The IRS recently released draft forms to be used by large employers, health insurers and sponsors of self-insured health plans to report information required by the Affordable Care Act (ACA), effective for calendar year 2015. Although 2015 may seem distant, planning now to determine the requirements that you will need to have in place in 2015 is prudent.

The purpose of the new forms

The purpose of Form 1095-C is for applicable large employers to provide the IRS with the information required to determine (1) whether an employer is in compliance with the requirement for Minimum Essential Coverage that is affordable and provides minimum value to substantially all full-time employees (pay or play mandate), and (2) whether an employee is eligible for premium tax credits if they purchase coverage through the Health Insurance Marketplace.

*An applicable large employer is generally defined as an employer that employed on average at least 50 full-time equivalent employees during the previous calendar year. The determination of full-time equivalent employees is a less than simple calculation that requires the accumulation of data and several specific calculations

The purpose of Form 1095-B, filed by health insurers, including sponsors of self-insured health plans, is two-fold: (1) to provide employees with the information they need to demonstrate compliance with the individual mandate on their individual income tax returns and (2) to provide IRS with the information they need to determine if individuals have the minimum essential coverage to comply with the ACA individual mandate.

Filing requirements

Beginning with calendar year 2015, applicable large employers that provide health insurance coverage through an employer-sponsored plan, whether insured or self-insured, must provide health insurance coverage information statements to covered employees on new Form 1095-C. Forms 1095-C, along with transmittal Form 1094-C, will also be provided to the IRS by the employer. Large employers that sponsor self-insured plans will complete Sections I, II and III of Form1095-C, while employers that sponsor a fully insured plan will only complete Sections I and II.

Health insurers, including sponsors of self-insured health plans, will use Form 1095-B to provide required information to covered employees and will also provide a copy of Form 1095-B, along with transmittal Form 1094-B, to the IRS.

See reporting deadlines below. This process is similar to how Forms W-2 are provided to employees and to the government.

Links to drafts of the new forms

At the time of this article, draft instructions for the forms have not been released by the IRS, but are expected to be released shortly. The forms listed below most likely will be finalized by the IRS before year-end. Below are links to the draft forms.

Form 1094-B: Transmittal of Health Coverage Information Returns

Form 1095-B: Health Coverage

Form 1094-C Transmittal Employer-Provided Health Insurance Offer and Coverage Information Returns

Form 1095-C: Employer Provided Health Insurance Offer and Coverage

Failure to file the required forms

Applicable large employers and health insurers who fail to file these returns and provide statements to employees will be subject to penalties for failure to file correct returns and failure to furnish correct statements to employees starting for calendar year 2015.

Our recommendation

Note that 2014 reporting is optional, but recommended by the IRS, to ease the transition to when the reporting becomes required for the 2015 tax year.

We recommend that you review the IRS draft forms listed above and proactively work with your IT and payroll departments and/or third party payroll vendors to determine the requirements that you will need to have in place in 2015 for operations and IT resources in order to meet the information reporting mandates of the ACA. Please contact us if you have any questions regarding ACA employer reporting requirements.

The IRS has released final regulations implementing the Affordable Care Act’s (ACA’s) information reporting provision for large employers. The new rules — which begin to phase in in 2015 — significantly streamline the required reporting and should make it easier for covered employers to comply with these ACA requirements.

ACA’s reporting requirements

The ACA enacted Section 6055 of the Internal Revenue Code (IRC), which requires health care insurers, including self-insured employers, to report to the IRS about the type and period of coverage provided and to furnish this information to covered employees in statements. The information must be reported by Jan. 31 (March 31, if filed electronically) of the year following the calendar year in which the coverage is provided. Employee statements must be provided by Jan. 31.

The ACA also enacted IRC Sec. 6056, which requires applicable large employers (generally those with at least 50 full-time employees, including full-time equivalent employees) to report to the IRS information about what health care coverage, if any, they offered to full-time employees. Employers must report this information no later than Feb. 28 (March 31, if filed electronically) of the year following the calendar year to which the Sec. 6056 reporting relates.

The IRS will use this information to determine whether a penalty will be assessed under the ACA’s employer shared-responsibility (also known as “play or pay”) provision because a large employer either 1) didn’t offer “minimum essential” health care coverage to its full-time employees (and their dependents), or 2) the coverage offered wasn’t “affordable” or didn’t provide “minimum value” — and at least one full-time employee received a premium tax credit for purchasing coverage on an insurance exchange.

Sec. 6056 also requires large employers to furnish related statements to employees that the employees can use to determine whether, for each month of the calendar year, they can claim a premium tax credit. The statements must be provided by Jan. 31 of the calendar year following the calendar year to which the Sec. 6056 reporting relates.

New reporting form

The final regs provide for a single, combined form (Form 1095-C) for the information reporting to the IRS. Employers that have fewer than 50 full-time employees (or the equivalent), and thus are exempt from the employer shared-responsibility provision, also are exempt from the Sec. 6056 employer reporting provision. (If these “small” employers are self-insured, they will, however, still be subject to Sec. 6055 reporting. This will be done on a different form.)

Form 1095-C will have two sections. The top half will collect the information needed for Sec. 6056 reporting, and the bottom half will collect the information for Sec. 6055. Self-insured employers subject to the shared-responsibility provision will complete both parts of the form. Employers that are subject to the shared-responsibility provision but don’t self-insure will complete only the top section. Electronic filing is required for employers filing 250 or more reports.

The ACA requires the reporting of some information that isn’t relevant to individual taxpayers or the IRS for purposes of administering the premium tax credit and the play-or-pay penalty. The final rules omit these requirements, as well as requirements for providing certain information that is already provided through other means. The omitted information includes:

The length of any waiting periods for coverage,
The employer’s share of the total allowed cost of benefits provided under the plan,
The monthly premium for the lowest-cost option in each of the enrollment categories (for example, self-only coverage or family coverage) under the plan, and
The reporting of months, if any, during which any of the employee’s dependents were covered under the plan. (The rules require reporting only regarding whether the employee was covered under a plan.)

These omissions are intended to minimize the cost and administrative steps associated with the reporting requirements.

The simplified alternative

The final rules also include a simplified reporting option for employers that provide a “qualifying offer” to any of their full-time employees. A “qualifying offer” is an offer of minimum-value coverage that provides employee-only coverage at a cost to the employee of no more than 9.5% of the federal poverty level (about $1,100 in 2015), combined with an offer of coverage for the employee’s dependents.

If an employer provides a qualifying offer, it need only report the names, addresses and taxpayer identification numbers of those employees who receive qualifying offers for all 12 months of the year, as well as the fact that they received a full-year qualifying offer. The employer also must provide the employees a copy of that simplified report or a standard statement indicating that the employees received a full-year qualifying offer. For employees who receive a qualifying offer for fewer than all 12 months of the year, employers can report to the IRS and employees for each of those months by simply entering a code indicating that the offer was made.

In additional welcome news for employers, the final rules provide a phase-in for the simplified option. Employers that certify that they’ve made a qualifying offer to at least 95% of their full-time employees (plus an offer to their dependents) can use an even simpler alternative reporting method for 2015. Specifically, they can use the simplified reporting method for their entire workforce — including any employees who don’t receive a qualifying offer for the full year. Such employers will provide employees with standard statements relating to their possible eligibility for premium tax credits.

The final regulations also give employers the option to avoid identifying in the report which of its employees are full-time and instead include in the report only those employees who may be full-time. This option, however, is available only to employers that certify that they offered affordable, minimum-value coverage to at least 98% of the employees on whom they’re reporting.

Transitional relief

Although the final regulations apply to calendar years beginning with 2015, they also provide some short-term relief from penalties for employers that can show they have made good-faith efforts to comply with the information reporting requirements. Please let us know if you have any questions about information reporting compliance or other questions related to the ACA.

February 2014

The IRS has released its long-awaited final regulations implementing the Affordable Care Act’s (ACA’s) employer shared-responsibility — also known as “play or pay” — provision that applies to “large” employers, including for-profit, nonprofit and government entities. These regulations are effective January 1, 2015. The final regs push out one year, from 2015 to 2016, the risk of play-or-pay penalties for eligible midsize employers that otherwise would be considered large employers under the ACA. They also provide other significant relief for 2015 and clarify certain aspects of the play-or-pay provision.

Play-or-pay in a nutshell

The play-or-pay provision imposes a penalty on large employers that don’t offer “minimum essential” health care coverage — or that offer coverage that isn’t “affordable” or doesn’t provide at least “minimum value” — to their full-time employees (and their dependents) if just one full-time employee enrolls in a qualified health plan through a government-run health insurance exchange and receives a premium tax credit.

Under the ACA, a large employer is one with at least 50 full-time employees or a combination of full-time and part-time employees that’s equivalent to at least 50 full-time employees. This involves totaling part-time employees’ monthly hours and dividing that figure by 120 to calculate full-time equivalent employees (FTEs). That figure is then added to the total number of actual full-time employees. A full-time employee generally is someone employed on average at least 30 hours a week, or 130 hours in a calendar month.

Relief for midsize employers

Under the final regs, eligible midsize employers will not be subject to the play-or-pay provision until 2016.

To qualify for the midsize-employer penalty relief, an employer must:

Employ on average fewer than 100 full-time employees or the equivalent during 2014,
Maintain its workforce size and aggregate hours of service (meaning the employer may not reduce its workforce or overall hours of employee service to qualify),
Maintain the health care coverage it offered as of Feb. 9, 2014, and
Certify that it meets these requirements.

Be aware that these employers will still be subject to the ACA’s large-employer information-reporting requirements in 2015.

Relief for larger employers

Under the ACA, large employers that don’t offer at least 95% of their full-time employees minimum essential health coverage will be assessed a penalty if one of their full-time employees receives a premium tax credit when buying health care insurance from an insurance exchange. The annual penalty is $2,000 per full-time employee in excess of 30 full-timers.

The final regs provide that large employers that don’t qualify for the midsize-employer penalty relief in 2015 can avoid the penalty for not offering minimum essential coverage by offering such coverage to at least 70% of their full-time employees (and their dependents.) The 95% requirement will apply in 2016 and beyond.

Other transitional relief

The final regs extend and expand transitional relief in other ways as well, such as the following:

In preparing for 2015, employers can determine whether they had at least 100 full-time employees or the equivalent in 2014 by reference to a period of at least six consecutive months (instead of a full year).
Employers with plan years that don’t start on Jan. 1 can begin compliance with the play-or-pay provision at the start of their plan years in 2015.
The requirement to offer coverage to full-time employees’ dependents will not apply in 2015 if an employer is taking steps to arrange for such coverage in 2016.

The IRS indicated it will consider whether it’s necessary to extend any of this transitional relief beyond 2015.

Affordability safe harbors

Generally, if an employee’s share of the premium would cost that employee more than 9.5% of his or her annual household income, the coverage isn’t considered affordable. Because an employer generally won’t know an employee’s household income, the proposed regulations provided safe harbors under which an employer can determine affordability. The final regs maintain the proposed safe harbors with some minor changes.

Under these safe harbors, affordability can be determined based on:

The employee’s Form W-2 wages,
His or her rate of pay (unlike under the proposed regs, the rate-of-pay safe harbor is available even if the employee’s rate of pay fell during the year), or
The federal poverty line.

If the employer meets the requirements of a safe harbor, the offer of coverage will be deemed affordable.

Clarifications on who’s a full-time employee

The final regs allow employers to use an optional look-back measurement method to determine whether employees with varying hours and seasonal employees are full time for purposes of determining large employer status. They also clarify the application of the look-back and alternative monthly methods of determining full-time status.

Additionally, the final regs clarify whether certain types of workers will be considered full time. For example, bona fide volunteer hours worked for government or tax-exempt entities won’t cause the volunteer to be considered a full-time employee.

More regs to come

The IRS is expected to soon issue final regulations that will substantially streamline information-reporting requirements related to the play-or-pay provision. We’ll keep you apprised of the relevant changes. In the meantime, if you have questions on how these or other ACA provisions may affect your company, please contact us.

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SKR+Co Follow-up: Clarification on who needs to send notice of health care options to employees

We recently sent an alert to you regarding the October 1st deadline for providing notification to employees of their healthcare options. We received questions from some of you asking whether this requirement applied to your business, so we will clarify this to the best of our ability.

Is your business required to send the notice?

The notice requirement must be met by employers that are required to comply with the Fair Labor Standards Act (FLSA). In general, the FLSA applies to *employers with one or more employees who are engaged in, or produce goods for, interstate commerce. By this definition a case could be made that just about any business meets this requirement, regardless of sales volume.

For that reason, it is our recommendation that all employers should provide the notice to their employees by Tuesday, October 1st. Please also note that after October 1, notice must be given to new employees within two weeks of their hire dates.

For detailed information on this requirement, Click Here.

Is there a standard notice I can use?

Yes. In fact there are Colorado versions and Department of Labor has also issued a pair of model notices you can use (or you could create your own as long as it contains required content).

One notice is for for employers that offer health benefits and one is for employers that do not – so be sure and select the right one. Please see the side bar to the right for links to these forms and more information on the notices.

How should employers send the notice?

It can be sent by first-class mail and can also be provided via e-mail, but only if employees access e-mail as an “integral part” of their duties and can access the messages easily.The notice must “be provided in writing in a manner calculated to be understood by the average employee,” according to the Department of Labor.

*The FLSA also specifically covers the following: hospitals; institutions primarily engaged in the care of the sick, aged, mentally ill, or disabled who reside on the premises; schools for children who are mentally or physically disabled or gifted; preschools, elementary and secondary schools, and institutions of higher education; and federal, state and local government agencies.

For more detailed information specific to Colorado, go to http://www.connectforhealthco.com

Standard Notices You Can Use

COLORADO

Colorado has issued notices that contain information regarding Colorado's Marketplace:

For employers that currently offer any health benefits, Click Here for Colorado Notice

For employers that don't offer health benefits, Click Here for Colorado Notice

DEPARTMENT OF LABOR

The DOL has also issued a pair of model notices you can use:

For employers that currently offer any health benefits, Click Here for the DOL Notice

For employers that don't offer health benefits, Click Here for the DOL Notice

Part B of the forms includes information employees will need if they plan to purchase coverage through a marketplace, assuming they’re eligible.

The Part B information is needed by employees who apply to their state’s marketplace (or the federal version, if no state-run marketplace exists). Employees must complete a required questionnaire to determine their eligibility.

Have questions? Contact us: (719) 630-1186 or Click Here

www.skrco.com

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SKR+Co Alert: Healthcare act's "play or pay" employer provisions, senior property tax confusion, IRS identity theft warning + more!

February 28, 2013

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IRS releases guidance on health care act's "play or pay" provisions

The IRS has issued extensive proposed regulations implementing the employer-shared responsibility provisions, also known as “play or pay,” of the Patient Protection and Affordable Care Act of 2010. The regulations address numerous topics. This article focuses on which employers must provide affordable health coverage, the requirements for such coverage and the penalties for failing to provide it.

Read the Full Article Here

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Clarification for seniors regarding property tax deferral and exemptions in Colorado

There has been some confusion regarding a green mailer insert that many of us received with our annual property tax statement. If not read carefully, (both sides), this form can be misleading. So to clarify what programs are available to senior citizens in Colorado, we've highlighted both the property tax deferral and exemption information in this article.

Read the Full Article Here

Helpful tools in tracking your refund are getting heavy traffic

On February 14th, the IRS issued a statement that it is experiencing heavy volume on "Where's My Refund?" on irs.gov and also the refund feature on the IRS2go phone app, causing delays and service disruptions.

The IRS strongly urges taxpayers to only check on their refunds once a day. IRS systems are only updated once a day, usually overnight, and the same information is available whether on the Internet, IRS2go smartphone app or on IRS toll-free lines.

Here are some tips to help you with your refund questions:

Have your Social Security number, filing status and refund amount ready before using a refund tool.
Only check “Where's My Refund?” once a day as your information will not change.
To avoid system delays, the best time to check on refunds is evening and weekends.

What you should know about identity theft

The IRS reported this month that they have seen a significant increase in refund fraud that involves identity thieves who file false claims for refunds by stealing and using someone's Social Security number. We thought this would be a good time to remind you that the IRS does not initiate contact with taxpayers by email. So if you receive such an email soliciting personal or financial information, forward it to the IRS atphishing@irs.gov. For phishing scams by phone, fax or mail, call 1-800-366-4484.

To read IRS Tax Tip, "Ten Things the IRS Wants You to Know About Identity Theft", Click Here.

This alert covers a number of different topics and you may have some questions. Please feel free to contact us by phone at (719) 630-1186 or Secure Email if we can assist you in any way.

SKR+Co Alert: The Supreme Court's ruling's effect on businesses & update on Waldo Canyon Fire recovery

July 13, 2012

Supreme Court upholds health care law: What do businesses need to do now?

June 28’s U.S. Supreme Court ruling has drawn attention to the far-reaching provisions of the Patient Protection and Affordable Care Act of 2010. Since 2010, various provisions have trickled into effect. But the waters of change are gaining speed, with several particularly significant provisions scheduled to take effect over the next 18 months, barring congressional action. And many of the health care act's provisions will require businesses to take action this year and next.

This alert provides an overview of what businesses need to do to prepare. To read the full article explaining what steps you might want to take, Click Here.

Tax deductions available for fire
mitigation

In the wake of the many wildfires here in Colorado, particularly the Waldo Canyon Fire, many of us are thinking more seriously about fire mitigation.

If you follow a previously approved fire mitigation plan for your area (follow the link below to the plan for your specific county and area) you can receive a Colorado tax deduction up to $2500 for 50% of the costs incurred for fire mitigation on your property(applies to individuals, estates and trusts.) Contact us for more information on how this might apply in your unique situation.

Colorado Community Wildfire Protection Plans

Colo. Dept of Revenue Fire Mitigation Information

The Waldo Canyon Fire: Working together toward recovery

The leadership team for Colorado Springs Together, the non-profit organization incorporated on July 3 to be a central clearing house for Waldo Canyon Fire recovery information, services and resources, is announcing additional details on relief efforts.

This is a community-driven volunteer effort led by Mayor Steve Bach and his wife Suzi, with 100% of donations going directly to restoring the Mountain Shadows community. The team members will determine a quick and effective rebuilding process for the neighborhoods devastated by the fire. For more information, Click Here.

Please contact us at (719) 630-1186 or through our Secure Email if you have any questions.

SKR+Co Alert: Individual tax planning in the aftermath of the Supreme Court's health care law ruling

July 11, 2012

Since the U.S. Supreme Court issued its health care law ruling on June 28, most of the attention has focused on its mandates, expansion of coverage and state insurance exchanges. But the Patient Protection and Affordable Care Act of 2010 includes some significant tax-related provisions affecting individuals that are scheduled to take effect in 2013 and 2014, unless Congress repeals them or takes other action.

Now is the time to start planning so you can minimize any negative tax consequences to the extent possible.

To read the full article explaining what steps you might want to take, Click Here.

What does it all mean for you?

We would be happy to take a look at your individual tax situation and how this ruling may affect you.

Please contact us at (719) 630-1186 or through our Secure Email if you have any questions.

SKR+Co. Alert

Health Care Tax Credit FAQs

The small business health care tax credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In 2010, the credit is generally available to small employers that contribute an amount equivalent to at least half the cost of single coverage towards buying health insurance for their employees. The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ moderate- and lower-income workers.

To see if you qualify for this credit and to learn more, Click Here

New Items on Form 1040

Despite calls for simplifying the tax laws, they have actually been made much more complicated in the last few years. This filing season is no different. The 2010 Form 1040 reflects a number of new tax breaks. Some are straightforward. Others are complex. Some present choices. But they all provide an opportunity to save money. We want you to be aware of the new tax breaks for this filing season so that you can take full advantage of them.

Click here for a listing of the key changes for this filing season.

Colorado Sales and Use Tax on Internet Purchases

Colorado has increased its efforts to collect sales/use tax on online purchases. While Colorado residents have always been required to pay use tax on their internet purchases, there was no mechanism in place to force compliance. Now there is. However, a recent injunction has put enactment on hold indefinitely.

Click here to learn more.

They have an App for That!

The IRS launched the IRS2Go App for the iPhone and the Android. Taxpayers can check refunds and get tax information literally at their fingertips!

For more information, Click here.