Second Chance Open Enrollment Through April 30 For ObamaCare: How Will Employers React If a Second Chance Enroller Triggers an Employer Mandate Penalty?

February 23, 2015 at 9:04 am | Posted in Affordable Care Act, Health Care | Leave a comment
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The Hill reported today that the Obama administration (through CMS) will hold a second enrollment period for ObamaCare this year to give people a chance to avoid a new tax penalty for going without insurance. The enrollment period will run from March 15 to April 30, at the height of tax filing season, officials said. The announcement does not address the issue of whether any form of transitional relief would be available to a large employer who, until now, may have avoided a penalty under the employer mandate because of the failure of an employee to sign up for ACA coverage and possibly receive a premium subsidy. Arguably, such an employer would now be exposed again since employees lacking coverage will have another bite at the ACA health coverage subsidy apple.

Congressional Democrats and advocacy groups had been pushing for the new enrollment period, arguing that millions of people are still unaware of the penalty and should be able to sign up for ObamaCare once they learn of it. “Our intention in doing this is not to increase numbers for numbers sake, it’s to make sure that if there were people who were unaware of the fee that they aren’t disadvantaged by that,” Andy Slavitt, the Centers for Medicare and Medicaid Services’ deputy administrator, said on a call with reporters. The administration estimates that up to 6 million people will likely be forced to pay the fine for not having insurance during this year’s tax season, marking the first time that the penalty will be in effect. Officials said that they do not have an estimate for how many people will take advantage of the new enrollment period.
People signing up now will still have to pay a penalty for lacking insurance in 2014. Anyone who was uninsured last year will be hit with penalties of either $95 or 1 percent of their income — whichever is higher. That fine will spike this year to $325 or 2 percent of their income. Officials said that the new period is a one-year-only occurrence. “Our intention is that this is one year only for people who have not been in the communication loop around the tax penalty,” Slavitt said.
Separately, the administration announced that there had been an error on a tax return form for people with coverage under ObamaCare, causing some tax credits to be calculated either too high or too low. Officials said the problem affects around 50,000 people who have already filed their taxes, and that they are being contacted to correct the problem.
A link to the announcement can be found here: CMS Announces Special Enrollment Period for Tax Season

IRS Publishes 403(B) Retirement Plan Self Compliance Checklist and Fix It Guide

May 1, 2014 at 3:07 pm | Posted in IRS | Leave a comment
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The IRS has just published (April 2014) a 403(b) “Self” Compliance Checklist and Fix It Guide which can be utilized by (a.) public educational institutions and (b.) 501(c) (3) nonprofit organizations. A 501(c)(3) nonprofit organization is exempt from federal income tax if its activities, generally, have the following purposes: charitable, religious, educational, scientific, literary, testing for public safety, fostering amateur sports competition, or preventing cruelty to children or animals.

A link to the checklist is here: [Guidance Overview] IRS 403(b) Checklist (PDF)
“[E]very year it is important to review the requirements for operating your 403(b) retirement plan. Use this checklist to help you keep your plan in compliance with many of the important rules…. [C]lick on ‘More’ in any of the questions for additional information (including examples) on how to find, fix and avoid each mistake.” (Internal Revenue Service [IRS]) 

Massachusetts Dept. of Revenue (DOR) Announces 2014 Individual Mandate Penalties; Interaction With Affordable Care Act

March 24, 2014 at 11:07 am | Posted in Affordable Care Act | Leave a comment
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The Massachusetts DOR has released the following information about the state’s 2014 individual health care mandate penalty structure. For 2014, individuals with incomes up to 150% of the Federal Poverty Level are not subject to any penalty for non-compliance, as those at this income level are not required to pay an enrollee premium for ConnectorCare health insurance.

•Penalties for individuals with incomes from 150.1 to 300% of the Federal Poverty Level will be half of the lowest priced ConnectorCare enrollee premium that could be charged to an individual at the corresponding income level, based on the ConnectorCare enrollee premiums as of January 1, 2014.

•Penalties for individuals with incomes greater than 300% of the Federal Poverty Level: ages 18-30:  half of the lowest priced individual Catastrophic Plan offered through the Health Connector; and ages 31 and above:  half of the lowest priced individual Bronze premium, based on the Health Connector’s prices for these plans as of January 1, 2014.

•The Department anticipates issuing an updated penalty schedule for tax year 2015.

•Penalties for married couples who do not comply with the individual mandate rules (with or without children) will equal the sum of individual penalties for each spouse.

•Interaction with Federal Health Care Shared Responsibility Payment. Beginning January 1, 2014, the Affordable Care Act instituted a federal mandate on individuals to obtain health insurance. For tax years beginning on or after January 1, 2014, if a nonexempt individual fails to obtain health insurance meeting federal standards, the person is liable for a “shared responsibility payment” that must be reported on his or her federal income tax return. To provide guidance on the interaction of the Massachusetts individual mandate with the federal mandate to obtain health insurance, the Department of Revenue plans to amend its regulation, 830 CMR 111M.2.1: Health Insurance Individual Mandate; Personal Income Tax Return Requirements. In particular, these amendments would create a credit against any Massachusetts health care penalty owed for the amount of any federal health care shared responsibility payment, so as to prevent aggregated federal and state penalties.

A full copy of the DOR release and penalty structure can be found here:

Additional Delay in Discrimination Testing for Fully Insured Plans Reported

January 20, 2014 at 10:17 am | Posted in Compliance, Employment Law, Federal Laws, IRS, Regulations | Leave a comment
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According to the New York Times, the IRS will further delay the issuance of regulations that prohibit discrimination of eligibility or benefits “in favor of highly compensated individuals” in fully insured health plans.

Since the IRS has not yet determined how to measure health benefits — or which well-paid employees would be considered “highly compensated” — they plan to hold off on penalties, which are set at $100 per day for each employee negatively impacted. Similar discrimination regulations have been in place for self insured employers for more than 30 years.

“The IRS has not announced any new or additional information on this issue,” IRS spokesperson Michelle Eldridge said in a statement. “The New York Times story refers to IRS Notice 2011-1, which was released to the press on December 22, 2010. That Notice stated that the sanctions under Public Health Service Act Section 2716 will not apply until after generally applicable guidance is issued, because the statute requires regulatory detail in order to operate properly.”

“Work on that guidance continues, taking into consideration comments received from the public. Any suggestion that there is a new delay is misleading,” Eldridge said.

Form 5500 Preparer Beware! IRS and DOL Search for Form 5500 Mistakes to Trigger Compliance Audits!

April 1, 2013 at 11:47 am | Posted in Department of Labor, Federal Laws, IRS | Leave a comment
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At a financial services conference last week, an IRS official disclosed how the IRS mines 5500 form responses for blanks and inconsistencies and then uses that mistake as a justification for a full fledged compliance audit. In fact, in 2009, when the DOL mandated electronic filing of the Form 5500, it stated that one of the purposes was to target more accurately and effectively those plan filings that they wished to pursue further. In 2012, within a few months of filing the Form 5500, the DOL sent thousands of letters or emails (DOL correspondence) to plan sponsors requesting amendments or explanations of responses on the 5500 form or attached schedules.

At the conference, and IRS official spoke of a few 5500 “red flags” that may lead to an audit:

  1. Line items that are left blank when the instructions require an answer.
  2. Inconsistencies in the data disclosed on the Form 5500 schedules.
  3. A large drop in the number of participants from one year to the next.

Unofficial: IRS Will Pursue Employers for Shared Responsibility Payments Starting in 2015

March 18, 2013 at 11:04 am | Posted in Affordable Care Act, Employment Law, Federal Laws, Federal Taxes, Health Care, IRS, Medical, PPACA, Regulations | Leave a comment
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From the Bloomberg News Service

Employers who may have a shared responsibility payment under tax code Section 4980H for not offering health care to full-time employees under the Affordable Care Act can expect to hear from the Internal Revenue Service about payments due beginning in 2015, but only if IRS has strong evidence to support its assessment, an IRS official said March 12.

Employers will be able to dispute or explain why the shared responsibility payment assessment may be incorrect, similar to standard IRS notice and demand procedures for assessable payments, Frederick Schindler, director of implementation oversight at the IRS Affordable Care Act Office, told members of the payroll industry at the American Payroll Association 2013 Capital Summit in Washington, D.C.

However, the IRS will make its assessment based on a variety of information provided by employers’ insurers, from the Department of Health and Human Services, and other third-party reporting to which IRS will have access, Schindler said.

“All of that information will be utilized before we go to the employer,” Schindler added.

Beginning Jan. 1, 2014, the shared responsibility payment for large employers, generally those with 50 full-time or full-time equivalent employees, is triggered if at least one employee receives a premium tax credit to help them pay for health coverage, if an employer does not provide a plan that meets minimum coverage requirements. Employees will use the tax credit to help purchase individual coverage on an affordable insurance exchange.

Protector Group Note: The statement of Mr. Schindler constitutes “informal” IRS guidance and should not be construed as a basis for an employer to assure full compliance with Section 4980H in 2014.

Massachusetts Wellness Tax Credit Application Process Likely Delayed Until April 1, 2013

January 18, 2013 at 10:42 am | Posted in Department of Public Health, DPH, Regulations, State Laws, Wellness | Leave a comment
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The Protector Group has had several communications with the Massachusetts Department of Public Health (DPH) this week about the mechanics of applying for the $10,000 wellness tax credit. As we stated in an earlier ALERT, the pool of available credit is fixed on an annual basis, underscoring the need for employers to apply as soon as possible if they want to secure the best chance of application approval.

Here is what we have learned in the past couple of days:

  1. DPH has prepared a draft application and guidance, which can be found at this link: DPH’s desire is that all applications will be submitted through an on-line application process that has yet to be created.
  2. The likely “kick off” date for submitting applications will be April 1, 2014, although there is an outside chance it could happen as early as March 1, 2013.
  3. Once the application process starts, DPH will accept applications through December 31, 2013 for the 2013 calendar year process.

We will keep you updated and issue a new ALERT once the wellness tax credit regulations and application process are finalized.

IRS Issues FAQ Guidance Concerning Same-Sex Couples Taxpayer Obligations and Allowances

October 30, 2012 at 11:50 am | Posted in Federal Taxes, IRS | Leave a comment
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Last week, the Internal Revenue Service (IRS) issued guidance concerning a variety of frequently asked income tax and deductions questions that they have addressed concerning same-sex couples.

 A copy of the guidance can be found here:

IRS Informal Guidance: Permissible SBC Content Flexibility and More “Pay or Play” Regulations Coming In 2013

October 25, 2012 at 9:58 am | Posted in IRS | Leave a comment
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Last week two IRS attorneys answered questions about the recent federal health care developments at the 2012 American Bar Associations Health and Welfare Benefits Plan conference.  According to the Wolters Kluwer News Center, the guidance was as follows:

Summaries of Benefits and Coverage (SBC)

The senior attorney in the IRS Office of Chief Counsel emphasized compliance flexibility with the content of SBCs.

“We won’t take any enforcement action against plans and issuers that are in good faith trying to comply with the template instructions….If it is impossible for you to put all of your information in four pages front and back, there are two things you can do: You can go over the four page front and back limitation or you can skimp on the content….I think it was the intent of everyone who was involved in the drafting process that you should go over the four pages front-and–back. You should still accurately describe everything in accordance with the instructions.”

Employer Shared Responsibility “Pay or Play” Regulations

The new federal “pay or play” regulations are aimed at employers with 50 or more full time employees. A full time employee is one who works at least 30 hours a week. The regulations, which are set to start on January 1, 2014, will impose a shared responsibility payment, i.e. a tax, on an employer if they do not offer “minimum essential” health insurance to their employees or if the health insurance is deemed unaffordable.An IRS attorney from the Office of Benefits Tax Counsel stated that additional guidance would be forthcoming in 2013. When asked if employees whose work hours fall below a threshold set by insurance carriers under their contracts would then expose an employer to a shared responsibility payment, the IRS attorney responded that he would have to “think about it.”

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