Author Archives: Brian Dunham

The most confusing portion of the entire Affordable Care Act employer reporting comes to bear when considering the lines 14, 15 and 16 for form 1095-C.

There are nearly 100 various logic combinations to create the codes necessary for the IRS reporting to be completed correctly.  To assist employers and organizations in checking the validity of the logic of these lines 14, 15 and 16 of form 1095-C, we have created a calculator.

Here is how it works … Simply select the codes below for lines 14 and 16 below and then press ‘search’.  You will then see the full logic as to why certain code combinations work or do not work.
Click here to load this Caspio Online Database.

The IRS regulations for ACA reporting require an employer to show that they offered the ‘right type of plan’ at the ‘right type of cost’ or else face penalties.  This means that an employer must have offered minimum essential coverage and minimum value coverage at a cost no greater than 9.5% of the employees household income.

Problem!  When you hired an employee you didn’t hire their whole household, so how are you to know what that number actually is?  To deal with this issue the IRS allows for employers to make assumptions on what the household income is for an employee.  It is important to note however, the Affordability Safe Harbor MUST work for everyone within a class of employees in order to use it.  Lets take an example …

Example:  The employer has a class of hourly employees that they are applying the rate of pay safe harbor for affordability purposes.  There are 100 employees in this class.  The safe harbor works for 99 of the employees but does NOT work for 1 person.  This safe harbor cannot be used for ANY employees in this class.  Instead, line 16 of their form 1095-C would simply be left blank and the IRS would use the final, actual household income of the employee to determine if a penalty could apply.

Of course for our clients, we perform all of this analysis on their behalf.  If by chance you used a different vendor for reporting and need assistance, we can assist you through our consulting services.

To see specifically where this information and guidance comes from, you can visit this link here to see the Federal Register Vol.79, No.29.  On page 57 of this document you will find the following language:

(i) Conditions of using an affordability safe harbor. An applicable large employer member may use one or more of the affordability safe harbors described in this paragraph (e)(2) only if the employer offers its full-time employees and their dependents the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan that provides minimum value with respect to the selfonly coverage offered to the employee.  Use of any of the safe harbors is optional for an applicable large employer member, and an applicable large employer member may choose to apply the safe harbors for any reasonable category of employees, provided it does so on a uniform and consistent basis for all employees in a category. Reasonable categories generally include specified job categories, nature of compensation (hourly or salary), geographic location, and similar bona fide business criteria.  An enumeration of employees by name or other specific criteria having substantially the same effect as an enumeration by name is not considered a reasonable category.

In working with CPAs across the county, we have found that the overwhelming majority have not been aware that in order to perform Affordable Care Act (ACA) reporting on forms 1095-B and 1095-B for their clients that they must be HIPAA Compliant.  The confusion is understandable, since this likely is the first time they have ever really dealt with Protected Health Information (PHI).  Employee benefit brokers typically work with PHI on a daily basis every day, and thus are familiar with the requirements, such as entering into a business associate agreement with your client.  However on the whole, we are finding out that CPAs are not aware.

This link here from HHS.gov will be helpful to anyone who is looking to further research this issue regarding how business associate agreements work.  In addition, you will see CPA firms listed as examples of business associates.

Well what about employment and payroll records?  The immediate defense of CPAs normally is that they already are working with this type of information and are not required to be HIPAA compliant.  However, it is important to understand that HIPAA Privacy rules exclude these type of records that CPAs often work with. When it comes to working with PHI for this Affordable Care Act reporting though, this is a different story.

This link is a blog article from the American Institute of CPAs that you might find helpful on this topic. (link here)

What is PHI?

In terms of ACA reporting, whoever performs this reporting will indeed become in possession of PHI when they receive medical plan participants enrollment dates, dis-enrollment dates and social security numbers.  Since the information that is being received is connected with a health plan, this information becomes PHI.  Anytime you come into contact with PHI, you must enter into a business associate agreement and take certain other steps to maintain HIPAA compliance.

What is required of CPAs to be HIPAA compliant?

We would strongly suggest you speak with an attorney (as we do not give legal advice).  When you speak with an attorney, you will likely find the following items below as necessary:

• Entering into a business associate agreement with clients
• HIPAA training of all staff
• Internal HIPAA security measures to ensure compliance with HITECH Regulations
• Ensuring the servers and other computers in which you hold PHI are encrypted, fire walled, have server logs and audits, etc.
• Rules on how data breaches are handled and communicated
• Normally it is recommended to have Cyber Security insurance policies in place
• It is also a very good idea to ensure your E&O insurance will cover you for these activities

Again, don’t take our word for it … definitely speak with an attorney.  And if we can help you, please let us know.  We partner with CPAs across the country to assist them with delivering an ACA reporting solution to their clients.

One of the most common questions we are receiving is regarding the impact to employees filing their own personal taxes now that there has been an extension of time allowing employers and organizations until the end of March 2016 to supply forms 1095-B and 1095-C to their employees.  The concern rises when employers consider how employees can complete their normal tax filings without being provided the forms showing their health coverage for the year.

The IRS recently released some guidance to assist us with understanding this topic.  In their guidance they have said, “Due to these [ACA reporting] extensions, some individual taxpayers may not receive a Form 1095-B or Form 1095-C by the time they are ready to file their 2015 tax return. While the information on these forms may assist in preparing a return, they are not required. Like last year, taxpayers can prepare and file their returns using other information about their health insurance. Individuals do not have to wait for their Form 1095-B or 1095-C in order to file.

The IRS has not extended the due dates for Health Insurance Marketplaces to issue Form 1095-A. Individuals who enrolled for coverage through the Marketplace should receive Form 1095-A by February 1, 2016 and should wait to file their returns until the receive their Form 1095-A.”

The IRS has also said that individuals can rely on information from their employer or provider without having to amend their return later.  https://www.irs.gov/Tax-Professionals/ACA-Information-Center-for-Tax-Professionals

So what is the overall actual impact?  

Since the forms 1095-B and 1095-C are informational returns, much like 1099’s and W-2’s, the extended filing deadline for employers will not affect companies income tax returns.  Also, it would seem to reason that individuals will not have to file amended returns if they have wrong (or no) information from their employers due to the extensions.  Likely, the IRS will punt on the individual mandate penalties for this year in some cases.

Specifically, on the form 1040 of individuals, there is a line 61 & 62 (shown below) and they will need to complete as part of filing their taxes.

Today the IRS and Treasury Department released guidance extending some of the Affordable Care Act reporting guidelines.  Simply put, the extensions will allow for the following:

• Employers will have an additional two months (until the end of March 2016) to provide employees with the forms 1095-B and 1095-C, and
• Employers will have an additional three months to file with the IRS.  
  • New paper form filing deadline:  May 31st, 2016
  • New e-filing form filing deadline:  June 30th, 2016

To learn more you can see the actual guidance by clicking here.

A common question in the marketplace is ‘what exact information is necessary to complete the Affordable Care Act (ACA) reporting’, which is required for employers for the first time regarding the 2015 calendar year.  To assist, we have created a list below of the types of data necessary as well as who will likely have that information.  

Many employers and benefit brokers originally made the assumption that ACA reporting would best be performed as an additional function of a company’s payroll provider.  However, now as the time comes to actually perform the reporting they understand that ACA reporting requires much more benefits information than payroll.  

Just like most things Affordable Care Act (ACA) related, there is a significant amount of confusion about how the ACA reporting extension works.  Hopefully this article will help …

The first thing you need to know is that there are actually TWO DIFFERENT extensions employers need to know about.

• First, you can receive an extension by sending the required ACA reporting to the IRS
• Secondly, there is a completely separate process to request an extension regarding providing the forms to your employees

1).  As an Applicable Large Employer (ALE), employers must file the appropriate forms 1094 and 1095 with the IRS.  Should you need additional time submitting the data to the IRS by the March 31st e-filing deadline, you can receive an automatic 30-day extension by completing Form 8809.  More information here…

2).  The form 8809 does not apply to providing forms to employees however.  To ‘possibly’ receive any extension in providing the appropriate forms 1095 to your employees, and employer must send a letter to the IRS requesting an extension  (full instructions on how at the bottom of this article).

Finally, many are relying upon the ‘Good Faith Effort’ provision that the IRS has issued in regard to their 2015 ACA form filings.  However, it is important to know that this provision does not apply to timely providing forms to recipients or the IRS.  For employers who do not provide timely notices to the IRS or recipients, they will face the penalties prescribed by the law.

Instructions on Extensions of time to furnish statement to recipients. You may request an extension of time to furnish the statements to recipients by sending a letter to Internal Revenue Service, Information Returns Branch, Attn: Extension of Time Coordinator, 240 Murall Drive, Mail Stop 4360, Kearneysville, WV 25430. The letter must include (a) filer name, (b) filer TIN, (c) filer address, (d) type of return, (e) a statement that extension request is for providing statements to recipients, (f) reason for delay, and (g) the signature of the filer or authorized agent. Your request must be postmarked by the date on which the statements are due to the recipients. If your request for an extension is approved, generally you will be granted a maximum of 30 extra days to furnish the recipient statements. For purposes of requesting an extension of time to furnish the statements, the term filer means the ALE Member, or the Designated Government Entity, if applicable.

If you are a benefit broker you might be in for a special 2015 Christmas surprise but not in a good way.  A question for you:

• Did any of your clients use their payroll vendor to do this reporting? (answer is usually yes)
• Have you heard from these clients yet? (answer is usually no)

You need to know that you will hear from them very soon. Why? The reason is twofold.

First, the payroll vendor almost never has all of the information necessary to complete the reporting from a medical plan standpoint.  Instead, they require their clients to enter that data and do not provide much support to assist them (unless you consider forwarding along the IRS regulations as ‘support’).  The clients of course do not know how this all works…

Surprise! You as a broker end up doing the work to help your clients while the payroll vendor receives their compensation for ‘doing’ the ACA reporting.

Secondly, with many payroll vendors they require the employer to actually determine and enter the codes in lines 14 and 16 of form 1095-C. The employer of course thinks that they have paid someone else to do this reporting, so what are they doing? You guessed it – they are sending it back to their broker to do.

This is creating major issues for brokers because often times they made the referral for the payroll company to perform this reporting not understanding that the reporting requires much more benefits information that it does payroll information.  Adding additional pressure, it is now late December 2015 and there are very few vendors in the marketplace still taking clients.

So what can you do about it?

1. Determine which clients are using payroll vendors and call them immediately to make sure they have begun the process and understand everything that is required.
2. Evaluate where you are in terms of your clients ….. and what will be needed to get their required information completed.

Need help?  Contact us at customer support via the link above OR learn more about our ACA consulting services for groups have had had their ACA reporting completed by another vendor, by contacting support.

Many municipal and other governmental entity types have been surprised by the fact that their Designated Governmental Entity has not reported all of the necessary information to the IRS as they assumed would happen.  Under the Affordable Care Act (ACA), Applicable Large Employer (ALEs) must report to the IRS on the type of plans that were offered to their employees, the costs of these plans, and who was covered under the plan.  For some governmental groups (we will call these ‘primary’) they might have a separate governmental entity that has some of their employees covered and who have agreed to perform the ACA reporting on behalf of the ‘primary’ group.

Example:  A school district has all of their teachers covered under the State medical plan, but all other staff covered under a separate plan.  The State has told the school district that ‘we will perform the reporting for you’. This is normally very misleading to the school district because the State health plan normally only intends to report to the IRS who was covered under the medical plan, and NOT the offer of coverage.

For those of you familiar with ACA reporting, the State health plan in this instance normally will report medical plan enrollment but NOT report the other necessary Offer of Coverage that shows up in lines 14, 15 and 16 of form 1095-C.  The end result is that the school district has not reported fully to the IRS and are now subject to penalties.

So what can you do ….

#1.  If you have a Designated Governmental Entity that is performing some of your reporting, you need to ask them if they are reporting for the Enrollment on the plan, OR ALSO the offer of coverage.  Understand it is unlikely they will report the Offer of Coverage.

#2.  If the DGE is only reporting enrollment, they will complete that on form 1095-B.

#3.  The underlying school district in our example still must complete forms 1095-C on these teacher employees, sections 1 and 2.

Need assistance?  Reach out to our customer service department by clicking contact us at the top of the page.