ARTICLES
REVIEW OF THE REPORTING REQUIREMENTS UNDER CODE SECTIONS 6055 AND 6056
September 17, 2014
Introduction
The Affordable Care Act (“ACA”) created new reporting requirements under Internal Revenue Code (“Code”) Sections 6055 and 6056. Under these new reporting rules, certain employers must provide information to the IRS about the medical plan coverage they offer (or do not offer) to their employees.
Code Section 6055 requires insurers, insurance issuers, self-insured health plan sponsors, government agencies that administer government-sponsored health insurance programs and any other entity that provides minimum essential coverage (“MEC”) to report information on that coverage to the Internal Revenue Service (“IRS”) and covered individuals.
Code Section 6056 requires applicable large employers (“ALEs”) subject to the employer shared responsibility rules to report information on the health coverage offered to full-time employees to the IRS and covered individuals.
The additional reporting is intended to promote transparency with respect to health plan coverage and costs. It will also provide the government with information to administer other ACA mandates, such as the large employer shared responsibility penalty and the individual mandate.
On March 5, 2014, the IRS released two final regulations on the ACA’s health coverage reporting requirements.
On July 24, 2014, the IRS released draft forms relating to the information reporting requirements under Code Sections 6055 and 6056.
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AN EMPLOYER’S GUIDE TO HEALTH SAVINGS ACCOUNTS (HSAs)
May 9, 2014
Introduction to the Guide
The following provides you, as an employer, with information about Health Savings Accounts (“HSAs”) under Internal Revenue Code (“Code”) Section 223. You should read this explanation to evaluate whether HSAs may be used either as an alternative to, or in addition to, health flexible spending accounts (“Health FSAs”) under Code Section 125 or Health Reimbursement Arrangements (“HRAs”) under Code Section 105(h).
To fully understand the requirements of these accounts, the following discusses their terms and compares their advantages and disadvantages over Health FSAs and HRAs in a question and answer format. In addition, a chart comparing both Health FSAs and HRAs with HSAs is included at the end of this explanation.
It is important to remember that this explanation is not intended to serve as a substitute for the advice of your lawyer, accountant, or other personal tax or financial advisor.
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Employer Mandate Explanation
February 20, 2014
On February 10, 2014, the Department of the Treasury and the Internal Revenue Service (the “IRS”) released final regulations under Code Section 4980H (54.4980H-1, 2, 3, 4, 5 and 6) relating to the employer shared responsibility provisions (the “Employer Mandate”) under Health Care Reform. These regulations follow prior guidance, make important changes, provide clarifications and include important new transition relief. The following has been written to include these new important provisions.
In general:
In Notice 2013-45, the IRS delayed the requirement that, certain large employers may be subject to a penalty tax for failing to offer health care coverage for all full-time employees (and their dependents), offering minimum essential coverage that is unaffordable, or offering minimum essential coverage under which the plan’s share of the total allowed cost of benefits is not at least 60% (referred to as “minimum value”) until 2015. The penalty tax is due if any full-time employee is certified to the employer as having purchased health insurance through an Exchange with respect to which a tax credit or cost-sharing reduction is allowed or paid to the employee, as provided in Code Section 4980H. In this notice, the IRS gave no indication of how the rules would apply for 2015. In these new final regulations, the IRS and Treasury provide such guidance.
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EXPLANATION OF HOW TO COMPLETE PART I OF FORM 8889 FOR 2013
January 31, 2014
Every year, I receive a number of questions regarding how to complete Part I of Form 8889. The reason for this is that the instructions provided by the Internal Revenue Service for completing Form 8889 are very complex and unclear. To assist, the following explanation shows how to complete Form 8889 in 25 different situations for 2013.
This explanation is for example purposes only. Individuals should be advised to seek professional tax assistance in the completion of Form 8889 or any other tax return.
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AN EMPLOYER’S GUIDE TO HEALTH SAVINGS ACCOUNTS (HSAs)
May 13, 2013
The following provides you, as an employer, with information about Health Savings
Accounts (“HSAs”) under Internal Revenue Code (“Code”) Section 223. You should
read this explanation to evaluate whether HSAs may be used either as an alternative to,
or in addition to, health flexible spending accounts (“Health FSAs”) under Code Section
125 or Health Reimbursement Arrangements (“HRAs”) under Code Section 105(h).