IRS won’t accept returns next year without health coverage

The Internal Revenue Service said that for the upcoming 2018 filing season, it‎ will not accept electronically filed tax returns where the taxpayer does not address the health coverage requirements of the Affordable Care Act, the first tax season it has refused to accept such returns.‎

In an update Friday to the web page of its ACA Information Center for Tax Professionals, the IRS said will not accept the electronic tax return until the taxpayer indicates whether they had coverage, had an exemption or will make a shared responsibility payment. On top of that, the IRS said tax returns filed on paper that don’t address the health coverage requirements may be suspended pending the receipt of additional information and any refunds may be delayed.

In previous tax seasons the IRS has held up processing of tax returns that didn’t have the health care coverage box checked, but it didn’t prevent the returns from being processed. During this year’s tax season, President Trump signed an executive order directing agencies not to impose burdens from the Affordable Care Act pending repeal, so the IRS processed the returns, but still required taxpayers to pay a penalty known as an individual shared responsibility payment if they lacked coverage and didn’t receive an exemption.

“To avoid refund and processing delays when filing 2017 tax returns in 2018, taxpayers should indicate whether they and everyone on their return had coverage, qualified for an exemption from the coverage requirement or are making an individual shared responsibility payment,” the IRS advised. “This process reflects the requirements of the ACA and the IRS’s obligation to administer the health care law.”

The announcement comes after unsuccessful efforts this year by the Trump administration and Republicans in Congress to repeal the Affordable Care Act and replace it with a Republican health care plan as an alternative to Obamacare. Last week, President Trump announced he would end cost-sharing reduction payments, subsidies to health insurance companies to help provide coverage to low-income people. He also signed an executive order allowing consumers to buy coverage from so-called “association health plans,” which could be sold across state lines and wouldn’t need to meet the minimum coverage requirements or consumer protections of the Affordable Care Act.

However, with the Affordable Care Act largely still in place, the IRS said taxpayers remain obligated to follow the law and pay what they may owe when filing‎.

“The 2018 filing season will be the first time the IRS will not accept tax returns that omit this information,” said the IRS. “After a review of our process and discussions with the National Taxpayer Advocate, the IRS has determined identifying omissions and requiring taxpayers to provide health coverage information at the point of filing makes it easier for the taxpayer to successfully file a tax return and minimizes related refund delays.”

Source: Accounting Today

Employers and Coverage Providers

Under the Affordable Care Act, insurance companies, self-insured companies, and large businesses and businesses that provide health insurance to their employees must submit information returns to the IRS and individuals reporting on health coverage.

Here is some information about the types of forms, the purpose of each, and noteworthy dates

Form 1095-C, Employer-Provided Health Insurance Offer and Coverage

 This form is filed by applicable large employers, which generally are employers with 50 or more full-time employees, including full-time equivalents. • ALEs send this form to certain employees, with information about what coverage the employer offered.
Employers that offer health coverage referred to as “self-insured coverage” send this form to individuals they cover, with information about who was covered and when.
This form is submitted to the IRS with Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns.
The deadline for filing this form with the IRS is February 28, 2017, or March 31, 2017 if filing electronically.
The deadline for furnishing this form to the employee is March 2, 2017, which is a 30-day extension from the original due date of January 31.

Form 1095-B, Health Coverage Information Return

This form is filed by providers of minimum essential coverage, including employers that are not applicable large employers, but who offer employer-sponsored self-insured health coverage.
It is used to report information to covered individuals about each person enrolled in coverage – this form is sent to the person identified as the responsible individual on the form.
This form is submitted to the IRS with Form 1094-B, Transmittal of Health Coverage Information Returns.
The deadline for filing this form with the IRS is February 28, 2017, or March 31, 2017 if filing electronically.
The deadline for furnishing this form to the covered individual is March 2, 2017, which is a 30-day extension from the original due date of January 31.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Health Care Law’s Rules Around Seasonal Workers

As an employer, your size – for purposes of the Affordable Care Act –  is determined by the number of your employees. If you hire seasonal or holiday workers, you should know how these employees are counted under the health care law.

Employer benefits, opportunities and requirements are dependent upon your organization’s size and the applicable rules. If you have at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, you are an ALE for the current calendar year.  However, there is an exception for seasonal workers.

If you have at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, your organization is an ALE. Here’s the exception: If your workforce exceeds 50 full-time employees for 120 days or fewer during a calendar year, and the employees in excess of 50 during that period were seasonal workers, your organization is not considered an ALE. For this purpose, a seasonal worker is an employee who performs labor or services on a seasonal basis.

The terms seasonal worker and seasonal employee are both used in the employer shared responsibility provisions, but in two different contexts. Only the term seasonal worker is relevant for determining whether an employer is an applicable large employer subject to the employer shared responsibility provisions.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Visit IRS.gov/AIR for Resources about Reporting Process

Under the Affordable Care Act, certain organizations must report information to the IRS and individuals about health insurance coverage. The reporting requirements apply to insurance companies, self-insured companies, applicable large employers and employers that provide health insurance to their employees. ACA information returns and transmittals are electronically filed through the ACA Information Return system, also known as AIR.

The ACA Assurance Testing System opens November 7 for tax year 2016 testing. AATS is a process to test software and electronic transmissions prior to accepting software developers, transmitters, and issuers into the AIR program. Software developers – including employers and issuers – who passed AATS for tax year 2015 will not have to retest for tax year 2016; their tax year software packages will be moved into production status. New participants need to comply with test requirements for tax year 2016.

Other non-ACA information returns – such as Forms 1099 – can be electronically transmitted through the Filing Information Returns Electronically system, also known as FIRE.  Even if you previously used FIRE, if you are transmitting to AIR, you should familiarize yourself with the AIR procedures, which are different than those for FIRE.

If you are required to file 250 or more information returns, you must file them electronically. This requirement applies separately for each type of return and separately to each type of corrected return. All filers are encouraged to electronically file even if you have less than 250 returns.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Seven Things Employers Can Think About Now

If your organization is an applicable large employer, you must report information about the health care coverage you offered to your full-time employees. As an employer, it’s not too early to start thinking about these seven facts related to your information reporting responsibilities under the health care law.

1. The health care law requires ALEs to report information about health insurance coverage offered to its full-time employees and their dependents as well as to the IRS.

2. ALEs must report information about themselves, the coverage they offered – if any – and the individuals covered under the policy.

3. ALEs are required to furnish a statement to each full-time employee that includes the same information provided to the IRS by January 31, 2017.

4. ALEs that file 250 or more information returns during the calendar year must file the returns electronically.

5. ALEs must file Form 1095-C, Employer-Provided Health Insurance Offer and Coverage with the IRS annually, no later than February 28, 2017 or March 31, 2017 if filed electronically. Forms 1095-C are filed accompanied by the transmittal form, Form 1094-C.

6. Self-insured employers that are applicable large employers, and therefore are also subject to the information reporting requirements for offers of employer-sponsored health insurance coverage, must combine reporting under both provisions by filing a single information return, Form 1095-C, and transmittal, Form 1094-C.

7. The ACA Assurance Testing System opens November 7, 2016 for tax year 2016 testing. Software developers – including employers and issuers who passed AATS for tax year 2015 – will not have to retest for tax year 2016; the Tax Year Software Packages will be moved into Production status.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Double Check ACA Information on Your Return

If you received an extension of time to file your 2015 federal tax return, you have until Oct. 17 to double check your return and information on it that is related to the Affordable Care Act. The health care law includes  the individual shared responsibility provision and the premium tax credit that may affect your return.

Many people already have minimum essential coverage. If this applies to you, you'll simply report your coverage when you file your tax return by checking a box on your Form 1040, 1040A or 1040EZ.

Most taxpayers simply need to check a box on their tax return to indicate you had health coverage for all of 2015. For any month that you or anyone in your family did not have minimum essential coverage, you need to either claim or report a coverage exemption or make a shared responsibility payment when you file your tax return.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Terms to Know about Offers of Health Coverage

Here are definitions of key terms related to health coverage you might offer to employees:

Affordable coverage: If the lowest-cost self-only only health plan is 9.5 percent or less of your full-time employee’s household income, then the coverage is considered affordable. Because you likely will not know your employee’s household income, for purposes of the employer shared responsibility provisions, you can determine whether you offered affordable coverage under various safe harbors based on information available to you as the employer.

Minimum essential coverage: For purposes of reporting by applicable large employers, minimum essential coverage means coverage under an employer-sponsored plan. It does not include fixed indemnity coverage, life insurance or dental or vision coverage.

Minimum value coverage: An employer-sponsored plan provides minimum value if it covers at least 60 percent of the total allowed cost of benefits that are expected to be incurred under the plan.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

How the Size of Your Workforce Affects Your Responsibilities

Two parts of the Affordable Care Act apply only to applicable large employers. These are the employer shared responsibility provisions and the employer information reporting provisions for offers of minimum essential coverage.   Whether an employer is an ALE is determined each calendar year, and generally depends on the average size of an employer’s workforce during the prior year.

How to Determine Workforce Size

To determine your workforce size for a year, you add your total number of full-time employees for each month of the prior calendar year to the total number of full-time equivalent employees for each calendar month of the prior calendar year and divide that total number by 12. If the result is 50 or more employees, you are an applicable large employer.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Understanding Affordable coverage and Minimum Value coverage

Here is information to help you understand affordable coverage and minimum value coverage.

Affordable coverage: If the lowest cost self-only only health plan is 9.5 percent or less of your full-time employee’s household income then the coverage is considered affordable. Because you likely will not know your employee’s household income, for purposes of the employer shared responsibility provisions, you can determine whether you offered affordable coverage under various safe harbors based on information available to you.

Minimum value coverage: An employer-sponsored plan provides minimum value if it covers at least 60 percent of the total allowed cost of benefits that are expected to be incurred under the plan.

Under existing guidance, employers generally must use a minimum value calculator developed by the Department of Health and Human Services and the IRS to determine if a plan with standard features provides minimum value. Plans with nonstandard features are required to obtain an actuarial certification for the nonstandard features. The guidance also describes certain safe harbor plan designs that will satisfy minimum value.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999