August 4, 2017
When John McCain cast his no vote on the latest health care bill another Republican plan to repeal and replace the Affordable Care Act (ACA) was essentially defeated. This has been a recurring theme for all of the bills that have been stuck in Congress over the last five months. All the bills debated and voted upon by both the House and Senate have cast a cloud of confusion over what an employer must do to comply with the ACA. The purpose of this article is to provide an overview of what the current law requires for the 2017 reporting season and things to keep in mind for the 2018 open enrollment period.
First, none of the bills voted upon by the House or the Senate became law. Therefore, the reporting requirements for the 2017 tax year will be similar to the reporting requirements applicable large employers (ALEs) had with respect to the 2015 and 2016 tax years. All ALEs will be responsible for furnishing a Form 1095-C to each full-time employee and reporting the Forms 1094-C and 1095-C to the IRS. ALEs will be responsible for furnishing a Form 1095-C to any employee who was full-time for one or more months in 2017 by January 31, 2018. ALEs will be responsible for reporting the Forms 1094-C and 1095-C to the IRS by April 2, 2018 assuming the forms are filed electronically.
Remember an employer can be penalized $260 per return for failing to file a correct information return (the Forms 1094-C and 1095-C filed with the IRS). Similarly, an employer can be penalized $260 per statement for failing to provide a correct payee statement (the Form 1095-C that must be furnished to employees by January 31, 2018).
We anticipate the draft instructions for the Forms 1094-C and 1095-C to be released any day but there is unlikely to be any substantive changes to the Forms in 2017. It is important to note that each of the bills debated and discussed by the House and Senate would have required employer reporting for at least the next three years if not longer.
Unlike reporting, each bill debated and voted on by the House and Senate repealed the employer mandate retroactively to 2016. However, none of the bills have become law to date so the employer mandate remains in place. An employer must offer minimum value coverage at an “affordable” price or be at risk of being assessed a section 4980H penalty.
Employers must be careful when setting the price of their health plans in 2018 as the affordability threshold has decreased compared to 2017. In 2018 an employer’s offer of health coverage will be deemed affordable if the employee’s contribution level for self-only coverage does not exceed 9.56 percent of the employee’s household income. In 2017 coverage was deemed affordable if the employee’s contribution level for self-only coverage did not exceed 9.69 percent of the employee’s household income. The lower threshold percentage in 2018 compared to 2017 may require certain employers who were near the 2017 threshold to make coverage cheaper in 2018 compared to 2017.
If you have any questions regarding the upcoming reporting season or the potential penalties, please contact us.
About the author – Ryan Moulder serves as General Counsel at Accord Systems, LLC and is a Partner at Health Care Attorney's P.C. Ryan received his LL.M. from Georgetown University Law Center and his J.D. from Saint Louis University School of Law. He has distinguished himself as a leader in the Affordable Care Act arena and has written and spoken on a variety of ACA topics as it relates to compliance for companies.
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