IRS Delays ACA Reporting Deadlines

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Good News!

The Internal Revenue Service (IRS) sent out a belated Christmas present to employers and other plan sponsors on December 28th when it announced it was delaying the 2016 Affordable Care Act reporting requirements. In Notice 2016-4, the IRS announced that the deadline for providing to individuals the 2015 Form 1095-B and Form 1095-C is delayed from February 1, 2016 to March 31, 2016. Similarly, the deadline for filing with the IRS Forms 1094-B and 1094-C is delayed from February 29 to May 31, 2016 for non-electronic filers and from March 31 to June 30, 2016 for electronic filers.

These requirements are related to defined “Large Employers” in 2015, those with 100 or more employees. “Medium Employers“, those with 51 to 99 employees, will meet the law’s requirements for the first time in 2016, and provide the noted documents to employees and the IRS in early 2017. “Small Employers“, those with less than 50 employees, are not subject to these requirements at this time.

Because of the delay, some employees will not receive their forms until after the April 15 tax filing deadline. The IRS indicates that these employees do not have to file an amended tax return. Employers should simply keep their forms in a file should they need them later.

Should you have any questions about this extension or anything else, please contact your Professional Agent or Underwriter here at Morris & Reynolds Insurance and we will be most happy to help.

As always, thank you for allowing us the honor to be of service.

ACA Compliance Bulletin:
ACA Reporting Deadlines Delayed


Click Below to View
Notice 2016-4 From the IRS

Average Individual Mandate Penalty Rising To $969 Per Household, Analysis Finds.

New analysis from the Henry J. Kaiser Family Foundation has found that Americans going into the New Year without purchasing health insurance or filing exemptions will be paying higher tax penalties than in previous years under the Affordable Care Act (ACA).

Starting in 2014, Americans filing their federal tax returns for the year were required to report whether they had health coverage or were exempt. As outlined by the ACA’s Individual Mandate, those who had not attained coverage, or filed for an exemption, paid a tax penalty fee of either 1 percent of their yearly income, capped at a maximum of the average price of an ACA Marketplace Bronze plan, or $95 per person ($47.50 per child under 18), limited to a family maximum of $285.

As the Individual Mandate is being phased in over a three-year period, the penalties have seen a steady increase. For anyone remaining uninsured in 2016, the penalty (to be paid out at tax time in 2017) will be much steeper than previous fees, as shown in the figure below:ACA Individual Mandate - Infographic

The Kaiser analysis estimates that individuals who were uninsured during the beginning of 2015 and eligible to enroll in the marketplace, the average household penalty in 2016 is $969, a 47% rise from 2015’s average estimated penalty of $661. Those who qualify for subsidized premiums will be subject to an average household penalty of $738 in 2016 and the average household penalty for uninsured individuals not eligible for any financial assistance is estimated to be $1,450.

According to the Kaiser analysis, just over 3 million uninsured Americans are eligible for healthcare at lower prices than what they would pay in penalties, or for free after subsidies. However, that leaves approximately 7 million people weighing their options, as the tax penalty fine could be more cost-effective for many than purchasing the least expensive insurance plan available.

The analysis goes on to say “a key area of uncertainty for 2016 is how much the increased penalties will encourage uninsured people – particularly those who are healthy – to obtain coverage”.  The ACA relies heavily on bringing healthy people into the risk pool; more people means lower premiums and increased subsidies for many, keeping the marketplace sustainable.

Open enrollment for 2016 health plans began November 1st and will last until the end of January 2016. In the last few weeks, the Obama administration has been endeavoring to publicize the increasing fines to the millions who remain without coverage. Mr. Kevin Counihan, the Chief Executive of the Federal Insurance Marketplace, wrote in a recent blog post that “A Special Enrollment Period around the April 15 tax filing deadline” will not be offered in 2016 like it was in previous years.

Please contact our fine Professional Agents and Underwriters here at Morris & Reynolds Insurance with any questions you have about these penalties, coverage options, or anything else you might need at (305) 238-1000.

As always, thank you for allowing us to provide your protection.

Know Your Insurance: Individual Mandate

Know Your Benefits: Individual Mandate Penalties

ACA Requirement to Buy Coverage: Flowchart


Maximizing Open Enrollment for Employees

Open enrollment can be an overwhelming time for both employers and employees. Employees are given the opportunity to re-evaluate their current benefits and make changes for the coming year, while employers must choose a benefits package that balances cost and value and facilitate the enrollment process. Due to a variety of factors, benefit offerings are changing, placing new demands on employees and employers during open enrollment. To make the enrollment process as smooth as possible, it is important that employers educate and communicate with their employees effectively.

The Open Enrollment Process
As employer-sponsored benefits transition to more voluntary, employee-paid or employee-subsidized offerings, employees must assume more control in making smart decisions. Accordingly, employers should provide benefit information in an easy-to-understand format that provides employees with essential information, along with additional resources to help them make decisions.

Here is a typical open enrollment process:

  • Notification – Employers send out an organization-wide announcement alerting employees that open enrollment will begin shortly.
  • Receipt of Information – Employers distribute information about benefit plans, selection information and the appropriate forms to their workers. Employees may also receive personal information based on their elections from the previous year.
    • Employers may direct their employees to the company website, invite them to attend HR seminars, offer a benefit fair with the insurance company or offer access to interactive decision-making tools.
  • Making Decisions – Employees research their various benefits options and discuss with family to determine which benefits they will elect for the coming year.
  • Enrollment – Employees select their benefits.

To make the open enrollment process as smooth as possible, it is important that employers educate and communicate to their employees effectively. Maximize open enrollment with these strategies.

Open Enrollment Strategies
The following suggestions, based partially on an employee survey conducted by MetLife®, can improve the open enrollment process for both employers and their employees:

  • Establish solid communication between the HR department and employees. To do so effectively, conduct meetings and seminars and offer calculators, intranet education information and benefit fairs. If your organization is smaller, conduct one-on-one meetings with employees to determine exactly the type of information they need.
  • Survey your employee population to determine their priorities—product importance, preferred method of communication, etc. By doing so, employers can identify exactly what their employees want, and workers feel their needs have been heard by decision-makers.
  • Customize benefits and information resources to the life stages of your employees. For instance, if you have a large older population, feature more retiree benefits and long-term care insurance. It is also wise to communicate with your employees in the same way that they communicate on a regular basis. For example, if messages are received via postings in a common area, consider placing benefit information in that area as well.
    • By customizing your benefits to your population, you can increase employee satisfaction without increasing your spending.
    • Employees have an easier time selecting the benefits that are best suited for them and their families.
  • Provide easy-to-understand tools. This will lessen employee confusion and the feeling of being overwhelmed while trying to make tough decisions.
  • Consider offering new benefits, even if they are voluntary, such as dental insurance, vision insurance or benefits for prescription drugs. Employees tend to make more changes when they receive new options.
    • Even if employees must pay 100 percent for such voluntary options, they can still be attractive offerings. Since the benefits are negotiated by the employer, employees typically receive a group rate, which is significantly lower than purchasing them individually.
  • Offer a second, off-cycle enrollment period when new benefits are featured. This can be a time for employees to focus on voluntary benefits and other offerings that are not traditional. These benefits are typically overshadowed by health insurance and retirement options, so a second off-cycle enrollment is a great time for employees to focus on their other needs.
  • Make plan information as simple as possible, while also being interactive. Employees should be able to understand their offerings to make more knowledgeable decisions.
  • Maintain all Summary Plan Descriptions on your website, rather than directing employees to the insurance carrier site for information. This provides easy access to information and makes the company appear more in control of the information.

Overall, a successful and effective open enrollment process can have a dramatic impact on the relationship between employers and their employees. By catering to their needs and wants, employers will ultimately make the experience more enjoyable and worthwhile for their workers. As a result, they will feel more secure in their benefits decisions throughout the plan year.

Agencies Prohibit All Employer Reimbursement of Individual Premiums

Due to the rising costs of health coverage, employers have shown interest in helping employees pay for individual health insurance policies instead of offering employer-sponsored plans.

In response, on Nov. 6, 2014, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) issued FAQ guidance stating that these arrangements do not comply with the Affordable Care Act’s (ACA) market reforms and may subject employers to penalties.

Although it was widely believed that these penalties would apply only to pre-tax arrangements, the FAQs clarify that after-tax reimbursements and cash compensation for individual premiums also do not comply with the ACA’s market reforms and may trigger the excise tax penalties.

This guidance essentially prohibits all employer arrangements that reimburse employees for individual premiums, whether employers treat the money as pre-tax or post-tax for employees.

The new FAQ follows up on IRS guidance previously issued in September 2013, which clarified that health reimbursement arrangements (HRAs), certain health flexible spending arrangements (FSAs) and other employer payment plans are considered group health plans subject to the ACA’s market reforms and cannot be integrated with individual policies to satisfy those requirements.

The IRS further clarified the issue in May 2014 when it issued two FAQs addressing the consequences for employers who reimburse employees for individual health insurance premiums. Because these employer payment plans do not comply with the ACA’s market reforms, the IRS indicated in the FAQs that these arrangements may trigger an excise tax of $100 per day for each applicable employee. This same penalty would apply to employers who violate the new ruling against reimbursing employees for individual premiums.

The latest guidance also stated that products claiming to help employers obtain Marketplace subsidies for their workers through a Code Section 105 reimbursement plan are also not permitted.

The IRS recently announced a new annual contribution limit for health Flexible Spending Accounts (FSAs) starting in 2015.According to this guidance, for taxable years beginning in 2015, the dollar limitation on employee salary reduction contributions to health FSAs will be $2,550, an increase of $50 from the amount for 2014.The FSA dollar limit first became effective in 2013, as part of the Affordable Care Act (ACA).Prior to the end of 2014, cafeteria plan documents should be updated to reflect the ACA’s new health FSA dollar limit.

HPID Requirement Delayed Indefinitely
On Oct. 31, 2014, the Centers for Medicare & Medicaid Services (CMS) announced a delay in enforcement of the Health Plan Identifier (HPID) requirement until further notice.

The HPID is a standard, unique health plan identifier required by the Health Insurance Portability & Accountability Act of 1996 (HIPAA).

The delay, which was announced five days before the initial deadline to obtain an HPID, means that for the foreseeable future, health plan sponsors are not required to obtain an HPID or use it in HIPAA standard transactions.

CMS has not indicated if there will be a new deadline for obtaining the HPID, or when the new deadline will be. Health plan sponsors who have already obtained HPIDs should maintain records of their identifiers.

This enforcement delay applies to all HIPAA-covered entities, including health care providers, health plans and health care clearinghouses.

Officials responsible for enacting the delay released a statement explaining their decision was based on recommendations by a separate advisory body. Those recommendations will be reviewed while the delay is in effect.

More Information
Stay tuned to for the latest news affecting your insurance needs, and stay in close contact to your professional agents and underwriters here at Morris & Reynolds Insurance. For more information on ACA visit our website’s Health Reform page.

Communicating With Employees During Open Enrollment

Open enrollment can be a hectic time for both employers and employees. Between budgeting and anticipating needs, both sides can become overwhelmed when choosing a benefits package that balances cost and value. Amidst the stress of research and deadlines, communication is the critical component that will help both parties reach a satisfactory conclusion.

With that in mind, here are some helpful suggestions to use employee communication to your maximum advantage:

  1. Understand workforce benefit needs. Consider surveying your employees to gauge their satisfaction with current options and ask what they are looking for in terms of benefits. Compare this information to plan utilization trends. When combined, this data should tell you what employees value and what they don’t, while possibly identifying benefits employees want but didn’t know they had.
  2. Customize benefits and information resources to the life stages of your employees, instead of taking a one-size-fits-all approach. For instance, if you employ a large older population, feature more retiree benefits and long-term care insurance.
  3. Start talking about enrollment early. Provide plan details several weeks before the enrollment deadline. Avoid using insurance and benefits industry jargon as much as possible, and present information in easy-to-understand terms. Explain the difference between general and voluntary benefits. Provide sources for additional information, as well as contact information for employee questions. Consider featuring employee stories about the impact benefits have had on their lives.
  4. Repeat information. Conduct meetings and seminars and offer calculators, intranet education information and benefit fairs. If your organization is smaller, conduct one-on-one meetings with employees to determine exactly the type of information they need.
  5. Maintain all Summary Plan Descriptions on your website, rather than directing employees to the insurance carrier site for information.
Instructions for the forms to be used for health coverage reporting under the Affordable Care Act are now available, along with Q&As on the reporting rules, which are found in Code Section 6055 and 6056.The Instructions for Forms 1094-B and 1095-B will be useful for entities reporting minimum essential coverage under Section 6055, such as health insurance issuers and self-insured plan sponsors that are not applicable large employers (ALEs). The Instructions for Forms 1094-C and 1095-C will be used by ALEs that are reporting under Section 6056, as well as for combined reporting by ALEs with self-funded plans.The forms and instructions are draft versions only, and they should not be relied upon or used for filing. Both the forms and instructions will be finalized later this year.

New Rules on Contraception for Religious Employers
On Aug. 27, 2014, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury published two separate rules in response to the recent U.S. Supreme Court decisions regarding contraception coverage under the Affordable Care Act. The rules pertain to both nonprofit and closely held for-profit organizations.

The ACA’s contraceptive coverage mandate generally requires non-grandfathered health plans to cover certain women’s preventive health services without cost-sharing, but provides special exceptions for certain religious organizations.

The interim final rule maintains the existing accommodation for certain religious nonprofit organizations and also creates an additional pathway for eligible organizations to provide notice of their objection to covering contraceptive services.

An additional proposed rule would extend the same accommodation that is available for nonprofit religious organizations to certain closely held for-profit companies.

More Information
Contact Morris & Reynolds Insurance at 305.238.1000 or visit our website’s Employee Benefits page for more information.