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Uncategorized

Laws Reduce Plan Sponsor ACA Reporting Burden

by Inoventive Solutions
January 1, 2025

Two new laws which took effect Jan. 1, 2025 will ease the Affordable Care Act annual tax reporting burden on health plan sponsors.

In a bipartisan effort, Congress recently passed the Employer Reporting Improvement Act and the Paperwork Burden Reduction Act, both of which outgoing President Biden signed into law.

The laws are aimed at making it easier for sponsors to comply with ACA requirements on Forms 1095-B and 1095-C, which provide information about health insurance coverage to workers and the Internal Revenue Service.

Both laws take effect immediately.

Forms explainer

Form 1095-C is issued by “applicable large employers” (ALEs) — those with 50 full-time or full-time-equivalent workers — to report the offer of health coverage, while Form 1095-B is issued by insurance providers, self-insured employers or small employers to report actual coverage.

Prior to 2025, plan sponsors were required to send these forms to all of their employees covered by their health plan by March 2. The due dates for transmitting the forms to the IRS are Feb. 28 (if filing on paper) and March 31 (if filing electronically).

Both forms help workers prove they comply with the ACA’s mandate that they carry health insurance and that an employer is complying with its obligations to provide coverage under the law.

What’s changing

There are four changes that benefit employers under the two new laws:

1. Forms upon request — Plan sponsors are no longer required to send Forms 1095-B and 1095-C to all full-time and covered employees. Instead, they will only be required to furnish them upon request from an employee.

Importantly, plan sponsors who want to go this route are required to notify their staff about their right to ask for a form.

2. Electronic forms — Starting this year, employers may furnish the forms to their employees electronically rather than on paper. The new law also makes it easier for employers to use a worker’s birth date instead of their Social Security number if the number is missing.

3. Reponse times to IRS letters — Another provision expands the time employers have to respond to a “employer shared responsibility payment” letter (Letter 226J) from the IRS, to 90 days from 30.

These demand letters are sent to employers if one or more full-time employees listed on the company’s Form 1095-C received a premium tax credit on his or her federal income tax return, meaning they secured insurance on an ACA exchange like healthcare.gov.

Employers have found it challenging to  provide a response and a defense to the IRS within such a short window of 30 days. An additonal challenge has been that these letters are sent by U.S. mail, and it may take some time to reach the appropriate person in an organization after being received. Filing a response late can result in the employer being assessed a penalty when one isn’t warranted, in addition to further penalties.

4. Statute of limitations — One of the new laws imposes a statute of limitations for how far back the IRS can go to try to collect assessments for 1095-B and 1095-C reporting failures and mistakes. Prior to this, there was no statute of limitations.

The takeaway

The above changes will benefit plan sponsors by reducing the reporting burden as well as give them more time to respond if the IRS thinks an ALE failed to provide coverage as required by law.

Your HR department should be aware of these changes in order to take advantage of the them.

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Uncategorized

Large Employers Must File ACA Forms, Not the Insurers

by Inoventive Solutions
October 19, 2021

One mistake more and more employers are making is failing to file the required Affordable Care Act tax-related forms with the IRS.

If you are what’s considered an “applicable large employer” (ALE) under the ACA, you are required to file with the IRS forms 1094 and 1095, often separately and before your annual tax returns are due.

Under the ACA, employers with 50 or more full-time and “full-time equivalent” workers are considered an ALE and are required to provide affordable health insurance to their staff that also covers 10 essential benefits as prescribed by the law. This is what’s known as “the employer mandate.”

Filing these documents is not the responsibility of your health insurer as it’s you that’s arranging the employer-sponsored health insurance for your staff. Be aware that you can face penalties if you:

  • Don’t file the forms in a timely manner,
  • Make mistakes when filing the forms, or
  • Fail to file the forms altogether.

The IRS requires these forms to ensure that ALEs are providing health coverage to their employees and that the employer is complying with the employer mandate portion of the ACA.

The forms

  • Form 1095-C — This is basically the W-2 reporting form for health insurance. The form tells the IRS which employers are providing coverage and which employees are getting coverage through their employers.
  • Form 1094-C — This form provides information about health insurance coverage that the employer provides.

Here are the deadlines you need to be aware of:

  • Jan. 31, 2022 — Individual statements (Form 1094 C) for 2021 must be furnished to employees by this date.
  • Feb. 28, 2022 — If filing paper returns, Forms 1094 C and 1095 C must be filed by this date.
  • March 31, 2022 — If filing electronically, Forms 1094 C and 1095 C must be filed by this date.

Penalties

The general potential late/incorrect ACA reporting penalties are $280 for the late/incorrect Forms 1095-C furnished to employees, and $280 for the late/incorrect Forms 1094-C and copies of the Forms 1095-C filed with the IRS.

That comes to a total potential general ACA reporting penalty of $560 per employee when factoring in both the late/incorrect Form 1095-C furnished to the employee and the late/incorrect copy of that Form 1095-C filed with the IRS.

The maximum penalty for a calendar year will not exceed $3,392,000 for late/incorrect furnishing or filing.

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Uncategorized

HHS Proposes Higher Cost-Sharing Limits for 2022

by Inoventive Solutions
March 23, 2021

The Department of Health and Human Services has proposed cost-sharing limits that would apply to all Affordable Care Act-compliant health insurance policies for the 2022 policy year.

The ACA imposes annual out-of-pocket maximums on the amount that an enrollee in a non-grandfathered health plan, including self-insured and group health plans, must pay for essential health benefits through cost-sharing.

This means that health plans are not allowed to require their enrollees to pay more than the maximum in a given year for health services. 

The proposed 2022 out-of-pocket maximums are $9,100 for self-only coverage and $18,200 for family coverage. This represents an approximate 6.4% increase over 2021 limits. For 2021, the out-of-pocket maximums are $8,550 and $17,100, respectively.

Penalties to rise

Applicable large employers (ALEs) — employers with 50 or more full-time or full-time-equivalent workers who are required to offer their employees health insurance under the ACA — can face large penalties known as “shared responsibility” assessments if they have at least one full-time employee who enrolls in public marketplace coverage and receives a premium tax credit. There are two types of infractions with different penalty amounts:

The “play or pay” penalty — This can be levied when an ALE fails to offer minimum essential coverage to at least 95% of its full-time employees and their dependent children during a month, and at least one of its full-time employees receives a premium tax credit through a public marketplace.

The per-employee penalty will rise to $2,880 in 2022 from the current $2,700.

The “play and pay” penalty — An ALE can be hit by this penalty if it offers minimum essential coverage to at least 95% of its full-time employees but a full-time employee receives a premium tax credit because: (1) the employer-offered coverage is unaffordable or fails to provide minimum value, or (2) the employee was not offered employer-sponsored coverage.

For 2022, the maximum annual assessment for each full-time employee receiving a premium tax credit will be an estimated $4,320, up from the current $4,060.

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Healthcare

Substance-Abuse Benefits under Affordable Care Act

by Inoventive Solutions
March 17, 2020

One less-touted aspect of the Affordable Care Act is that it provides employers more tools for assisting employees with substance-abuse problems to seek help.

According to a study by the Substance Abuse and Mental Health Services Administration, 10% of America’s workers are dependent on one substance or another. The study also found that 3.1% have used illegal drugs either before or during a shift. 

Also, 79% of heavy alcohol users have jobs, and 7% of them say they’ve had drinks while on duty. 

Drug use and abuse have been on the rise — both illegal drugs and prescription painkiller abuse, the latter of which led a more than a 500% increase in people seeking treatment for addiction to doctor-prescribed opioids between 2007 and 2017.

As an employer, the costs are great if you have someone on staff who has a substance-abuse problem. It behooves you to ensure that the group health plan you offer your workers is comprehensive amid this growing problem. 

Far-reaching costs

Addicted workers have been found to have:

  • Lower or lack of workplace productivity;
  • Higher health care costs;
  • Increased absenteeism and presenteeism;
  • Diminished quality control;
  • More disability claims;
  • Increased workplace injuries;
  • Lower morale;
  • Higher job turnover; and
  • Employee theft.

Some employers have tried to help employees tackle their addictions or abuse problems by implementing workplace prevention, wellness and disease-management strategies. These programs improve health, which lowers health care costs and insurance premiums and produces a healthier, more productive workforce.

Under the ACA, anybody covered by a health plan has access to substance-abuse treatment. That’s because the law makes such treatment one of 10 benefits insurance plans must offer.

The ACA requires health plans to pay for prevention and early intervention. 

Health care plans also have to comply with a “parity” law, which requires them to treat mental health issues the same way they do physical diseases.

What else can you do?

  • You can start by adding addiction to your prevention, intervention, treatment and disease-management strategies.
  • Use confidential screenings and assessments. There are a number of screening, brief-intervention and referral-to-treatment modules available to help people confront their drinking or drug use and get the help they need. 
  • Review your policy for coverage. If you have coverage for substance-abuse treatment, employees with addictions will be more apt to seek out help knowing the cost is at least partially covered.

And, importantly, make sure your substance-abuse benefit is robust, and that it covers a full continuum of care. 

A strong benefit would include:

  • Inpatient care;
  • Residential treatment programs; 
  • Outpatient care; and
  • Continuing care for those in need of treatment.
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Finance, Healthcare, Industry News

DOJ Tells Court to Nullify ACA; What’s Next?

by Inoventive
June 11, 2019

After a period of relative stability, the future of the Affordable Care Act has once again been thrown into uncertainty.

In a surprise move, the Department of Justice announced that it would not further pursue an appeal of a ruling by U.S. District Court Judge Reed O’Connor, and instead asked the 5th U.S. Circuit Court of Appeals to affirm the decision he made in December 2018.

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