September 17, 2015
- Bipartisan Legislation to Repeal 40 Percent ‘Cadillac’ Tax Introduced in Senate
- IRS Issues Guidance on ACA Reporting, Finalizes 2015 Reporting Forms, Instructions
Bipartisan Legislation to Repeal 40 Percent ‘Cadillac’ Tax Introduced in Senate
A bill to repeal the 40 percent excise tax on “high-cost” plans, enacted as part of the Affordable Care Act (ACA), was introduced by Senator Dean Heller (R-NV) on September 17. Among the original cosponsors of the Middle Class Health Benefits Tax Repeal Act is Sen. Martin Heinrich (D-NM), making the effort bipartisan, matching a parallel effort in the U.S. House of Representatives.
“The American Benefits Council enthusiastically applauds Senator Dean Heller (R-NV) for his leadership in sponsoring” the repeal measure, Council President James A. Klein said in a statement to the media. “We also commend Senator Martin Heinrich (D-NM) and the several other Senate cosponsors who support this bipartisan effort to protect employer-sponsored health coverage.”
As we have previously reported, Representative Joe Courtney (D-CT) has also introduced a Middle Class Health Benefits Tax Repeal Act (H.R. 2050), which now includes 145 cosponsors (including 14 Republicans). Courtney appeared at a media event on September 17 to unveil the Senate companion bill. Rep. Frank Guinta (R-NH) has introduced a similar measure, the Ax the Tax on Middle Class Americans' Health Plans Act (H.R. 879), which now features 91 Republican cosponsors. Together, a majority of members in the House of Representatives have co-sponsored one or both House bills.
While all three bills fully repeal the 40 percent tax, the Heller bill and the Courtney bill retain the requirement that employers must report the cost of employer-provided health coverage on the employee’s form W-2. Heller’s bill is patterned on Courtney’s H.R. 2050, with some slight differences pertaining to the W-2 reporting requirement.
Heller’s bill also specifically mentions Health Flexible Spending Accounts (FSAs) and Archer Medical Savings Accounts (MSAs) and Health Savings Accounts (HSAs) in its reference to employer-sponsored coverage, while Courtney’s bill does not. Conversely, Courtney’s bill specifies self-employed individual coverage as “applicable employer-sponsored coverage,” while Heller’s does not.
The Council – as part of its own advocacy strategy and as the organizer of the broad-based Alliance to Fight the 40 coalition– will continue to support repeal measures in the House and Senate, urging more Senate Democrats in particular to sign on to Heller’s bill.
IRS Issues Guidance on ACA Reporting, Finalizes 2015 Reporting Forms, Instructions
On September 17, the Internal Revenue Service (IRS) issued Notice 2015-68, providing guidance on the minimum essential coverage (MEC) reporting requirements under Internal Revenue Code Section 6055, as added by the Affordable Care Act (ACA).
In conjunction with the Notice, the IRS has also released final versions of 2015 Forms 1094-B, 1094-C, 1095-B and 1095-C, as well as instructions for completing the forms (Instructions for Forms 1094-B and 1095-B | Instructions for Forms 1094-C and 1095-C). These forms will be used to fulfill the requirements specified in final regulations implementing the reporting of MEC under Code Section 6055 and the reporting of health insurance coverage under Code Section 6056. These reporting requirements are first effective for 2015, with initial reporting to occur in early 2016.
Specifically, Notice 2015-68 states that the IRS will soon issue proposed regulations that will:
- require health insurance issuers to report, on Form 1095-B, coverage in catastrophic health insurance plans (as described in ACA Section 1302(e)) when enrolled in through an exchange. This requirement would not be effective until 2017 (for coverage provided in 2016).
- permit electronic delivery of statements reporting coverage under expatriate health plans unless the recipient explicitly refuses consent or requests a paper statement.
- allow filers reporting on insured group health plans to use a truncated taxpayer identification number (TTIN) to identify the employer on the statement furnished to a taxpayer.
- specify when a provider of minimum essential coverage is not required to report coverage of an individual who has other minimum essential coverage. Specifically, Notice 2015-68 suggests that if an employee is enrolled in both his or her employer’s HRA and insured group health plan, the employer would not be required to perform minimum essential coverage reporting with regard to the HRA. This is welcome guidance in light of language in the draft Instructions for Forms 1094-B and 1095-B which suggested that employers might have to independently report coverage under the HRA, notwithstanding that the insurer would be also performing reporting with regard to the major medical coverage.
Notice 2015-68 also invites comments on issues relating to solicitation of taxpayer identification numbers (TINs) of covered individuals. It suggests that, pending additional guidance, reporting entities will not be subject to penalties for failure to report a TIN if (1) the initial solicitation is made at an individual’s first enrollment, or if already enrolled as of September 17, 2015, then the next open season; (2) the second solicitation is made at a reasonable time thereafter, and (3) the third solicitation is made by December 31 of the year following the initial solicitation. It also provides that there is no obligation to solicit a TIN from an individual whose coverage is terminated.
Comments on Notice 2015-68 may be submitted in writing on or before November 16, 2015.
- Form 1095-C: Employer-Provided Health Insurance Offer and Coverage is to be used to fulfill the requirement under Code Section 6055 that every applicable large employer (generally, an employer that employed on average at least 50 full-time employees or equivalents) file a return with the IRS that reports the terms and conditions of the health care coverage provided to the employer's full-time employees during the year.
- Form 1094-C: Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns is to be used for transmitting Form 1095-C.
- Form 1095-B: Health Coverage is used to fulfill the requirement under Code Section 6056 that every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs and other entities that provide minimum essential coverage to file annual returns reporting certain information for each individual for whom minimum essential coverage is provided and to provide a copy of the return to the individual.
- Form 1094-B: Transmittal of Health Coverage Information Returns is to be used to transmit Form 1095-B. However, employers (including government employers) subject to the employer shared responsibility provisions sponsoring self-insured group health plans generally will report information about the coverage in Part III of Form 1095-C instead of on Form 1095-B.
The revised forms and instructions reflect the following changes:
- Consistent with Notice 2015-68, an employer with a self-insured major medical plan and an HRA is required to report the coverage of an individual enrolled in both types of MEC under only one of the arrangements. An employer with an insured major medical plan and an integrated HRA is not required to report the HRA coverage if the individual is eligible for the HRA because the individual is enrolled in the insured major medical plan.
- When a former employee terminates employment, an offer of COBRA coverage should not be reported as an offer of coverage in all circumstances. This is a change from prior IRS guidance that suggested that an offer of COBRA coverage should be reported as an offer of coverage if the employee actually enrolled in COBRA.
- There is modified guidance for the Form 1095-C relating to when an employer should use the code specific tocertain relief relating to its participation in multiemployer plans under the employer shared responsibility rules.
- Employers must report their total employee count for each month on the Form 1094-C based on a consistent “snapshot” methodology. The methodology has been revised to allow employers to base their employee count on the number of employees as of the 12th day of each month.
- Entities can now truncate the EIN of an employer reported on Form 1095-B when furnishing the forms to recipients (but not on the Form 1095-B filed with the IRS). This is also consistent with Notice 2015-68.
- When an employer is determining if it is subject to the employer shared responsibility rules, it should disregard an employee for any month in which the employee is covered under TRICARE or Veterans Administration coverage, consistent with The Surface Transportation and Veterans Health Care Choice Improvement Act (STVHCC) of 2015.