Affordable Care Act (ACA) IRS Reporting Requirements

As the new ACA requirements for IRS reporting are quickly approaching, are you prepared to be in compliance? With so many critical details – over 200 pages worth – how do you know what to report and when? Below is an overview of the information that will need to be included in the ACA reporting, which we will cover in our upcoming Affordable Care Act (ACA) Reporting webinar on April 22, 2014.

Who needs to file?

Self-insured group health plans, Health Plan Issuers, Multi-employer plans (as defined under Section 414(f) of the Internal Revenue Code), and Government employers will all be responsible for reporting the type and period of coverage to the IRS, as well furnishing a statement to the covered individuals. The reporting will also be used for determining whether the coverage offered meets affordability and minimum value criteria for determining employer penalties.

Which form needs to be used for reporting (6055 or 6056)?

The 6055 requires that providers of minimum essential coverage to individuals must report the type and period of coverage to the IRS and furnish a statement to the individuals covered.  The purpose is to allow the IRS to verify minimum essential coverage and administer the premium tax credit.

6056 reporting is for determining which applicable large employers (ALEs) offered minimum essential coverage to their full-time employees, if the coverage was affordable and provides minimum values, and if any of the full time employees received a premium tax credit through the public exchanges which would trigger the employer penalties. Applicable large employers are employers who employed an average of at least 50 full time employees on business days during the previous calendar year.

How do we file?

Large employers will file on Forms 1094C and 1095C, and others will use Forms 1094B and 1095B (all forms have yet to be issued by the IRS). Any entity required to file at least 250 returns of any specific form for 6055 or 6056 reporting must file electronically, while all others will file manually.

What are the filing due dates?

Employers must file on or before Feb 28 if non-electronic and before Mar 31 if electronic.

What needs to be filed?

There are different requirements between the 6055 and 6056 legislation, with over 40 individual fields of data (some per employee or per covered individual).

Learn more during our upcoming webinar

Even though this is only an overview, as you can see the reporting requirements are fairly complicated. Whether you handle benefits administration at a large company or are self-insured, companies will require an expert to navigate the many complexities in the ACA employer mandate to ensure you are prepared for 2015 reporting.

Register now for Tango’s webinar on Tuesday, April 22, 2014 at 1:00 Central Time, a 30-minute session that will discuss the IRS reporting needed under ACA and what you need to know to be ready and in compliance.

New FSA Carryover Clarification for Companies with HSA-Compatible Plans

In November of last year the IRS announced a change to the “use it or lose it” rule governing health Flexible Spending Arrangements (FSAs). This change allows for $500 of unused FSA funds to be “carried over” from one benefit year to the next. While providing a great relief for those who participate in health FSAs, the regulation also left several unanswered questions.

New guidance has been provided to help clarify the regulation, providing a better understanding of how a health FSA that has been carried over into the next benefit year will affect Health Savings Account (HSA) eligibility. The new guidance provided the following information:

  • An individual whose health FSA has unused amounts may elect to carry over up to $500 of those funds into a limited purpose FSA or post-deductible FSA. These types of accounts are HSA-compatible, and would not interfere with HSA eligibility, allowing for an individual to contribute to an HSA as well as to keep the unused FSA funds.
  • An employer can structure their benefit plan to automatically carry over up to $500 of unused health FSA funds into a limited purpose FSA or post-deductible FSA for individuals who choose an HSA-eligible health plan. This also allows the employee to become eligible to contribute to an HSA and to keep the unused FSA funds, with the benefit of requiring no action on the employee’s part.
  • An individual with unused health FSA funds may also choose to forfeit those amounts. This will allow an individual with a very small health FSA balance to become HSA-eligible without making any transition to a different type of account.
  • Any individual who is covered by a health FSA as a result of a carry-over of unused amounts from the prior year, and does not elect to carry over into a limited purpose or post-deductible FSA, is ineligible to contribute to an HSA for the entire plan year, even if the carried over funds are exhausted before the end of the plan year.

Carrying over from a health FSA to a limited purpose FSA or post-deductible FSA will be a great option for employers looking to move larger numbers of employees onto high deductible health plans (HDHPs) as well as for individuals looking to make changes to their individual health plans without losing any funds already contributed to a health benefit.

While the regulations still require employers to offer either the $500 carry-over option OR a grace period lasting up to two and a half months, this new guidance offers more flexibility with the carry-over option and will help employers make more educated decisions in their benefits offerings.

Please be aware that these changes may require a modification to your Section 125 plan, so contact your plan administrator if you’d prefer to do this. Since the regulations are brand new, it may take a few weeks for appropriate paperwork to become available.

Filing Taxes with an HSA – 2014 Edition

Back in 2012, we wrote a blog post during tax season which reviews the general process of filing taxes with an HSA. It is a 5-part series that goes into some detail about the different tax forms and documents associated with filing taxes with an HSA and what penalties may be applied if you fail to follow some of the rules. Although we go into some depth on Form 8889, we do not recommend using these posts as tax advice, but rather to provide more information on a somewhat confusing subject. If you have specific questions about your situation, we highly recommend consulting a tax advisor. Feel free to leave a comment and we will be glad to do our best to assist you.

Here is a breakdown of each post in the 5-part series so that you can navigate through each topic easily and select the one that is applicable to you:

Part 1 – In order to file your taxes properly with an HSA, you must first have your W-2 ready and have a basic understanding of the tax forms and documents associated with this account. Part 1 of this blog series generally reviews each tax form for informational purposes only.

Part 2 – Part 2 of the blog series reviews how to correctly identify your contributions as either pre-tax or post-tax deposits, since knowing the difference between the two is key when filing your taxes. This post also reviews how you would realize the tax savings in each scenario.

Part 3 – This part of the series answers a few of the most-asked questions regarding Part 1 of Form 8889, which determines your annual contribution limit and whether your contributions were pre-tax or post-tax.

Part 4 – This post answers common questions regarding Part 2 of Form 8889, which calculates the penalties, if any, that apply to any distributions from your HSA.

Part 5 – The last part of this blog series reviews Part 3 of Form 8889 and some common questions associated with it. Part 3 of Form 8889 determines if any contributions were made when the account holder was ineligible for the account and which taxes or penalties would then be applied.


BOK Financial: Tango Saves Bank $1M, Employees Make Smart Healthcare Choices

BOK Financial needed to get in front of sky-rocketing costs, industry changes, and government regulations with Tango, an innovative health care solution. They took a calculated risk partnering with Tango, an innovative healthcare solution that enables employees to make smart benefits choices by greatly simplifying the arduous open enrollment process.

What the ACA Final Regulations Really Mean to You

On February 10th, 2014, the Internal Revenue Service (IRS) released significant guidance for the Patient Protection and Affordable Care Act, or Obamacare, that ends months of speculation, review of feedback from the industry, and addresses the need for transition relief.

A majority of the media’s headlines such as, “Employer Mandate Delayed” or “Obamacare Delayed to 2016,” misrepresent the majority of the content of this latest release. After a review of the 200+ pages of guidance, it’s clear the administration is not flinching about moving forward with the large employer mandate. However, in order to ease the transition, they’re temporarily relaxing requirements for smaller employers and finally clarifying their position on more complex and complicated portions of the act.

Heads up to employers with more than 100 Full Time Equivalents (FTEs): final regulations have been issued and go into full effect on January 1, 2015

Only organizations with 100 or more Full Time Equivalents (FTEs) will be required to comply and offer affordable benefits to eligible employees starting on January 1, 2015. Organizations with less than 100 but more than 50 have another year before things take effect. This “transition relief” gives smaller employers more time to implement important changes to how they track time and attendance in order to fairly classify employees for the purposes of meeting benefits provision requirements of Obamacare.

For Employers with >49 but less than 100 FTEs, transition relief if…

For these employers, there is no penalty for failure to offer affordable minimum value coverage for the 2015 calendar year (and any months following in 2016 if the plan year is not on a calendar year) provided that these employers:

  1. Utilize the applicable rules for determining large employer status (but using 100 as the cutoff)
  2. Do not reduce the size of their workforce to satisfy the under 100 rule (other reductions due to normal business activity will be allowed)
  3. Maintain or do not materially reduce the coverage they were offering as of 2/9/14,
  4. Certifies on the prescribed IRS form that they meet the requirements in 1-3 above.

The guidance contains more details around these requirements, but this summary shows that it is not automatic.

Rules for Large Employer calculation for new employers

Employers not in existence in a preceding calendar year will base their “large employer” status based upon the average number of employees the employer will reasonably expect to employ during business days for the current calendar year.

So you are a >100 Large Employer. Transition relief for the 2015 plan year….

Rather than having to offer minimum essential coverage to 95% of your full-time employees in 2015, you only have to offer it to 70%.  You will still be penalized $2,000 per employee per year for substantially all of your employees if you fall below the 70% threshold. By phasing in this rule the IRS has given large employers transitional breathing room so that a casual book keeping error can’t trigger the massive “Pay or Play” penalty.  You still face per-employee penalties for: full-time employees not offered coverage within 90 days of their start date, variable-hour employees who have met the 30-hour rule and have not been offered coverage, full-time employees who are not offered an affordable qualifying coverage.  In summary, your obligation to appropriately track full-time status and offer affordable coverage to all of your full-time employees (as defined by final regulations) is unchanged, only the trigger for the “Pay or Play” penalty is affected.

Penalty calculations for 100 or more…

For the 2015 plan year, if you have more than 100 FTEs, your penalty calculation for not offering coverage is the number of FTEs minus 80 FTEs multiplied by 1/12 of $2,000 for each calendar month.

Transition guidance for multiemployer arrangements such as collective bargaining agreements…

For any large employer member of a multi-employer arrangement, coverage will be considered affordable if the employee contribution is no more than 9.5% of actual wages or the wage rate under the collective bargaining agreement. Any penalties for failure to offer minimum value affordable coverage would be borne by the employer member, not the multi-employer plan, and the employer member has to identify its FTEs in the plan.

More to come, stay tuned…

Obviously there are lots of definitions and details that we couldn’t include here, but this gives you a good idea of the complexity of making sure that you are complying with these rules. In our next post, we’ll cover more detailed changes with regard to how to measure certain classes of employees, such as teachers and seasonal workers.

Need an ACA solution? Get in contact with Tango now.