COVID-19 State Quick Reference Chart,Updated 1/22/21
IRS Issues Information Letter Regarding DCAP COVID-19 Relief
On December 31, 2020, the IRS released Letter Number 2020-0027 that addressed a question concerning whether a person with unused funds in a DCAP can have those funds reimbursed to him because his child did not attend summer camp due to COVID-19 and he did not anticipate any further childcare expenditures for the rest of the year.
The IRS stated that, although 2020 COVID-19 relief did give plans flexibility in allowing mid-year changes in DCAP elections, it did not override the requirement that DCAP funds cannot be returned except to reimburse the participant for employment-related childcare expenses.
Information letters are not legal advice and cannot be relied upon for guidance. Taxpayers needing binding legal advice from the IRS must request a private letter ruling. While the letter does not provide any new guidance, this letter does provide general information that may be helpful to employers with questions on this topic.Letter Number 2020-0027
Reminder: Medicare Part D Disclosure to CMS
As a reminder, employers who sponsor a group health plan that provides prescription drug coverage to Medicare Part D eligible individuals must disclose to CMS, on an annual basis, whether the coverage qualifies as creditable or non-creditable. The disclosure is due no later than 60 days after the beginning of each plan year. Thus, for calendar year plans, the disclosure is due March 1, 2021.
Reminder: Upcoming IRC 6055 and 6056 Reporting Deadlines
Employers that were ALEs in 2020 must comply with IRC Section 6056 reporting in early 2021. Specifically, ALEs must complete and distribute a Form 1095-C to full-time employees by March 2, 2021 (the IRS changed this from January 31, 2021). The form should detail whether the employee was offered minimum value, affordable coverage during 2020. The forms may be mailed, electronically delivered, or delivered by hand (although proof of delivery in some manner is recommended).
If an employer sponsored a self-insured plan during 2020, it must comply with Section 6055 reporting in 2021. Self-insured employers with 50 or more FTEs must complete Section III of Form 1095-C detailing which months the employee (and any applicable spouse and dependents) had coverage under the employer’s plan. If the self-insured employer has fewer than 50 FTEs, it must complete and distribute a Form 1095-B with such information. Again, the forms must be delivered to employees by March 2, 2021.
Employers must also file the forms with the IRS by March 1, 2021 (as February 28, 2021 falls on a Sunday), if filing by paper, and March 31, 2021, if filing electronically. Those that are filing 250 or more forms are required to file electronically. Lastly, the employer is required to file the transmittal Form 1094-C (if filing Forms 1095-C) or Form 1094-B (if filing Forms 1095-B).
As a reminder, the IRS recently provided penalty relief for employers which will allow them to forego distributing the Form 1095-B to individuals. This comes after the IRS accepted comments on the necessity of the Forms 1095-B now that the individual mandate penalty has been zeroed out. If employers post a notice on their website that the document is available upon request, and fulfil any such request within 30 days, then they will not have to distribute the Forms 1095-B to covered individuals. But keep in mind that there is no such penalty relief for Form 1095-C.
FAQ: Can employers provide employees an incentive, such as a gift card or other cash payment, to receive the COVID-19 vaccine?
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