A number of employers and individuals are asking whether they still need to comply with the Patient Protection and Affordable Care Act (ACA)’s Employer and Individual Mandates and associated information reporting requirements.
The answer is YES – the ACA remains the law and both employers and individuals must comply or face potential penalties. The IRS’s Office of Chief Counsel recently released four information letters emphasizing the need for continued compliance with the Employer and Individual Mandates.
Employer Mandate Still Applies
IRS Letters 2017-0010 and 2017-0013 address questions about the employer requirements of the ACA. For large employers (averaging 50 or more full-time employees including equivalents during the previous calendar year), a penalty may apply for failure to offer adequate, affordable health coverage to 95% of full-time employees and their dependent children. The new IRS letters emphasize that there is no waiver of the ACA’s Employer Mandate for large employers, even if compliance causes financial or religious burdens. The letters state unequivocally that the President’s executive order directing federal agencies to minimize the law’s "unwarranted economic and regulatory burdens" did not change the law itself. The ACA remains in force unless changed by Congress.
Individual Mandate Still Applies
IRS Letters 2017-0011 and 2017-0017 address questions about the Individual Mandate requirements of the ACA. The letters explain that all individuals must either cover themselves and their dependents, qualify for an exemption, or face a penalty at tax time. Individuals who do not maintain minimum essential coverage and who do not qualify for a coverage exemption must make a shared responsibility payment when filing their federal income tax returns. Like the employer shared responsibility letters, the letters to individuals emphasize the point that the executive order directing the agencies to minimize the ACA’s burdens does not change the Individual Mandate. Individual taxpayers and their families are still required to follow the ACA.
IRS Form 1094 and 1095 Reporting Still Required
During an informal, nonbinding discussion in early August, IRS representatives indicated that there is not likely to be an extension of 2017 information reporting deadlines, nor is there likely to be a renewal of last year’s relaxed "good faith effort" enforcement of the information reporting rules. Because penalties of up to $260 per return may apply for late, inaccurate, or missing information, employers should take steps to ensure the accuracy of the data reported. ACA Information Reporting Deadlines Quickly Approaching
ACA information reporting deadlines are quickly approaching, and it can take considerable time and internal resources to gather the data and information needed to complete the Form 1095 employee statements and Form 1094 employer returns. This means that employers need to prepare now to file information returns on time – by mailing Form 1095 employee statements on or before January 31, 2018 and filing Form 1094, together with copies of all Forms 1095, by either February 28, 2018 (paper filings) or April 2, 2018 (electronic) – and should start work ASAP to gather the necessary data.
As always, American Fidelity is committed to providing our customers with up-to-date information on changes to the law. In the meantime, remember that the ACA is still the law. Employers should continue current compliance efforts while watching and waiting for new developments.
Need assistance planning for 2017 and beyond? Contact your American Fidelity representative or email HCR@americanfidelity.com.