Employee Benefits Compliance, Reporting Requirements, Small Employers

Recent Benefits News: January – March 15th

US Capitol Building

A summary of guidance issued in January, February and the first half of March 2015 on Health Care Reform and other benefits topics.

HCR Information Reporting

IRS Final Forms 1094 and 1095 and New Publication on Employer Reporting Requirements

In February the IRS issued final Forms 1094 and 1095, which will be used for information reporting by large employers and by health insurance issuers. The IRS also issued Publication 5196 on “Understanding Employer Reporting Requirements.” The IRs needs the information on the forms 1094 and 1095 to  determine which employers are subject to “employer mandate” penalties (under Code § 4980H), which employees are eligible for subsidies in the exchange, and which employees had “minimum essential coverage” so are not subject to the “individual mandate” tax.  These final forms replace drafts that were issued in the July and September 2014. Information reporting is required under new Code §§ 6055 and 6056. Links to the forms:

B Form Instructions

C Form Instructions

Form 1094-B

Form 1095-B

Form 1094-C

Form 1095-C

Pub. 5196


IRS Forms and Guidance for Individual Taxpayers to Report on ACA Coverage

The IRS released a number of resources for individual taxpayers who will be reporting their health insurance coverage on their 2014 1040 tax returns.  This is the first year such reporting is required, since the “individual mandate” was effective as of January 1, 2014.  The IRS press release states that the “vast majority” of taxpayers will just need to check a box on their tax returns indicating that they had health insurance for all 12 months in 2014.

Form 1095-AHealth Insurance Marketplace Statement

Form 1095-A Instructions

Form 1095-A  FAQs

Form 8962Premium Tax Credit (PTC)

Form 8962 Instructions

Form 8965Health Coverage Exemptions

Form 8965 Instructions

Publication 5187Health Care Law: What’s New for Individuals & Families

Press Release – IRS Press Release


Cadillac Tax:  IRS Notice 2015-16

The IRS has issued Notice 2015-16 to “initiate and inform” the process of developing regulations on the excise tax on high-cost employer-sponsored health coverage under Code § 4980I (often referred to as the “Cadillac tax”). The Notice addresses various aspects of the tax, including defining and determining the cost of applicable coverage, and applying the annual dollar limit.  The IRS plans to issue additional guidance on other aspects.  The Cadillac tax will apply beginning in 2018.

IRS Notice 2015-16 (Feb. 23, 2015)


Small Employer Tax Credit:  2014 Form 8941

The IRS has released the 2014 version of Form 8941, which eligible small employers use to calculate their ACA health care tax credit.  Eligible small employers are employers that have fewer than 25 employees, pay average compensation of not more than $50,000 and contribute a uniform percentage of at least 50% of the premium costs for employee health insurance coverage

Form 8941Credit for Small Employer Health Insurance Premiums



SBCs:  Proposed Regs & Some Changes to SBC Template and Instructions

The IRS, DOL, and HHS have issued separate but largely identical proposed regulations relating to health care reform’s summary of benefits and coverage (SBC) requirement, along with proposed revisions to the SBC template, instructions, uniform glossary, and other materials. Summary of Benefits and Coverage and Uniform Glossary; Proposed Rule, 26 CFR Part 54, 29 CFR Part 2590, 45 CFR Part 147, 79 Fed. Reg. 78578 (Dec. 30, 2014);

Proposed Regulations

Templates, Instructions, and Related Materials – Proposed

Fact Sheet


Premium Tax Credits:  Penalty Relief for Excess Advance PTCs

IRS issued Notice 2015-9 (January 26, 2015), which provides relief from underpayment penalties for taxpayers who received advance premium tax credits that exceeded actual allowable premium tax credits. This could occur, for example, if a taxpayer under-estimated 2014 household income when applying for exchange coverage and the subsidy in late 2013 or early 2014  (e.g., if the taxpayer got a raise or new job in 2014).  Such taxpayers will owe money on their 2014 tax returns and could be subject to a penalty for underpayment of taxes, but Notice 2015-9 will relieve the taxpayer of this underpayment penalty and allow taxpayers to pay  additional taxes due under an installment plan.  Interest will accrue on unpaid amounts.

IRS Notice 2015-9


HDHPs must Pay Once Individual Annual Cost-Sharing Cap is Met:  HHS FAQ

The preamble to the final regulations HHS issued last month on benefits and payment parameters changed the prior interpretation of how individual and family maximum cost-sharing limits apply.  It provided that the cost-sharing limit for self-only coverage should apply to all covered individuals, whether they have self-only or family coverage. On March 10th HHS posted an FAQ explaining how the annual cost-sharing limit under health care reform will affect high-deductible health plan (HDHP) coverage.  It provides an example of a HDHP with a family deductible of $10,000.  Such plan would have to start covering the eligible expenses of any individual family member whose expenses exceeded the self-only annual cost-sharing limit (which is of $6,600 for 2015), even though the plan has a higher family deductible. This policy will apply as of the 2016 plan year (when the self-only annual limit will increase to $6,850).



IRS Issues New 2014 Tax Publications 502 and 503

The IRS has released the latest versions of Publications 502 (Medical and Dental Expenses) and 503 (Child and Dependent Care Expenses).  These are used by individual taxpayers in preparing 2014 tax returns and by employers who sponsor health FSAs and Dependent care FSAs.

Publication 502

Publication 503


How to Implement Retroactive Increase in Qualified Transit Benefits

The monthly limit for transit pass and vanpooling benefits under qualified transportation plans was $130/ month in 2014.  The Tax Increase Prevention Act of 2014 (TIPA) increased the monthly limit to $250 and applied it retroactively to 2014 as well as to 2015. Some employers who provided transit benefits in 2014 treated amounts over $130/month as taxable compensation for purposes of employment and income tax withholding and reporting.  In Notice 2015-2 (issued January 8, 2015), the IRS explains how such employers can correct the FICA tax overpayments and report the correct amounts of income and tax on Forms 941 and W-2. The corrections generally were required by February 2, the date the Forms W-2 were due to employees.

Available Here



New FAQ Clarifies that “Excepted Benefits” Include Non-EHB Coverage

Excepted benefits are exempt from certain federal mandates, such as ACA insurance market reforms, the PCORI fee, and HIPAA portability requirements.  Examples of excepted benefits include stand-alone dental and vision coverage, certain supplemental coverage, and hospital indemnity insurance.  Over the past few years, the DOL, IRS, and HHS have issued various guidance on different categories of excepted benefits, and on February 13, 2015, they jointly issued an FAQ clarifying the circumstances in which certain supplemental group (or individual) health insurance coverage that does not include coverage of any essential health benefits (EHB) may qualify as excepted benefits.

FAQs About Affordable Care Act Implementation Part XXIII (Feb. 13, 2015)

DOL website

HHS website


Proposed Regs Allow Limited Wraparound Coverage to be Excepted Benefit

On December 23, 2014, the DOL, IRS, and HHS jointly issued proposed regulations that would allow an employer to offer limited health coverage designed to wrap around individual health insurance coverage and still qualify as an excepted benefit.

Amendments to Excepted Benefits, 26 CFR Part 54, 29 CFR Part 2590, 45 CFR Part 146, 79 Fed. Reg. 76931 (Dec. 23, 2014)



$150,000 Settlement with HHS for Potential HIPAA Security Violation

HIPAA compliance requires that covered entities (CEs) not only adopt security policies and procedures and complete a risk assessment, but also monitor ongoing compliance and update electronic security software and systems.  In December 2014, HHS reached a settlement agreement with a health care provider (a CE) under which the CE was required to pay $150,000 and to implement a corrective action plan (CAP) to settle potential HIPAA security violations that resulted after malware compromised the security of electronic PHI (ePHI) affecting over 2,700 individuals. The CE adopted sample (“off-the-shelf”) security policies and procedures in 2005 but did not follow them nor regularly update the electronic network with available patches, and ran outdated, unsupported software

Resolution AgreementAnchorage Community Mental Health Services, Inc. (Dec. 2, 2014)



FMLA Final Rule:  “Place of Celebration” Rules Applies to Define “Spouse”

The DOL issued a final rule revising the definition of “spouse” for purposes of the FMLA. The final rule—which is effective March 27, 2015—defines “spouse” based on the marriage’s “place of celebration” (where the marriage occurred) rather than the employee’s “state of residence.” Under the place of celebration rule, a marriage that was valid in the state where the marriage occurred will be recognized as valid by other states, even if such a marriage would not be valid in the state in which the employee resides.   Employers should review their FMLA policies to make sure they have updated their definition of “spouse” before the March 27th deadline.

Final RuleDefinition of Spouse under the FMLA, 29 CFR Part 825, 80 Fed. Reg. 9989 (Feb. 25, 2015)


Fact Sheet: Final Rule to Amend the Definition of Spouse in the Family and Medical Leave Act Regulations (Feb. 2015)

Press Release

DOL Blog Post
FMLA Final Rule Defines Spouse According to “Place of Celebration” Rule


CMS Policy on Recognition of Same-Sex Marriage for Medicare Purposes

CMS has issued its policy recognizing same-sex marriage for purposes of entitlement, eligibility, and enrollment for Medicare age-based and end-stage renal disease (ESRD) benefits.  The Supreme Court’s Windsor decision requires the federal government to recognize same-sex marriage, which includes recognition for purposes of Medicare benefits. The CMS ruling is generally effective on February 9, 2015.

Announcement of CMS Ruling: Implementing United States v. Windsor for Purposes of Entitlement and Enrollment in Medicare Hospital Insurance and Supplementary Medical Insurance, 80 Fed. Reg. 7975 (Feb. 13, 2015)


US Supreme Court to Rule on State Laws Prohibiting Same-Sex Marriage

The U.S. Supreme Court recently agreed to review consolidated cases from the Sixth Circuit upholding state same-sex marriage bans.  This is a change from its position in October, when the Supreme Court declined to hear a set of same-sex marriage cases.  The Court will address the constitutionality of state laws prohibiting same-sex marriage.

The cases are DeBoer v. Snyder, 2015 WL 213650 (U.S. 2015); Tanco v. Haslam, 2015 WL 213648 (U.S. 2015); Obergefell v. Hodges, 2015 WL 213646 (U.S. 2015); Bourke v. Beshear, 2015 WL 213651 (U.S. 2015)