In yet another surprising move during a snowy holiday break, everybody’s favorite agency of government, the Internal Revenue Service, gave applicable large employers more time in 2016 to file their “Official Employer Report” and notify employees of coverage availability.
This is important for two reasons. First, the government has to track those with insurance, to enforce the individual mandate of the Affordable Care Act that requires individuals to purchase coverage or face a penalty whichever is the greater– $695 or 2.5 % of their income.
Since most Americans receive insurance from their employer, the federal government needed to create the infrastructure to corroborate individuals who indicate that they have received coverage on their tax return. In typical fashion with this law, they created an onerous system that has confused companies and the professional advisors who serve them in an attempt to enforce sections 6055 and 6056 in the Act.
Second, the extension gives employers, municipalities and others more time to file these forms that have created additional costs and labor requirements for already over-whelmed human resource departments.
Employers now have until March 31 to give individuals the 2015 forms for reporting on offers of health coverage and the coverage provided according to Notice 2016-4 provided by the IRS on December 28th. The necessary forms are the Form 1095-B, Health Coverage, and the Form 1095-C, Employer-Provided Health Insurance Offer and Coverage.
The former deadline was February 1 to notify employees and those with coverage and the deadlines for reporting this information to the IRS are extended by three months. The deadlines are now May 31 for those not filing electronically, and June 30 for electronic filers. The previous deadlines were a February 29 due date for paper filings, and March 31 dead line for electronic returns.
When you reform something as massive as the United States healthcare system with a massive piece of legislation there are going to be hiccups along the way. This delay and others along the way will give employers more time to figure out their solution which is something they desperately need as many are struggling to figure this out while others remain are in a much worse position and are unaware of the requirements.
This section of the law is one of the more complicated pieces of a massive law still being written and implemented by the federal bureaucracy. The extension will be welcomed by those assigned with navigating this confusing requirement that according the instructions on the IRS website take over 15 minutes per form.
The problem is they have to be sent to every employee on the plan and if they self-insure their dependents, and what is worse is the penalty exposure facing businesses who fail to report the necessary information on time. Thanks to some trade legislation passed late in 2015, the penalty has doubled to $250 per form for non-compliance meaning a company of 250 employees who blows this requirement off faces a penalty of $62,500.
As someone who spends nearly every moment of my profession following the changes to the law, the extension came as a surprise, but is likely needed based upon the struggles we have found in the companies we work with at E.D. Bellis all across the country. Employers now desperately need to determine the solution that is most appropriate for their situation and trusting payroll vendors exclusively could be a foolish move.
Often times a technology solution may be beneficial for organizations with variable hour employees but may not be the answer for a company with mostly full-time workers as they simply need a service to handle this for them each year. Fortunately for organizations of any size, E.D. Bellis brings you access to both and there is not a problem related to the ACA out there that we are unable to solve.
Large businesses (over 50 FTEs) and their professional advisors should have a plan in place for filing the necessary forms. However, many are still behind or are relying on a payroll system to handle the reporting. This makes sense on the surface because they have some of the information for the report. What many do not have is the necessary benefit information and knowledge about the required safe-harbor sections on the forms.
For those who are finding themselves behind, E.D. Bellis and its team of ACA compliance experts have all of the answers and resources to assist businesses needing to comply with this difficult section. Read more on our website about our simple process for handling this and other difficult requirements coming as a result of national healthcare reform and if you are a fan of talk radio check out our weekly radio program, America’s Healthcare Challenge for the absolute latest on this rapidly moving issue.