribution procedures
  • Contacting employer plan sponsors who fail to file a Form 5500
  • Examining 403(b) and 457 plans for compliance related to universal availability, excessive contributions and catch-up contributions
  • Continuing to pursue referrals received from internal and external sources that allege possible noncompliance by a retirement plan
  • Hiring 40 new revenue agents to process the applications that determine the exempt status of submitting organizations

While it may be helpful for employers to see the areas where the IRS will focus their enforcement efforts in fiscal year 2019, compliance in all areas related to employer sponsored plans should always be a priority. If you have any questions related to your plan’s compliance, please contact your advisor for assistance and resources.

Program Letter »

 

Source: NFP BenefitPartners

Filed under: Abentras Blog

IRS Releases Final Instructions for Forms 1094-C, 1095-C, 1094-B and 1095-B

The IRS recently released final Forms 1094 and 1095 (B and C) and instructions related to IRC Sections 6055 and 6056 reporting. The 2018 forms and instructions appear to have no substantial changes from the 2017 versions.

As a reminder, Forms 1094-B and 1095-B (the forms used for Section 6055 reporting) are required of insurers and small self-insured employers that provide MEC. These reports will help the IRS administer and enforce the ACA’s individual mandate for 2018. Form 1095-B, the form distributed to the covered employee, will identify the employee, any covered family members, the group health plan and the months in 2018 for which the employee and family members had MEC under the employer’s plan. If the plan is fully insured, Form 1094-B identifies the insurer (for a fully insured plan) or the employer (for a self-insured plan) and is used by the insurer to transmit corresponding Forms 1095-B to the IRS.

In addition, the ACA requires all employers with 50 or more full-time equivalent employees to file Forms 1094-C and 1095-C with the IRS and to provide statements to employees to comply with IRC Section 6056 (intended to help the IRS enforce the ACA’s employer mandate). Specifically, large fully insured employers will need to complete and submit Forms 1094-C and 1095-C (Parts I and II). Large self-insured employers, which are subject to both Sections 6055 and 6056, may combine reporting obligations by using Form 1094-C and completing all sections of Form 1095-C (Parts I, II and III). Small self-insured employers would need to file Forms 1094-B and 1095-B. In addition, employers with grandfathered plans must comply with the reporting requirements.

The 2018 final forms and instructions appear to have only minor changes compared to the 2017 forms. Highlights of the changes are as follows:

  • 1094-B – Appears unchanged.
  • 1094-C – Appears unchanged.
  • 1095-B – Appears unchanged.
  • 1095-C – Line 1 in Part I and Column (a) in Part III provide dividers for the entry of the individual’s first name, middle initial and last name. This new layout will likely ensure all Forms 1095-C are completed with an identical name structure, thus leading to more uniformity and fewer TIN issues.
  • Instructions – Penalty amounts for reporting failures reflect indexed increases. The penalties for failure to comply have increased from $260 to $270 per failure. This means that an employer who fails to file a completed form with the IRS and distribute a form to an employee/individual would be at risk for a $540 penalty. Notably, however, the instructions don’t refer to proposed regulations that we reported about in the June 12 edition of Compliance Corner that would require aggregation of most information returns when determining the 250-return threshold for mandatory electronic filing.

Lastly, the due dates for 2018 employer reporting are:

  • Jan. 31, 2019 to provide 2018 information returns to employees or responsible individuals.
  • Feb. 28, 2019 for paper filings with the IRS of all 2018 Forms 1095-C or 1095-B, along with transmittal Form 1094-C or 1094-B. Employers filing fewer than 250 forms may file either by paper or electronically.
  • April 1, 2019 for electronic filings with the IRS of all 2019 Forms 1095-C or 1095-B, along with transmittal Form 1094-C or 1094-B. Employers filing 250 or more forms are required to file electronically with the IRS.

Employers should become familiar with these forms in preparation for filing information returns for the 2018 calendar year. In addition, despite the repeal of the individual mandate penalty in 2019, large employers will still need to continue to offer affordable, minimum value coverage to all full-time employees and prepare to comply with employer reporting requirements as to 2018 coverage.

Form 1094-B »
Form 1095-B »
Form 1094-C »
Form 1095-C »
B Form Instructions »
C Form Instructions »

 

Source: NFP Benefit Partners

Filed under: Abentras Blog

IRS Releases Updated ACA Information Returns (AIR) Submission Composition and Reference Guide

The IRS has released the latest version of Publication 5258: “ACA Information Returns (AIR) Submission Composition and Reference Guide.” The guide has been updated for use in 2019.

This publication is meant to assist various entities with electronic information return (AIR) submissions required under the ACA — Forms 1094-B and 1095-B under Section 6055, and Forms 1094-C and 1095-C under Section 6056.

The guide includes information on the process for applying for the program, technical requirements and updates to the 2019 version, what testing is necessary before the actual transmission, parameters for filing, and data file size limits. The technical nature of this reference guide reinforces the need for employers to partner with an IT professional (either in-house or external) or experienced vendor if planning to file ACA information returns electronically.

As a reminder, if you’re a self-insured employer or an applicable large employer, the deadline to provide information returns to employees or responsible individuals is Jan. 31, 2019, for tax year 2018. Also, employers filing 250 or more forms must file electronically with the IRS. Employers filing fewer than 250 forms may file by paper or electronically. Paper filings are due by Feb. 28, 2019. Those filing electronically must report 2018 data by April 1, 2019 (since March 31, 2019 falls on a weekend).

IRS Website on ACA AIR Program »
ACA Information Returns (AIR) Submission Composition and Reference Guide »

 

Source: NFP BenefitsPartners

Filed under: Abentras Blog

IRS Releases Publication 5164, Test Package for 2018 Electronic ACA Filers

On Sept. 14, 2018, the IRS released Publication 5164, entitled “Test Package for Electronic Filers of Affordable Care Act (ACA) Information Returns (AIR),” for tax year 2018 (processing year 2019). The publication describes the testing procedures that must be completed by those filing electronic ACA returns with the IRS, specifically Forms 1094-B, 1095-B, 1094-C and 1095-C. As a reminder, those who are filing 250 or more forms are required to file electronically with the IRS.

Importantly, the testing procedure applies to the entity that will be transmitting the electronic files to the IRS. Thus, only employers who are filing electronically with the IRS on their own would need to complete the testing. If an employer has contracted with a software vendor who’s filing on behalf of the employer, then the testing and this publication would not apply to the employer, but would apply to the software vendor instead.

For reporting year 2018, the IRS provides two options (see pages 12-13) for submitting test scenarios: predefined scenarios and criteria-based scenarios. Predefined scenarios provide specific test data within the submission narrative for each form line that needs to be completed. Criteria-based scenarios give more flexibility to test and create data that may be unique to their organization when completing the necessary test scenarios.

Correction scenarios are also provided (see page 17), but they’re not required in order to pass testing.

As a reminder, electronic filing of 2018 returns will be due April 1, 2019 (since March 31, 2019, falls on a weekend). If you’re a large employer who’s required to file electronically and would like information on third-party vendors who can assist, please contact your advisor.

IRS Publication 5164 »
AIR Program »

 

Source: NFP BenefitsPartners

Filed under: Abentras Blog