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You received a Letter 226-J from the IRS? Here are some key considerations…

wpengine — Wed, 17 Jan 2018 20:19:59 +0000

The Internal Revenue Service (IRS) has started issuing the first wave of Letters 226-J informing applicable large employers who did not comply with the ACA employer mandate for 2015 Plan Year that they may be liable for an Employer Shared Responsibility Payment (ESRP). Though receiving the letter is unnerving, there are certain steps you should take to resolve the matter as quickly as possible.

Carefully Review the Letter 226-J. The Letter will present your proposed ESRP assessment as well as your rights, including your rights to provide additional information should you disagree.
How long do you have to respond to the letter?
You only have 30 days to respond to an IRS letter 226-J. The response date is printed on the top of the Letter 226-J. Depending on whether or not you agree with the assessment of your liability, you may need more than 30 days to review all of your data. If you need an extension, reach out to the individual IRS contact listed on the letter and ask for the extension early in the process.
Determine your response.
Responding to letter 226-J should not be handled by your benefits departments alone; your chief counsel, CFO, and any internal ACA experts should be part of the conversation. Depending on your organization, it may be a good idea to seek legal counsel or other external experts.
Assess your liability. While the current letters 226-J refer to employer shared responsibility payments for the 2015 plan year, the penalty process is not limited to that year or to shared responsibility payments specifically. Work with your team to ensure you understand the full scope of any shared responsibility payments and other penalties you may owe for 2016 and 2017 as well.
Provide all of the requested information – Letter 226-J requests that you return Form 14764, ESRP Response and Form 14765, Employee Premium Tax Credit (PTC) Listing to the IRS. Do not forget to return these forms.
Review your forms 1094-C and 1095-C. If you disagree with the IRS’ assessment, it’s important to ensure your forms 1094-C and 1095-C are correct. If you need to correct your data on those forms, do not submit a corrected 1094-C to the IRS; you will be able to make changes in your response to the letter.
Respond to the letter. Fax and mail any response to the IRS. Keep a copy of the fax confirmation sheet. Also consider following up with the IRS to confirm receipt.

It is important to note that Letter 226-J is not a bill. Its purpose is to notify employers that one of your employees received a premium tax credit and that you may be liable.
If you have questions regarding the letter, contact us at solutions@gsanational.com or 1-800-250-2741 ext. 170.

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IRS Raises FSA Limits, Other Benefits for 2018

wpengine — Wed, 29 Nov 2017 03:34:46 +0000

The IRS just released the 2018 Cost-of-Living Adjustments (COLAs) for a variety of tax-related limits. The changes, as outlined in Revenue Procedure 2017-58, featured several notable adjustments employers should be aware of:

Employees will be able to contribute up to $2,650 to a health flexible spending account (FSA), a $50 increase from 2017.
The monthly limits on the qualified transportation fringe benefit, as well as the qualified parking benefit, will increase to $260 (from $255).
The annual compensation that makes a company’s officer a “control employee”, for fringe benefit valuation purposes, will rise from $105,000 in 2017 to $110,000 (announced separately in Notice 2017-64).
The bar for “highly compensated employee” is unchanged at $120,000, and the dollar limit that defines a “key employee” in a top-heavy plan remains $175,000.
The maximum amount that may be excluded from an employee’s gross income under an employer-provided adoption assistance program rises to $13,840 (up $270 from 2017). In addition to this increase, the maximum adoption credit allowed to an individual for the adoption of a child will also be $13,840 (a $270 increase from 2017). Both the exclusion and the credit will begin to be phased out for individuals with modified adjusted gross incomes greater than $207,580 and will be entirely phased out for individuals with modified adjusted gross incomes of $247,580 or more (both up $4,040 from 2017).
Rev. Proc. 2017-58 raises the long-term care (LTC) insurance premium amounts that will be deductible in 2017. These will range from $420 for taxpayers aged 40 or younger, to $5,200 for those older than 70. The per diem limitation on LTC insurance payments remains $360.
The maximum amount of payments and reimbursements under a Qualified Small Employer Health Reimbursement Arrangements (QSEHRA) cannot exceed $5,050 for individual coverage and $10,250 for family coverage (a $100 and $200 increase from 2017, respectively).

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Guidance For Employer Shared Responsibility Payments Announced

wpengine — Wed, 15 Nov 2017 16:52:44 +0000

The IRS has announced new guidance regarding the Employer Shared Responsibility Payments (the “ESRPs”), which are the ACA penalties assessable to “Applicable Large Employers” for failing to provide affordable health care coverage to eligible full-time employees.
Although the IRS began collecting information from employers (via the Form 1095-C), beginning with the 2015 calendar year, it has not yet assessed any of the ESRP “play-or-pay” penalties. The new guidance forewarns that the IRS is gearing up for the penalty collection program. The guidance states that notices for penalties pertaining to 2015 will begin being issued in “late 2017.”
The IRS has also released a sample of the penalty notice (Letter 226J). The letter gives notice of a tentative penalty assessment for each non-exempt full-time employee who received a premium tax credit for health insurance coverage purchased on a state or federal Marketplace exchange.
Because of the complexity of the Form 1095-C program, it is expected that the IRS’s records are not entirely accurate. Consequently, we should assume that a notice will be sent to most employers, with the odds increased for larger employers.
Unfortunately, the deadline for responding to the IRS challenging its report is very short. Specifically, the appeal must be submitted within 30 days of the date of the penalty notice, and not 30 days from the receipt of the letter. The response date will be printed on the letter.
Because the timeframe for challenging the IRS’s tentative penalty assessment is very short, employers may wish to prepare for the inevitable receipt of the notice. Actions that they should consider taking are outlined below.

Identify to whom the notice will be sent, and alert that person or office to be on the lookout for the notice. Presumably, but not necessarily, it will be sent to the contact person listed in Part 1 of the Form 1094-C transmittal form.
Have copies of the 2015 Form 1095-Cs available to compare with the listings that will be included with the Letter 226J penalty notice.
Alert their Form 1095 vendor that you may need supporting information and reports on a quick turnaround basis.
Assemble a team to review and respond to the notice.

The sample penalty notice letter released by the IRS makes mention of the form to be used in challenging the penalty (Form 14764). A copy of that specific form has not yet been released. We will post a link to Form 14764 upon its release.
If you have questions about the new guidance, contact us at solutions@gsanational.com or 1-800-250-2741 ext. 170.

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The 2017 Comparative Effectiveness Research Fee

wpengine — Fri, 16 Jun 2017 19:46:42 +0000

It’s that time of year again.
The Affordable Care Act imposes an annual fee called the Comparative Effectiveness Research Fee (CERF) on insurers and plan sponsors of self-insured coverage to help fund the Patient-Centered Outcomes Research Institute. The fee is based on the average covered lives for the applicable plan year.
IRS Notice 2016-64, issued on Nov. 4, provides that the PCORI fee for plan years ending on or after Oct. 1, 2016, and before Oct. 1, 2017, including 2016 calendar year plans, is $2.26 per each person covered, up from $2.17 for the previous plan year.
Paying PCORI Fees
For self-funded plans, the self-insured employer/plan sponsor is responsible for submitting the fee and accompanying paperwork to the IRS. Third-party reporting and payment of the fee is not permitted for self-funded plans.
Employers subject to the fee must submit it by July 31 of the year following the last day of the plan year. For the coming year, self-insured health plan sponsors should use Form 720 for the second calendar quarter to report and pay the PCORI fee by July 31, 2017.
Links:
• IRS Form 720
• IRS Form 720 Instructions
If you have questions regarding the PCORI fees, call 1.800.250.2741 or email us at solutions@gsanational.com.

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Tax Treatment of Voluntary Fixed Indemnity Health Benefits

wpengine — Fri, 03 Feb 2017 17:05:04 +0000

Last week, the IRS’s Office of Chief Counsel released a Memorandum announcing that benefits paid under a fixed indemnity health benefit program that is either funded by the employer, or funded by employees through contributions made on a pre-tax basis, are included in the employee’s gross income as taxable wages. This would require the employer to withhold and pay applicable employment taxes, including income and FICA.
The rationale of the IRS, as explained in the Memorandum, is that fixed indemnity health benefit programs pay a fixed dollar amount for certain health-related events, such as days in the hospital. The amount paid is not related to the amount of any medical expense incurred or coordinated with any other health coverage. Consequently, the usual tax-free treatment of benefits paid by a group health plan is not available because the amounts paid under the hospital indemnity program are not a reimbursement of medical care under Code Section 213(d).
In contrast, payments made from a fixed indemnity health plan are still tax-free to the extent that the premiums for such coverage are paid by the employee on an after-tax basis.
Thus, if an employer’s benefit program includes a voluntary hospital indemnity plan funded by the employer or employees on a pre-tax basis, they may want to reconsider and instead have contributions for coverage paid by employees on an after tax basis to avoid the imposition of income and employment tax withholdings on any benefit payments.
We’re Here to Help
If you have questions regarding the memorandum as it pertains to your contract, call us at 1.800.250.2741 or email us at solutions@gsanational.com.

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ACA Patient-Centered Outcomes Research Institute (PCORI) Fee Filing Deadline Approaching

wpengine — Fri, 01 Jul 2016 03:21:51 +0000

This is an early reminder that employers with insured plans/HRA arrangements are required to report and pay the 2015 ACA Patient-Centered Outcomes Research Institute (PCORI) fees for the HRA plan no later than July 31, 2016. The IRS has adjusted the ACA fee amount for this year to $2.17 per insured life.

As in previous years, employers must report and pay the fee via IRS form 720 by July 31 of each year. The filing will cover the plan year that ended during the preceding calendar year.

If you have questions regarding the PCORI fees, call 1.800.250.2741 or email us at solutions@gsanational.com to contact one of our Healthcare Reform subject matter specialists.

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IRS Releases 2017 Health Savings Account Limits

wpengine — Wed, 04 May 2016 03:35:29 +0000

The Internal Revenue Service (IRS) issued new guidelines for contributions and out-of-pocket expenses (OOPs) for health savings account (HSA) limits in 2017.

Maximum OOPs for individual and family accounts tied to high-deductible plans will not change in 2017, and contributions will remain intact for family plans as well. Individual contributions will only increase moderately.

A quick breakdown of the new guidelines highlights the following:

Out-of-pocket maximums are unchanged at $6,550 for individuals and $13,100 for families;
Maximum contributions for family plans remain the same at $6,750;
Individual contributions can increase from $3,350 to $3,400.

High deductible plans will be defined as plans that have an annual deductible of at least $1,300 for self-only coverage and $2,600 for family coverage.

HSAs are open to all men and women enrolled in a high-deductible health insurance program (exceeding $1,300 for individuals and $2,600 for family) aside from those policyholders currently covered by Medicare or listed as a dependent.

For both 2015 and 2016, IRS regulations mandating the potential contributions on plans covering families increased $100 annually. Individual restrictions, meanwhile, increased by $50 in 2015, and remained stable for 2016.

The annual fluctuations of HSA contribution levels are based directly upon federal cost of living adjustments. They will be applied for the calendar year of 2017.

If you have questions regarding these guidelines, feel free to call us today at 1-800-250-2741 ext.170, or email us at solutions@gsanational.com with questions. You may also post questions below. Our blog is moderated by subject matter specialists who will reply to questions within 24 hours.

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