IRS Releases Final 2018 ACA Reporting Forms and Instructions

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On October 1, 2018, the IRS released the final 2018 Forms 1095/1094 and instructions for IRS reporting under the Affordable Care Act (ACA).  No alterations were made to Forms 1094-B and 1094-C when compared to the final 2017 versions. The IRS made minor changes to how names are entered on Forms 1095-B and 1095-C.

226-J Notices Continue to be Issued

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Beginning in November 2017, the IRS has used Letter 226-J to notify employers who may have not complied with section 4980H (a) and (b) of the Employer Shared Responsibility provision of the ACA, during the 2015 tax year. The IRS has now begun issuing 226-J letters for the 2016 tax year while also improving their processes for identifying potential ACA non-compliance.

5 Key Considerations Raised by Newly Proposed HRA Regulation

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On October 28, 2018, the Secretaries of the Treasury, Labor and Health and Human Services announced a proposed regulation intended to expand the flexibility and use of health reimbursement arrangements (HRAs). The proposed regulation allows employers (in place of their traditional employer plan) to offer an HRA that reimburses for individual market healthcare premiums on a pre-tax basis. It also allows employers that offer traditional employer plans to also offer an HRA to reimburse up to $1,800 toward short-term medical plan premiums.

The regulation raises key questions as to how large employers can offer HRA premium reimbursement plans in place of traditional employer health plans while satisfying ACA requirements and avoiding penalties.

Estimated 2019 4980(H) Employer Shared Responsibility Penalties

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On April 17, 2018, the Department of Health and Human Services (HHS), in conjunction with the Centers for Medicare & Medicaid Services (CMS), released the final rule for the Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2019.   Because the final penalty amounts have not yet been released, we’re providing an estimated calculation of 2019 penalties based on the premium adjustment percentage and rounding rules for plan year risk planning purposes.

Estimated 2019 ACA Penalties

Penalty A: 95% Minimum Offer Requirement

Section 4980H(a) penalty amount = $2,500 annualized/ $208.33 monthly (less the first 30 FT employees)

(Increased from $2,320 in 2018)

Penalty B: Affordability and Minimum Value Requirement

2019 Section 4980H(b) penalty amount = $3,750 annualized/ $312.50 monthly

(Increased from $3,480 in 2018)

New PCORI Fee for Plan Years Ending October 2018 to September 2019

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On November 5, the IRS announced in Notice 2018-85 that the adjusted applicable amount for the Patient-Centered Outcomes Research Institute (PCORI) fee for policy or plan years ending on or after October 1, 2018, and before October 1, 2019, will be $2.45. This has increased from $2.39 for plan years that end on or after October 1, 2017, and before October 1, 2018. The PCORI fee is calculated based on the average number of lives covered under the policy or plan. This fee is filed and paid each July with a Form 720, Quarterly Federal Excise Tax Return.

Tax Credit for Paid FMLA Leave

IRS.gov

At the end of September, the IRS announced that employers who provide paid medical leave time to their employees may qualify for a new business credit for calendar years 2018 and 2019. Eligible employers who set up qualifying family leave programs or amend their existing programs to comply with the qualifying requirements by December 31, 2018, will be eligible to claim the family medical leave credit for the 2018 tax year.  The credit is equal to a percentage of wages paid to qualifying employees while they are on family and medical leave. The credit is retroactive to the beginning of the employer’s 2018 tax year for paid leave already provided.