IRS has begun notifying employers of their potential liability for an ACA employer shared responsibility payment in connection with the 2015 calendar year. It recently released Forms 14764 and 14765, which employers can use to dispute the assessment.

Background

The Affordable Care Act (ACA) imposes employer shared responsibility requirements that are commonly referred to as the “employer mandate.” Beginning in 2015, applicable large employers (ALEs) – generally, employers with at least 50 full-time employees – are required to offer minimum essential coverage to substantially all full-time employees and their dependents, or pay a penalty if at least one full-time employee enrolls in marketplace coverage and receives a premium tax credit. Even if they offer employees coverage, ALEs may still be subject to an employer shared responsibility payment if the coverage they offer to full-time employees does not meet affordability standards or fails to provide minimum value. 

The IRS announced their plans in Fall of 2017 to notify employers of their potential liability for an employer penalty for the 2015 calendar year. It released FAQs explaining that Letter 226J will note the employees by month who received a premium tax credit, and provide the proposed employer penalty. Additionally, the IRS promised to release forms for an employer’s penalty response and the employee premium tax credit (PTC) list respectively. 

Employer Penalty Response & Employee Premium Tax Credit Forms Now Available

IRS subsequently issued Form 14764, the employer penalty Response, and Form 14765, the Employee PTC Listing. Together, these forms are the vehicle for employers to respond to a Letter 226J.

On Form 14764, employers indicate full or partial agreement or disagreement with the proposed employer penalty, as well as the preferred employer penalty payment option. An employer that disagrees with the assessment must include a signed statement explaining the disagreement, including any supporting documentation. This form also allows employers to authorize a representative, such as an attorney, to contact the IRS about the proposed employer penalty.

On Form 14765, the IRS lists the name and last four digits of the social security number of any full-time employee who received a premium tax credit for one or more months during 2015 and where the employer did not qualify for an affordability safe harbor or other relief via Form 1095-C. Each monthly box has a row reflecting any codes entered on line 14 and line 16 of the employee’s Form 1095-C. If a given month is not highlighted, the employee is an assessable full-time employee for that month – resulting in a potential employer assessment for that month.

If information reported on an employee’s Form 1095-C was not accurate or was incomplete, an employer wishing to make changes must use the applicable indicator codes for lines 14 and 16 described in the Form 1094-C and 1095-C instructions. The employer should enter the new codes in the second row of each monthly box by using the indicator codes for lines 14 and 16. The employer can provide additional information about the changes for an employee by checking the “Additional Information Attached” column. As mentioned:

Employers: Carefully Consider 226J Letter Responses
Miscoding can happen for different reasons, including vendor errors and inaccurate data. To minimize risk of additional IRS exposure, employers should carefully consider how best to respond to a 226J letter given circumstances surrounding the disputed assessments. For example, changing the coding on the 1095-C of an employee from full-time to part-time could trigger further review or questions by the IRS on the process for determining who is a full-time employee – and may increase the likelihood of IRS penalties for reporting errors on an employer’s Form 1095-Cs.

If No IRS Notice in 2017, Is an Employer Home Free in Connection with 2015 Employer Penalty?

In its October FAQs, the IRS stated that it “plans to issue Letter 226J informing ALEs of their potential liability for an employer shared responsibility payment, if any, in late 2017.” If the IRS sticks to that timing, all notices should be sent out by the end of this calendar year. However, because the IRS has not indicated that it will inform employers that they have no employer penalty due, it is impossible to say that an employer not receiving a Letter 226J in 2017 is home free for 2015 employer penalties.

In Closing

Employers should review the newly released forms so they are prepared to respond within 30 days of the date on the Letter 226J. They should also ensure processes are in place to make these payments, as necessary. Even employers who are not expecting any assessments will need to prepare to respond to the IRS within the limited timeframe to dispute any incorrect assessments.

Top Ten Ways to Hold a Company Party- Without Getting Sued

December 01 - Posted at 9:00 AM Tagged:

With the Holiday Season in full swing, many employers inquire about holding company parties where alcohol will be served. They generally want to know about the risk involved if an employee drinks too much at the party and misbehaves, or worse, injures or kills someone on the way home.

 

There is always risk involved in holding a company sponsored event. Serving alcohol only compounds the potential for problems. According to one study, 36% of employers reported behavioral problems at their most recent company party. These problems involved everything from excessive drinking to off-color jokes to sexual advances to fist fights. As a result, more and more employers now hold alcohol-free parties. Since most employers still want to hold holiday parties, you can reduce your legal liability by observing as many of the following recommendations as possible:

 

10. If possible, don’t serve alcohol. This is easier to do if you simply have a catered lunch at the company office.

 

9. Invite spouses and significant others so there will be someone there to help keep an eye on your employees and, if necessary, get them home safely.

 

8. Always serve food if you serve alcohol and always have plenty of non-alcoholic beverages available.

 

7. If your party is a dinner, consider serving only wine or beer (plus non-alcoholic alternatives) with the meal.

 

6. If you do serve alcohol, do not have an “open bar” where employees can drink as much as they want. Instead have a cash bar or use a ticket system to limit the number of drinks. Close the bar at least an hour before you plan to end the party. Switch to coffee and soft drinks from there on.

 

5. Let your managers know that they will be considered to be “on duty” at the party. They should be instructed to keep an eye on their subordinates to ensure they do not drink too much. Instruct managers that they are not to attend any “post party” parties.

 

4. Consumption of alcohol lowers inhibitions, and impairs judgement. This can result in employees saying and doing things that they would not ordinarily do. Remind employees that, while you encourage everyone to have a good time, your company’s normal workplace standards of conduct will be in force at the party, and misconduct at or after the party can result in disciplinary action.

 

3. Hire professional bartenders (don’t use supervisors!) and instruct them to report anyone who they think has had too much. Ensure the bartenders require positive ID from guests who not appear to be substantially over age 21.

 

2. Arrange for no-cost taxi service for any employee who feels that he/she should not drive home. At management’s discretion, be prepared to provide hotel rooms for intoxicated employees.

 

1. Never, never, hang mistletoe! Take a loo at item #4 again and you will see why.

 

Article courtesy of Fisher & Phillips LLP

ACA Pay or Play Penalty Letters Coming “Late 2017”

November 09 - Posted at 11:19 AM Tagged: , , , , , , , , , , , , , ,

As we near closer to Thanksgiving, it’s safe to say we are  in “late 2017” territory. Last week, the IRS issued new FAQ guidance informing employers that they can expect notice of any potential ACA employer mandate pay or play penalties in late 2017. 

What Will the Letter Look Like?  
The IRS recently posted a copy of the Letter 226J here: https://www.irs.gov/pub/notices/ltr226j.pdf

Letters Will Look Back to 2015
The ACA employer mandate pay or play rules first took effect in 2015. The IRS Letters 226J at issue will relate only to potential penalties in that first year, and therefore they will be relevant only to employers that were applicable large employers (ALEs) in 2015.

In general, an employer was an ALE in 2015 if it (along with any members in its controlled group) employed an average of at least 50 full-time employees, including full-time equivalent employees, on business days during the preceding calendar year (2014).

Note that a special 2015 transition rule provided that certain “mid-sized” employers between 50 and 100 full-time employees could have reported an exemption from potential pay or play penalties.

What Are the Potential 2015 Penalties?

a) §4980H(a)—The “A Penalty” aka No Coverage Offered
This is the big “sledge hammer” penalty for failure to offer coverage to substantially all full-time employees. In 2015, this standard required an offer of coverage to at least 70% of the ALE’s full-time employees. (For 2016 forward, this standard has been increased to 95%).

The 2015 A Penalty was $173.33/month ($2,080 annualized) multiplied by all full-time employees then reduced by the first 80 full-time employees (reduced by the first 30 full-time employees for 2016 forward). It was triggered by at least one full-time employee who was not offered group coverage enrolling in subsidized coverage on the Exchange.

The reduced 70% threshold for the 2015 penalty should be sufficient for virtually all ALEs in 2015 to avoid the A Penalty, provided they offered a group health plan with eligibility set at 30 hours per week or lower. It would be very unlikely for a surprise A Penalty to arise for 2015.

b) §4980H(b)—The “B Penalty”  aka Coverage Not Affordable
This is the much smaller “tack hammer” penalty that will apply where the ALE is not subject to the A Penalty (i.e., the ALE offered coverage to at least 70% of full-time employees in 2015, or 95% thereafter). It applies for each full-time employee who was not offered coverage, offered unaffordable coverage, or offered coverage that did not provide minimum value and was enrolled in subsidized converge on the Exchange.

The 2015 B Penalty was $260/month ($3,120 annualized). Unlike the A Penalty, the B Penalty multiplier is only those full-time employees not offered coverage (or offered unaffordable or non-minimum value coverage) who actually enrolled in the Exchange. The multiple is not all full-time employees.

What Happened to My Section 1411 Certification?
In the vast majority of states, they never came!

In short, the 1411 Certification (typically referred to as Employer Exchange Notices) informs the employer that one or more of their employees have been conditionally approved for subsidies (the Advance Premium Tax Credit) to pay for coverage on the exchange.

One important purpose of the notice is it provides employers with the chance to contemporaneously challenge the employee’s subsidy approval. Near the time of the employee’s subsidy approval, the ALE can show that it made an offer of minimum essential coverage to the full-time employee that was affordable and provided minimum value.

In other words, the notices provide the ALE with the opportunity to prevent the employee from incorrectly receiving the subsidies, and the ALE from ever receiving the Letter 226J from the IRS (because all ACA pay or play penalties are triggered by a full-time employee’s subsidized Exchange enrollment).

CMS admitted in a September 2015 FAQ that they were not able to send the notices for 2015 for federal exchange enrollment (most state exchanges took the same approach), but the potential penalties will nonetheless still apply.

The result is that ALEs will for be receiving their first notice of potential 2015 penalties via IRS Letter 226J in “late 2017.”

How Does the IRS Determine Potential Penalties?
The 2015 ACA reporting via Forms 1094-C and 1095-C (as well as the employee’s subsidized exchange enrollment data for 2015) serve as the primary basis for the IRS determination.

What Do I Need to Do?
First of all, review the information carefully.

The first-year ACA reporting for 2015 was a particularly difficult one, and one in which the IRS provided extended deadlines and a good faith efforts standard. It is very possible that the numerous challenging systems issues that made the first-year (and, frankly, all subsequent years) ACA reporting so difficult resulted in certain inaccuracies on the 2015 Forms 1094-C and 1095-C.

Be sure to review any potential penalties carefully with your systems records to confirm the reporting was correct.

a) If You Agree with the Penalty Determination – You will complete and return a Form 14764 that is enclosed with the letter, and include full payment for the penalty amount assessed (or pay electronically via EFTPS).

b) If You Disagree with the Penalty Determination – The enclosed Form 14764 will also include a “ESRP Response” form to send to the IRS explaining the basis for your disagreement. You may include any documentation (e.g., employment or offer of coverage records) with the supporting statement.

The response statement will also need to include what changes the ALE would like to make to the Forms 1094-C and/or 1095-C on the enclosed “Employee PTC Listing,” which is a report of the subsidized Exchange enrollment for all of the ALE’s full-time employees. The Letter 226J includes specific instructions on completing this process.

The IRS will respond with a Letter 227 that acknowledges the ALE’s response to Letter 226J and describes any further actions the ALE may need to take. If you disagree with the Letter 227, you can request a “pre-assessment conference” with the IRS Office of Appeals within 30 days from the date of the Letter 227.

If the IRS determines at the end of the correspondence and/or conference that the ALE still owes a penalty, the IRS will issue Notice CP 220J. This is the notice and demand for payment, with a summary of the pay or play penalties due.

 

New Indexed PCORI Fee Issued

November 01 - Posted at 8:33 AM Tagged: , , , , , , , , , , ,

Under the Affordable Care Act, (ACA) a fund for a new nonprofit corporation to assist in clinical effectiveness research was created. To aid in the financial support for this endeavor, certain health insurance carriers and health plan sponsors are required to pay fees based on the average number of lives covered by welfare benefits plans. These fees are referred to as either Patient-Centered Outcome Research Institute (PCORI) or Clinical Effectiveness Research (CER) fees.

The applicable fee was $2.26 for plan years ending on or after October 1, 2016 and before October 1, 2017.  For plan years ending on or after October 1, 2017 and before October 1, 2018, the fee is $2.39.  Indexed each year, the fee amount is determined by the value of national health expenditures. The fee phases out and will not apply to plan years ending after September 30, 2019.

As a reminder, fees are required for all group health plans including Health Reimbursement Arrangements (HRAs), but are not required for health flexible spending accounts (FSAs) that are considered excepted benefits. To be an excepted benefit, health FSA participants must be eligible for their employer’s group health insurance plan and may include employer contributions in addition to employee salary reductions. However, the employer contributions may only be $500 per participant or up to a dollar for dollar match of each participant’s election.

HRAs exempt from other regulations would be subject to the CER fee. For instance, an HRA that only covered retirees would be subject to this fee, but those covering dental or vision expenses only would not be, nor would employee  EAPs, disease management programs and wellness programs be required to pay CER fees.

IRS Won’t Accept 2017 Individual Tax Returns without ACA Information

October 25 - Posted at 8:26 AM Tagged: , , , , , , , , , , , , , , , , ,

In a recent statement released by the IRS it advised that it would not accept individual 2017 tax returns that did not indicate whether the individual had health coverage, had an exemption from the individual mandate, or will make a shared responsibility payment under the individual mandate. Therefore, for the first time, an individual must complete line 61 (as shown in previous iterations) of the Form 1040 when filing his/her tax return. This article explains what the new IRS position means for the future of ACA compliance from an employer’s perspective.

First, it will be critical (more so this year than in year’s past) that an employer furnish its requisite employees the Form 1095-C by the January 31, 2018 deadline. In previous years, this deadline was extended (to March 2, 2017 last year). However, with the IRS now requiring the ACA information to be furnished by individual tax day, April 17, 2018, employers will almost certainly have to furnish the Form 1095-C to employees by the January 31, 2018 deadline. This is a tight deadline and will require employers to be on top of their data as the 2017 calendar year comes to a close.

An employee who is enrolled in a self-insured plan will need the information furnished in part III of the Form 1095-C to complete line 61 on his/her tax return. It is reasonable to assume that an employee is more likely to inquire as to the whereabouts of the Affordable Care Act information necessary to complete his/her 2017 tax return. Therefore, the possibility of word getting back to the IRS that an employer is not furnishing the Form 1095-C statements to employees is also likely greater in 2017 compared to past years. Remember, an employer can be penalized $260 if it fails to furnish a Form 1095-C that is accurate by January 31, 2018 to the requisite employees. This penalty is capped at $3,218,500. The $260 per Form penalty and the cap amount can be increased if there is intentional disregard for the filing requirements. 

The IRS statement continues the IRS’ trend of being more strenuous with ACA requirements. Many employers have received correspondence from the IRS about missing Forms 1094-C and 1095-C for certain EINs. Frequently, this has been caused by the employer incorrectly filing one Form 1094-C for the aggregated ALE group as opposed to a Form 1094-C for each Applicable Large Employer member (ALE member). While the IRS’ latest statement does not ensure that enforcement of the employer mandate (the section 4980H penalties) is coming soon, one could infer that the IRS will soon be sending out penalty notices with respect to the employer mandate.

With the actions taken by the IRS in 2017, all employers need to be taking the reporting of the Forms 1094-C and 1095-C seriously. As of the date of this publication, the Form 1095-C must be furnished to an employer’s requisite employees by January 31, 2018.

IRS Publishes 2018 Indexed Figures

October 24 - Posted at 10:34 AM Tagged: , , , , , , , , , ,
The IRS recently published indexed figures for 2018 including changes to the following:

Maximum H.S.A. Annual Contribution Limits-
  • 2018- $3450 Self / $6900 Family 
  • $2017- $3400 Self / $6750 Family
The H.S.A. catch up limit for individual age 55 and over will remain at $1000.

Medical Plan Maximum Out of Pocket Limits-
  • 2018- $7350 self / $14,700 Family
  • 2017- $7150 self / $14,300 Family
The 2018 FSA annual contribution limit was increased from $2600 to $2650. Dependent Day Care Assistance contribution limit  remains at $5000 if single head of household or married and filing jointly ($2500 if married and filing separately). 

October is Breast Cancer Awareness Month

October 06 - Posted at 9:00 AM Tagged: , , , , , , ,
Breast cancer is a common fear among women, and knowledge is the best weapon against fear. Sadly, a lot of bad information is out there, which makes it hardto know what to believe. Here is the truth about some common myths.

Myth: Breast cancer is the leading cause of death in American women.
Fact: Breast cancer is the most common cancer in women, but it is not the main cause of death. Coronary heart disease (which causes heart attack) is by far the number one killer of women in the U.S. It kills more women than all types of cancer combined. Breast cancer is not even the deadliest type of cancer. Lung cancer is the leading cause of cancer deaths in women.

Myth: Young women don’t get breast cancer.
Fact: Breast cancer usually strikes after menopause, but it is possible at any age. From ages 30 to 39, an average woman’s risk is about one in 233 (only about 0.4 percent). When younger women get breast cancer, it is often because they have inherited a genetic mutation linked with cancer.

Myth: Antiperspirants cause breast cancer.
Fact: Some e-mails claim that substances in antiperspirants and deodorants are absorbed through the skin by way of nicks from shaving and can lead to cancer. Neither the National Cancer Institute nor the FDA has found any link between antiperspirants or deodorants and breast cancer.

Myth: I will get breast cancer because it runs in my family.
Fact: You may be at higher risk for breast cancer if other people in your family have had it. But many women who have a family history of breast cancer never develop it. Your doctor or a genetic counselor can help you understand your personal risk for breast cancer and what steps you can take to lower it.

Myth: I don’t have breast cancer in my family, so I won’t get it.
Fact: Plenty of women who are diagnosed with breast cancer have no family history of the disease. The fact
of being a woman is your main risk factor, and the risk rises as you age, especially after menopause. That’s why mammograms and clinical breast exams are important for all women as they get older.

Myth: Bras cause breast cancer.
Fact: This rumor has been spread through e-mail and at least one book. There is no evidence that wearing any type of bra causes breast cancer.

Myth: Only women get breast cancer.
Fact: It’s rare, but men can get breast cancer. They account for less than one percent of all breast cancer cases. Men who get breast cancer often have an inherited breast cancer gene mutation.

When in doubt, check it out!
Many myths about breast cancer make the rounds through e-mail and the Internet. Don’t believe everything you read. Even if it sounds like it could be true, check the facts. These tips can help:
  • Find reliable sources. Go to trusted sites for cancer information, such as the National Cancer Institute or the American Cancer Society.  Stay away from any site that sells cancer “cures.”
  • Search out the evidence. When you hear a claim, look for medical research to support it. Don’t rely too much on any single small study. Look for large, well-designed studies conducted through major research centers.
  • Talk to your doctor. If you are uncertain about a health claim, ask your doctor at your next visit. Your doctor can help you learn about your risk factors and ways to prevent disease. He or she can also suggest when you should have mammograms and other important screenings.

OSHA Electronic Record-Keeping Submission Due Dec 1st

October 02 - Posted at 9:00 AM Tagged: , , , , , ,
The Occupational Safety & Health Administration (OSHA) has implemented a change to its record keeping rule that now requires certain employers to electronically submit 2016 injury and illness data to the agency as of December 1, 2017. 

The injury and illness reports that employers are required to submit electronically are already recorded on forms that employers keep onsite at their workplace. OSHA feels this change will help to improve the safety for workers across the country by making injury information publicly available. 

Who Must Comply: Employers who are required to comply are establishments with 250 or more employees as well as those with 20-249 employees who fall into certain industries that have historically high rates of occupational injuries and illnesses. 

What Are Employers Required to Submit:
  • Employers with 250 or more employees must electronically submit information from OSHA Forms 300 (Log of Work Related Injuries & Illnesses), 300A (Summary or Work Related Injuries & Illnesses), and 301 (Injury & Illness Incident Report).
  • Employers with 20-249 employees in the required industries must electronically submit the Form 300A.

OSHA has provided a secure website that offers 3 options for data submission:
  1. Users can manually enter data into their webform
  2. Users can upload a CVS file to process single or multiple establishments at the same time
  3. Users of automated recordkeeping systems can transmit data electronically via API (application programming interface)

The Injury Tracking Application (ITA) is accessible from their launch page where employers are able to provide OSHA with their 2016 Form 300A information. 

The new reporting requirements will be phased in over 2 years. OSHA extended the 2017 compliance date for 2016 data submission to December 1, 2017.  The data  deadline for 2017 information submission is July 1, 2018. Beginning in 2019 and every year thereafter, the information must be submitted by March 2nd.

Equifax Data Breach Survival Tips

September 25 - Posted at 12:13 PM Tagged: , , , , , , , ,
As you may have seen all over the news recently, Equifax, who is one of the three major credit bureaus, announced they suffered a data breach that may have affected 143 million US consumers. 

Below are some tips to consider to help minimize your exposure to identity theft. 

  • Check the following link to first determine if Equifax believes your data was part of the breach: https://www.equifaxsecurity2017.com/potential-impact/
  • Request a free copy of your credit report: https://www.annualcreditreport.com/index.action
  • Review your bank and financial statements often and use multi-factor authentication with online account as available
  • Based on your individual situation, consider placing fraud alerts and/or credit freezes on your accounts with all 3 of the major credit reporting agencies. Some agencies may charge a nominal fee (i.e. $10) each time you place/lift a credit freeze on your report. A detailed comparison between a fraud alert and a credit freeze can be found here: http://www.idtheftcenter.org/Fact-Sheets/fs-124.html
  • Do not disclose personal, financial, or password related info over the phone if you did not initiate the call or if you are not dealing with an institution that you are familiar with.
  • Be extremely cautious with fake news and fictitious websites offering to help. 
  • Below is the contact information for the three credit bureaus if you need to contact them directly:

VSP Disaster Outreach

September 20 - Posted at 11:42 AM Tagged: , , , , , ,
VSP is reaching out to help those affected  by the recent Hurricane and are offering vision services to both members and non-members. 

  • For VSP Members- Anyone currently enrolled in a VSP vision plan who has lost or broken their eyewear or is in need of eye care services due to the recent natural disaster can call VSP Member Services Support Line (#800-877-7195) to have their VSP benefits reinstated- regardless of their eligibility.
  • For Non VSP Members-If you are in need of eye care due to the natural disaster and are not currently a VSP member, contact your local American Red Cross and request a VSP Global Eyes of Hope gift certificate to use for no-cost eye care and glasses at a local VSP network doctor.

 

For more information about the VSP Eyes of Hope program, you can visit their website at www.vspglobal.com/disasteroutreach.

© 2025 Administrators Advisory Group, Inc. All Rights Reserved