Cadillac Tax and Health Insurance Tax Pushed Back
Late Monday evening, Jan. 22, Pres. Trump signed H.R.195 into law to end the government shutdown and fund the government through Feb. 8, 2018. The bill passed the House with a 266-159 vote and the Senate with an 81-18 vote.
Importantly, for employers and group health plans, the bill includes provisions to delay certain tax provisions within the ACA. Specifically, the bill includes a further delay in the implementation of the excise tax on high-cost employer-sponsored health coverage (the Cadillac tax), which is now set to take effect in 2022 (this was previously delayed until 2020). In addition, the bill includes a suspension of the annual Health Insurance Provider Fee (also known as the health insurance tax, or HIT) for 2019. The HIT was in moratorium in 2017. Therefore, the HIT is effective in 2018, on moratorium in 2019, and will be in effect again for 2020 and beyond. Finally, while less of a direct impact on employers, the bill includes a moratorium on the medical device excise tax, which is now set to apply for sales after Dec. 31, 2019.
The delay of the Cadillac tax and HIT is welcome relief for employers as they consider the impact both might eventually have on their plans. In addition to the delay, there appears to be bipartisan support for eventual repeal of the Cadillac tax. Regardless, employers should consult with counsel to consider whether plan amendments are necessary considering these recent changes.
Reminder: Form W-2 Cost of Coverage Reporting
Under the ACA, large employers must report the cost of group health coverage provided to employees on the Form W-2. The requirement applies to employers that filed 250 or more Forms W-2 for 2016. Employer aggregation rules do not apply for this purpose. In other words, the number of Forms W-2 is calculated separately without consideration of controlled groups. Indian tribes, self-funded church plans and employers contributing to a multiemployer plan are exempt from the Form W-2 reporting requirement.Cost of Coverage (W-2) Reports reflecting 2017 PPI-billed MEDICAL coverage costs are now available to fully-insured clients with online billing. Annual billed amounts for other coverages are not available. To access your report, log into ppibenefits.com. Click to Download Instructions
Reminder: Upcoming IRC 6055 and 6056 Reporting Deadlines
Applicable large employers (ALEs - those with 50 or more full-time employees including equivalents, or FTEs) in 2016 must comply with IRC Section 6056 reporting in early 2018. Specifically, ALEs must complete and distribute a Form 1095-C to full-time employees by March 2, 2018 (the IRS changed this from Jan. 31, 2018). The form should detail whether the employee was offered minimum value, affordable coverage during 2017. 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 2017, it must comply with Section 6055 reporting in 2018. 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, 2018.
Employers must also file the forms with the IRS by Feb. 28, 2018, if filing by paper, and April 2, 2018, if filing electronically. Those that are filing 250 or more forms are required to file electronically. Lastly, the employer is required to a file the transmittal Form 1094-C (if filing Forms 1095-C) or Form 1094-B (if filing Forms 1095-B).
If an employer has been a small employer but has recently increased the number of employees, when will the employer become subject to the employer mandate and Section 6056 reporting?
This material was created by PPI Benefit Solutions to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The service of an appropriate professional should be sought regarding your individual situation. PPI does not offer tax or legal advice. "PPI®" is a service mark of Professional Pensions, Inc., a subsidiary of NFP Corp. (NFP). All rights reserved.