Post on 19-Nov-2020
ACA Tax Reporting
Requirements
AUMCPBO Annual Meeting
October 2014
Disclaimer
The material in this update is provided
as general information and education.
It should not be construed as, and does not
constitute, legal advice nor accounting, tax,
or other professional advice or services on
any specific matter, nor does this message
create an attorney-client relationship.
Readers should consult with their counsel or
other professional advisor before acting on any
information contained in this presentation.
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Agenda
• ACA*—New Regime of Reporting Requirements
• Minimum Essential Coverage
• Individual Shared Responsibility
• W-2 Reporting
• Employer Shared Responsibility Rule
• Premium Tax Credits (PTC)
• Church Plan Sponsor/Employer Concerns
* ACA: Affordable Care Act 3
ACA Reporting and Tax Forms
Individual Tax Returns
Form 1040
• Line 61 (New):
Individual Mandate
• Line 69 (New):
Net Premium Tax Credit
Form 8962 Premium Tax Credit
Form 8965 Health Coverage Exemption
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Information Returns
Form 1095
• 1095-A: Marketplace Coverage
• 1095-B: Plan Coverage
(insured or self-funded
employer plans)
• 1095-C: Employer-Provided
Coverage
Form W-2
• Box 12, Code DD:
Cost of employer-sponsored
health coverage
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IRS Databases
Coverage Data Repository (CDR)
• Forms 1095-A
• Marketplace Coverage
• Advanced Premium Tax Credits
• Form 14950—
Premium Tax Credit Verification
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Minimum Essential Coverage
Plan Coverage Reporting 2016 Deadlines
Minimum essential coverage (MEC) reporting
(Code §6055) beginning with 2015 calendar year
This reporting is a Plan Sponsor responsibility.
February 1 Reporting Entity issues statements
(copies of Form 1095-B) to all covered lives
March 31
Reporting Entity submits Form 1095-B
to IRS for each covered individual in the Plan
Reporting Entity submits Form 1094-B
(transmittal cover) to IRS • February 28 deadline for hardcopy paper forms
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Who Is Reporting Entity?
Fully-Insured Plans
Self-Insured Plans
Insurance Company
Plan Sponsor
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Who Is the Plan Sponsor?
Other Cases
• Local church self-insured medical plan Local church (rare)
• Local church-provided health reimbursement arrangement (HRA)
or employer payment plan (EPP) Local church
* CBOP: Conference Board of Pensions (if it so chooses)
HealthFlex GBPHB
Self-Insured Conference Plan
CBOP*
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Small Plans Must Report
Unlike the reporting requirement for ACA
applicable large employers (ALEs) [§ 6056 reporting],
§ 6055 reporting applies to self-insured plans of
small employers (fewer than 50 FTEEs*)
* FTEE: Full-time equivalent employees
Smaller self-insured annual
conference plans
Local church-provided HRAs
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Plan Coverage Reporting
Section 6055 Report must include:
Name of each person with MEC
Name of “responsible person” (primary participant)
TIN* (SSN*) of each covered person
Calendar months each person was covered
Name, address, EIN* of reporting entity
* EIN: Employer identification number; TIN: tax identification number;
SSN: Social Security number
Form 1095-B—Draft
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TIN Safe Harbor—Section 6055
• Reporting entities must use TIN
• DOB* may be used instead of TIN,
if TIN is not available after reasonable effort:
— Plan solicits TIN for covered dependents at annual
enrollment or initial enrollment for new hires, and
— Follows up at least one additional time during
calendar year
• Reporting entities may use truncated TINs
on statements to the employee
* DOB: Date of birth
Penalties—Section 6055
2015 Penalties not assessed if Reporting Entity
makes “good faith effort to comply”
2016
Penalties similar to § 6056 Reporting
• $100 per covered life
• Maximum $1.5 million per calendar year
[for both IRS Form and participant statement]
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Individual Shared Responsibility
Minimum Essential Coverage
• Government coverage — Medicare, Medicaid, CHIP*, TRICARE and veterans’ coverage
• Employer-sponsored coverage — Church health plans are minimum essential coverage
• Individual market plans — Exchange plans, private market plans, grandfathered plans
• Other health benefit plans recognized by HHS**—examples: — Student health plans and state high-risk pools (2014 only)
— Medicare Advantage plans
— AmeriCorps coverage
— Foreign health services (if approved)
* CHIP: Children’s Health Insurance Program
** HHS: U.S. Department of Health and Human Services 18
Tax Return Verification
Individual Responsibility (Mandate)
on Form 1040: Line 61
• 2014: “Honor system”
• 2015: Reported on Form 1095-A or 1095-B
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Penalty Tax
Code §5000A Have “minimum essential coverage (MEC) or pay excise tax—April 2015 tax return*
Individual Penalty (Adults)
2014 2015 2016 Maximum
Greater of $95
or 1% of income
Greater of $325
or 2% of income
Greater of $695 or
2.5% of income
National average**
“bronze plan” premium
Family penalty: Limited to 3x (300%) individual penalty
Child penalty: 50% of individual adult penalty
* Line 61 Form 1040 2014
** $2,448 per individual in 2014 20
Penalty Tax Exemptions—Examples
• No affordable coverage — Costs > 8% of MAGI*
— Hardship
— Low income (less than tax
filing threshold)
• Undocumented aliens
• Incarcerated
• Religious objectors (Amish),
health care sharing
ministries
• Native Americans
* MAGI: Modified adjusted gross income
Form 8965
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W-2 Reporting
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W-2 Reporting
Employers (e.g., local churches) required to report
“cost” of health coverage on employees’ W-2s
January 2013 on secular, large employer W-2s
Temporary exemptions remain for:
• Employers in church plans
(unless church plan is subject to ERISA)
• Small employers (fewer than 250 W-2s)
• Union plans
• HRAs
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W-2 Reporting
• Cost of Health Coverage
— For self-insured plans: §4980B(f)(4) “COBRA Rate”
• Church Plans exempt from COBRA
— Blended rates, percentage of compensation,
part of apportionment
• Church Alliance Comment Letter
IRS may end exemption upon 6 months’ notice
• No earlier than 2014 Tax Year
– 2017 Tax Year more likely (ahead of Cadillac Tax)
Employer Shared Responsibility
Employer Coverage Reporting
Applicable large employers* must report to IRS:
covered full-time employees (FTEs)—Code §6056
* Applicable large employer: 50+ full-time equivalent employees
** January 31 most years
This reporting is an employer responsibility.
GBPHB/CBOP will likely not perform this reporting for churches.
Required for 2015 calendar year
• Even if not subject to Employer Mandate until 2016
Penalty for failures: $100 per FTE; maximum $1.5 million per
calendar year [for both IRS Form and participant statement]
Submit Form 1095-C for each covered FTE
(with single Form 1094-C) by March 31, 2016
Provide statement to covered FTEs by February 1, 2016**
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Employer Certification (2015)
Related to new delay for mid-sized employers (50-99 FTEEs)
Certification required for 2015
(with 2015 reporting of covered FTEs)
Employer has 50–99 FTEEs in 2014
Has not cut staff to have fewer than 100 FTEEs
(February 9 — December 31, 2014)
Has not/will not drop or “reduce” health coverage
(February 9, 2014 — December 31, 2015)
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Employer Coverage Reporting
§6056 Report must include:
Name, address, EIN* of employer
Contact person at employer
Certification that employer offered coverage
to FTEs and dependent children
FTEs for each month
FTEs’ share of premium of lowest-cost plan
Name, address, TIN* (SSN*) of each FTE
* EIN: Employer identification number; TIN: taxpayer identification
number; SSN: Social Security number
Form 1095-C—Draft
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Who Must Report?
• Applicable Large Employer (ALE)
— 50 or more FTEEs
— No extension for medium employers
50–100 FTEEs
• Third-party vendor can assist
or do reporting—but penalties
for failures accrue to ALE
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Affordability Safe Harbors
• ALEs can report the ACA “Affordability”
safe harbor used to avoid Shared
Responsibility penalties
Part II of Form 1095-C
• Safe Harbor reporting for FTEs, may
reduce likelihood of assessed penalties
when an employee receives a PTC
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PTC Verification
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Reporting APTC*
Form 1095-A from Marketplace to
taxpayer reports month-by-month:
• Premium
• Second-lowest-cost
Silver plan premium
• Advanced premium tax credit
* APTC: Advanced premium tax credit
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Form 8962—Premium Tax Credit
Form 8962
• PTC calculation
• Advanced PTC
reconciliation
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Reconciliation
Form 1040: Line 69
“Net premium tax credit”
• From Form 8962
Church Plan/Employer Concerns
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Plan Sponsor Ambiguity
• Who is “plan sponsor” in a multiple
employer church plan?
Who submits Form 1095-B?
• Default each separate employer
Plan document may assign
“plan sponsor” duty under Section 6055
to plan administrator or trustee
Preliminary HealthFlex approach
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Duplication
• If GBPHB or CBOP submits Forms 1095-B
for all covered lives;
• Must participating ALEs (large local
churches, conference offices, etc.)
report covered lives in Forms 1095-C
(Part III)?
May be duplicative
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1-800-851-2201
www.gbobphb.org