Health & Welfare Notes
Vol. 21, Issue 3 Fall 2016
Reminder: Reporting Transitional Reinsurance Fee Enrollment Count is Due By November 15, 2016. The Affordable Care Act created a three-year transitional reinsurance program that reimburses certain health insurers in the individual market for losses they sustain when they enroll individuals who are higher-cost claimants. Health insurers (for insured health plans) and self-insured group health plans must contribute to this program by paying fees over the three-year period, 2014, 2015 and 2016. The submission required for the 2016 (third) year’s fees must be filed by November 15, 2016, using the same online process used for the prior years’ submissions (i.e., via www.pay.gov).
The fees are assessed on plans that provide major medical coverage. The fees are paid on a per-person basis for each “covered life” under the plan, including dependents. For 2016, the fee is $27 per covered life. The deadline to register the 2016 benefit year’s enrollment count is November 15, 2016. The reinsurance contribution payment(s), however, are not due by that date but must be scheduled for payment by that date; payment options include: (1) the entire fee for 2016 can be made in one payment no later than January 17, 2017 reflecting $27.00 per covered life; or (2) in two separate payments: the first payment due by January 17, 2017 reflecting $21.60 per covered life; and the second payment due by November 15, 2017 reflecting $5.40 per covered life. The payment must be made using an Automated Clearing House (ACH) debit on pay.gov. The ACH Company ID for 2016 is 7505008016 (USDEPTHHSCMS). Plan sponsors should ensure that they have sufficient funds in their account for this payment and should verify that the account being used to make this payment is not debit blocked for this ACH Company ID.
Submission Process for 2016. The official online form that needs to be completed is called the 2016 ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form (the 2016 Form). It became available online on October 3, 2016. CMS has posted a web-based training to assist plan sponsors in completing the 2016 Form. Plan sponsors will have to count enrollment in the plan for the first nine months of 2016, using either the same method that was used in 2015 or any of the other permissible methods. There are four different counting methods permitted to determine the average number of covered lives (enrolled employees, dependents, retirees, and COBRA-qualified beneficiaries who are not also covered by Medicare). The counting methods are similar to the PCORI fee methods; however, the reinsurance fee count is based on the calendar year and not the plan year. Retiree major medical coverage is generally subject to the fee, but retiree coverage that pays secondary to Medicare is not subject to the fee. If the plan sponsor is reporting for itself there is no need to upload supporting documentation with the Form. However, supporting documentation of the enrollment count and fee payment should be kept for at least 10 years. Plan sponsors that relied upon a third-party administrator (TPA) to do the submission for 2015 and intend to do the same this year should contact their TPA immediately to make sure the TPA is prepared to handle this for 2016.
Final Forms for ACA Reporting Released. The IRS released the final 2016 Forms and Instructions to use in 2017 for reporting under Internal Revenue Code Sections 6055 and 6056 for the 2016 calendar year. Forms 1094-B and 1095-B are used by entities reporting under Section 6055as health insurance issuers, sponsors of self-insured group health plans that are not reporting as applicable large employers (ALEs) [employers with 50 or more full-time or full-time equivalent employees], sponsors of multiemployer plans and providers of government-sponsored coverage to report enrollment information to verify that individuals have minimum
essential coverage that complies with the individual coverage requirements. Forms 1094-C and 1095-C are used by ALEs to report under Section 6056 to verify their compliance with the employer “shared responsibility” mandate. Form 1095-C is also used to establish employee eligibility for premium tax credits if the employer does not offer affordable and adequate coverage.Form 1095-C is used as well for combined Section 6055 and Section 6056 reporting by ALEs who sponsor self-insured plans to report information about individuals who have minimum essential coverage under the employer plan. The 2016 Forms and Instructions are largely unchanged from the 2015 versions. Most of the changes were made to provide additional clarification, rather than make substantive revisions. However, the following changes are noted:
- Waivers from Electronic Filing. The 2016 instructions state that reporting entities are encouraged to file Form 8508 requesting a waiver from electronic filing at least 45 days before the due date of the return, but no later than the return’s due date. The instructions also note that the IRS does not process waiver requests until January 1 of the calendar year that the returns are due. The 2015 instructions had indicated that waiver requests had to be filed at least 45 days before the due date of the returns.
- Reporting Penalties. Greater care must be taken in completing the Forms in 2016 as employers/plan sponsors are no longer protected by the good faith efforts standard. The 2016 instructions include adjusted penalty amounts for failures to file correct returns to the IRS and furnish correct statements to employees. The adjusted penalty amount is $260 per violation, and each penalty is separately capped at $3,193,000. Penalty amounts can be increased or decreased, depending on the situation. Lower annual maximums continue to apply for small businesses.
- Taxpayer Identification Number (TIN). Both Forms 1095-B and 1095-C clarified that employers may report a Taxpayer Identification Number (TIN) instead of a Social Security Number (SSN) for any covered individuals (except for employees listed in Part I of Form 1095-C).
Employers/plan sponsors should become familiar with the revisions to the 2016 Forms as provided in the instructions:
Instructions for Forms 1094-C and 1095-C: https://www.irs.gov/pub/irs-pdf/i109495c.pdf
Instructions for Forms 1094-B and 1095-B: https://www.irs.gov/pub/irs-pdf/i109495b.pdf
Reporting Deadlines. For calendar year 2016, the Forms are required to be filed with the IRS by February 28, 2017 (or March 31, 2017, if filing electronically). The individual statements for the 2016 calendar year must be furnished by January 31, 2017.
Extensions. There is no automatic extension for furnishing the Forms 1095-B or 1095-C to employees/individuals by January 31, 2017. However, an employer/plan sponsor (filer) may request an extension of time to furnish the statement by sending a letter to the IRS with the filer’s name, TIN, address, the type of return for which the extension is being requested, a statement that the extension request is for providing statements to employees, the reason for the delay, and the signature of the filer or authorized agent. This extension request must be postmarked by or before the January 31, 2017 deadline. If the government is lenient, something an employer should not anticipate, the extension will generally only be granted for 30 days bringing the new due date to March 2, 2017.
If an employer/plan sponsor completes Form 8809, it will receive an automatic 30-day extension for filing the Forms 1094-C and 1095-C or 1094-B and 1095-B with the IRS. With the 30-day automatic extension, the deadline for filing on paper is March 30, 2017. With the 30-day automatic extension, the deadline for filing electronically is April 30, 2017. However, since April 30, 2017 is a Sunday, employers/plan sponsors filing electronically with the benefit of the extension would have until May 1, 2017 to file the Forms with the IRS.
[Excerpts from Clark & Associates, Featured, October 7, 2016 ; Accord Systems, LLC, October 5, 2016]
Disclaimer – This newsletter’s purpose is to inform our clients and colleagues of recent legislative health care-related developments. It is not intended, nor should it be used, as a substitute for specific legal advice.
Health and Welfare Notes is prepared four to six times annually and will accompany Retirement News. If there are questions concerning the information discussed, call richard Gabriel associates and ask for Gabe Zinni, Karen Irwin, Cindy Swartz or Nancy Cunningham.
richard Gabriel associates
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