IRS Delays Employers’ Deadline to Distribute ACA Reporting Form 1095 to Employees

In a move that caught many in the benefits community by surprise, the IRS issued Notice 2016-70 on Nov. 18, giving employers subject to the Affordable Care Act's (ACA's) 2016 information-reporting requirements up to an additional 30 days to deliver these forms to employees.

The notice affects upcoming deadlines for ACA information reporting as follows:

• The IRS extended the deadline to deliver ACA reporting forms to employees from Jan. 31, 2017 to March 2. The extended deadline applies to furnishing to individuals the 2016Form 1095-C (Employer-Provided Health Insurance Offer and Coverage) and Form 1095-B(Health Coverage). 
  
  The Treasury Department and the IRS determined that a substantial number of employers and other insurance providers needed additional time "to gather and analyze the information [necessary to] prepare the 2016 Forms 1095-C and 1095-B to be furnished to individuals," Notice 2016-70 states.
  
• This extension applies for tax year 2016 only, and does not require the submission of any request or other documentation to the IRS.
  
• The IRS did not change the deadline for filing Forms 1094 and 1095 with the agency.This means there will be no extension to file the 2016 Form 1094-B (Transmittal of Health Coverage Information Returns) along with copies of Form 1095-B, and Form 1094-C(Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns) along with copies of Form 1095-C.
  
  Employers filing these forms by mail will still need to do so by Feb. 28, 2017. Employers filing electronically (as those submitting 250 or more forms are required to do) must do so by March 31.
  

	Previous IRS Due Date	New IRS Due Date
Deadline to distribute ACA reporting forms to employees and covered individuals	Jan. 31, 2017	March 2, 2017
Deadline to file ACA reporting forms with the IRS	Feb. 28, 2017 (paper) March 31, 2017 (electronic)	No change

• The IRS extended "good faith transition relief" for another year. In 2015, the IRS announced it would not penalize employers for incorrect or incomplete forms if they could show they made good-faith efforts to comply with the reporting requirements. No relief was available to employers who did not timely file the forms at all. Notice 2016-70 extends that good-faith relief to the 2016 reporting year. 
  
  The notice also clarified that the relief applies to "missing and inaccurate taxpayer identification numbers and dates of birth."

"The IRS announcement is welcome news to many employers still struggling to interpret and apply the IRS instructions to their reporting obligation," said Marcus Wilbers, a compliance attorney at benefits brokerage J.W. Terrill in St. Louis.

"This deadline was especially challenging because it coincided with Form 1099 and W2 processing schedules," said Mike Downey, executive vice president of BenefitScape, a Boston-based benefits services firm. "A 30-day extension, while short, moves the printing and distribution to a more opportune time."

A Second Year of Relief

Last December, the IRS gave employers subject to the ACA's 2015 information reporting requirements extra time to give these forms to employees and file them with the government. At that time, the IRS indicated it did not anticipate any additional extensions regarding ACA information reporting for future years.

Most employers and practitioners will now take advantage of the extended relief for distributing reporting forms to employees, Downey predicted.

Like last year, the guidance provides that employees can file their personal income taxes without having to attach the relevant Form 1095 to their tax returns. Taxpayers, however, should keep these forms with their other tax-year documents, as the IRS will request to view them if the taxpayer is audited.

ACA Reporting Is Still Required

Applicable large employers—those with 50 or more full-time or equivalent employees—are subject to the ACA's employer mandate and its related tracking and reporting requirements.

President-elect Donald Trump has made repealing and replacing the ACA a top priority, although the extent to which his administration and the GOP Congress can accomplish that goal is subject to debate. And while even short of full repeal the employer mandate is seen as a likely, early, target, "the ACA is still the law of the land," said Scott Behrens, an ERISA compliance attorney at Lockton Companies, a benefits brokerage based in Kansas City, Mo. "Prudent employers will want to continue to comply with the ACA, including the play-or-pay mandate and reporting requirements until formal guidance relieves them of those compliance obligations."

Small employers with fewer than 50 full-time employees are exempt from some, but not all, of the ACA's reporting requirements. For example, those with a self-insured health plan must complete and file Forms 1095-B and 1094-B with the IRS, as well as provide employees with a copy of Form 1095-B. Small employers also are required to file Forms 1095-C and 1094-C if they are members of a controlled or affiliated service group that collectively has at least 50 full-time employees.

Penalties Left Intact

Notwithstanding the extension, the IRS encouraged employers to furnish the 2016 statements as soon as they are able. Employers that do not meet the extended deadlines will remain subject to penalties.

"The IRS stated in Notice 2016-70 that it would apply a reasonable cause analysis when determining the penalty amount for a late filer," said Damian Myers, a benefits attorney with Proskauer in Washington, D.C.

"According to the IRS, this analysis will take into account such things as whether reasonable efforts were made to prepare for filing"—such as an employer's gathering and transmitting data to an agent or testing its own ability to transmit information to the IRS—"and the extent to which the filer is taking steps to ensure that it can comply with the reporting requirements for 2017," Myers noted

By Stephen Miller, CEBS

Nov 21, 2016

Medicare Part D Notices Need to be Distributed Before October 15

It is that time of year again when the annual Notice of Creditable Coverage, as required under Medicare Part D, must be distributed by employers. The notice informs participants if the prescription drug coverage offered under the employer's group health plan is considered 'creditable' or 'non-creditable' coverage. Employers who sponsor a health plan that includes prescription drug benefits must provide the annual notice to all Medicare-eligible participants. The notice will explain whether or not the prescription drug benefits offered under the group health plan are at least as good as the benefits offered under the Medicare Part D plan. The Notice of Creditable Coverage must be provided: At least once a year before October 15th (the start of the annual Medicare Part D enrollment period, which is from October 15th through December 7th). Whenever a Medicare-eligible employee, spouse or dependent enrolls in the employer's health plan (including Medicare-eligible COBRA individuals and their dependents; Medicare-eligible disabled individuals covered under the group health plan's prescription drug plan and any retirees and their dependents). Whenever there is a change in the creditable or non-creditable status of the employer's health plan prescription drug coverage. Whenever an individual requests the notice. CMS (The Centers for Medicare and Medicaid Services) has posted forms and instructions for providing this notice. Forms are available in English and Spanish. Click Here to access more information from CMS on this subject. Click Here to access the CMS Disclosure Notice.

Carefirst to Distribute Medical Loss Ratio (MLR) Rebates

According to Carefirst, under the Affordable Care Act (ACA), all health insurers must spend a minimum percentage of the premiums they collect on health care services and quality improvement activities for their members. This percentage is called the Medical Loss Ratio (MLR) and is calculated for an insurer’s overall business based on the market segments in each state (not at the group level).

Generally, insurers must spend at least 80 cents of every premium dollar they receive on health care services. If the minimum MLR is not met within a market, insurers are required to pay a rebate to customers within that market segment. These rebate checks must be received by September 30, 2016.

Employers or administrators of a group health plan, including plans offered by non-governmental employers subject to the Employee Retirement Income Security Act of 1974 (ERISA), may have fiduciary responsibilities regarding use of the MLR rebates. Some or all of an MLR rebate may be an asset of the plan which must be used for the benefit of employees covered by the policy. As a general summary, for group health plans that are employer plans governed by ERISA or that are state or local governmental plans, an employer must distribute the rebate in one of three ways: 

1. Reduce employees’ portion of premium for the upcoming year for subscribers covered under any option offered by the health plan at the time the rebate is received;
2. Reduce employees’ portion of premium for the upcoming year for subscribers covered under the option offered by the health plan to which the rebate applies at the time the rebate is received; 
3. Provide a cash rebate to employees or subscribers that were covered by the health insurance on which the rebate is based.                                                    

CareFirst, however, cannot provide legal advice regarding an employer’s obligations, and individual groups should consult with their legal or benefits advisors in light of their specific circumstances. Employers also may consult the Department of Labor’s guidance for group health plans subject to ERISA in Technical Release 2011-04, available at http://www.dol.gov/ebsa/newsroom, the guidance for State or local governmental plans at 45 C.F.R. § 158.242, or, for general information, the Department of Labor’s Employee Benefits Security Administration at 1-866-444-EBSA (3272).      

                       

Evergreen Being Forced to Pay Nearly $22 Million Under Risk Adjustment Costs

June 3, 2016

Evergreen Health Cooperative could be forced to pay nearly $22 million to CareFirst BlueCross BlueShield as part of an Affordable Care Act provision that was initially designed to level the health insurance playing field.

The fees are part of what's known as risk adjustment costs. The provision requires insurers who take on healthier patients to pay insurers who have sicker clients.

Evergreen Health Cooperative may have to pay CareFirst almost $22 million in fees under a provision of the Affordable Care Act.

For health insurance co-ops across the country, including Maryland's Evergreen, this could mean paying tens of millions of dollars to the largest insurers in the country. Evergreen's payments for 2015 could hit $22 million, with most of it being owed to CareFirst, the largest insurer in the state. Cooperatives are expected to get their final risk adjustment estimates on June 30. Prior to that date, Beilenson said Evergreen is exploring all of its options, even in the form of litigation. Otherwise, having to pay out would be "damaging."

Evergreen is one of 24 insurance cooperatives in the U.S. under the Affordable Care Act that was intended to create more competition in the marketplace. The co-op had to pay $2 million in risk adjustment fees last year for 2014, a year in which Evergreen had approximately 2,000 members. It now has almost 40,000 members.

Peter Beilenson, the CEO of Baltimore-based Evergreen Health, said he's appealed eight different times to the Centers for Medicare and Medicaid Services to have the federal government either lower the risk adjustment payment or develop a payment plan, but he says the feds are refusing to budge.

"They're telling me they can't change the rules in the middle of the game," Beilenson said.

Specifically, Evergreen is asking CMS to place a cap on the size of the risk assessment payments. In this case, $1.6 million. Beilenson also said he'd like to see payments phased in over the next two or three years so that newer providers have time to get patient information up to date and balance the formula.

Jonathan Munshaw
Digital Editor, Baltimore Business Journal

MEDICARE PART B AND WHEN TO ELECT

Turning 65 and being eligible to elect Medicare coverage can be a tricky time.  If you have medical coverage through your employer, you may want to delay the election of your Medicare Part B coverage as this costs money.  Medicare Part A is free.  In certain circumstances you will not want to wait to elect Part B.  When you employer has over 20 employees, Medicare is secondary, meaning it pays after your employer coverage. However, if there are less than 20 employees, Medicare is primary.  Why this is important is that if you wait to elect Part B because you have coverage through your employer, it may come back against you.  Part A covers Hospitalization and Part B covers the Physicians. Since Medicare is primary, all claims will go there first and then to the employer based plan. If you don't have Part B, those claims can't go to Medicare and will not be sent to the carrier, they will stop. Effectively you will have no coverage for anything that would have been paid through Part B, namely any physician fees. Therefore, if your employer has less than 20 employees and you or your employee is eligible to elect Part B, elect it.  You have three months prior to your effective date, the month of you effective date and three months after to sign up for Part B. 

For more information you can call Social Security at 1-800-772-1213 or go to the Social Security website .

Exchange Notice Requirement Under ACA

FLSA section 18B, added to the labor statute by the Patient Protection and Affordable Care Act (PPACA), requires employers that are subject to the FLSA (most employers) to provide to each of their employees, and to all new employees at the time of hiring, a written notice.  The notice is to remind employees of the availability of the health insurance exchange.  

The notice must be provided to each employee, regardless of plan-enrollment status or part-time or full-time status. Employers are not required to provide a separate notice to dependents or retirees, but an employer's obligation to provide the notice may extend to its independent contractors and leased workers, depending on the nature of their relationship with the employer as determined under the FLSA's "economic reality" test.  Below is a link for a Model Notice that can be used to satisfy the requirement.

http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf