By April Goff & Norbert F. Kugele | Warner Norcross & Judd LLP
Employer-sponsored group plans have a lot on their plate this time of year. Open enrollment is just around the corner and human resource departments are swamped with deadlines. As a plan sponsor, you’ll want to focus on these 12 action items before year-end.
Author’s note: The following items will probably not pertain to most members of the Small Business Association of Michigan.
- ACA reporting (though it really depends on total number of full-time equivalent employees, and not just those covered by the medical plan);
- Form 5500/SAR reporting (unless the employers has over 100 participants enrolled in a plan as of the Plan Year Day 1 – for example, a company with over 100 employees that provides life insurance to everyone); and
- 990/8868 requirements, as an employer of this size is very unlikely to have a VEBA
1. Start Now: ACA Employer Responsibility Information Reporting
The first Health Care Reform employer responsibility information returns are not due to individuals until January 31, 2016, and to the IRS by February 28 (March 31 if filed electronically), but, employers must track and collect 2014 and 2015 data that will be used for those submissions. To assist, the IRS issued final forms and instructions on September 16, 2015.
Many employers are choosing to partner with outside vendors to track and/or report the data for the required filings and are establishing a formal relationship through contracts that clearly specify responsibilities for data tracking, reporting, form distribution and printing and mailing costs. It’s a great idea to conduct a trial run of partial or mock data ahead of the deadline to ensure your data is accurate and your process is working.
Employers are required to include the social security numbers of employees, spouses and covered dependents. Social security numbers are preferred, but if a social security number is not available, you may use an employee’s date of birth instead.
Earlier this year, Congress increased the penalties for failing to comply with these new reporting requirements. Failing to furnish the required form on time can result in penalties up to $250 per failure (previously $100), subject to a calendar year maximum of $3,000,000 (previously ($1,500,000). The IRS will not impose penalties for incorrect or incomplete information if the filer can demonstrate good faith in attempting to comply with the requirements. This relief is not available, however, for entities which fail to file or furnish required returns on time.
2. October 15, 2015: Medicare Notice of Credible Coverage
Employers who sponsor a health plan that offers prescription drug benefits must provide an annual notice to all Medicare-eligible participants before October 15, 2015. The notice must explain whether the prescription drug benefits offered under the plan are at least as good as the benefits offered under the Medicare Part D plan. The only employers exempt from this requirement are those that establish their own Part D plan or contract with a Part D plan.
3. October 15, 2015: Form 5500
Employer-sponsored group health plans, which operate on a calendar year and filed an IRS Form 5558 (Application for Extension of Time to File Certain Employee Plan Returns), must file the completed Form 5500 and associated schedules by October 15, 2015.
4. November 15, 2015: Transitional Reinsurance Enrollment
The deadline for submitting enrollment numbers for the calculation of the transitional reinsurance fee is November 15, 2015.
5. November 15, 2015: Transitional Reinsurance Second Installation Fee
Those who opted to pay the 2014 Transitional Reinsurance Fee in two installments must make the second installment of $10.50 per covered life by November 15, 2015. Employers may make this payment through the government’s secure online portal: pay.gov.
6. November 15, 2015: Form 990 and Form 8868
The deadline for exempt organizations (Voluntary Employee Beneficiary Associations or “VEBAs”) to submit the IRS Form 990, Return of Organization Exempt from Income Tax, is November 15, 2015. This deadline also applies to organizations following a calendar tax year and who previously filed IRS Form 8868, Application for an Extension of Time to File an Exempt Organization Return.
7. December 15, 2015: Summary Annual Report to Employees
Employers must provide employees with a copy of the plan’s Summary Annual Report by December 15, 2015.
8. December 31, 2015: Corrections to Cafeteria Plan Discrimination Failures
Cafeteria Plans, which failed nondiscrimination testing under Code Section 125, and Dependent Care Assistance Programs, which failed nondiscrimination testing under Code Section 129, have until December 31, 2015, to correct those errors.
9. End of Year: Wellness Program Review
In April 2015, following three high-profile lawsuits regarding employer-sponsored wellness programs, the EEOC issued proposed rules addressing financial rewards and penalties for those programs. Although these rules are not yet final, employers sponsoring wellness programs should evaluate their existing wellness program to ensure the highest return on investment.
10. End of Year: Cost-Sharing and High Deductible Review
In May 2015 the Departments of Labor, Treasury and Health and Human Services issued Frequently Asked Questions to address the maximum out-of-pocket maximum (“OOPM”) on cost sharing. For plans beginning in 2016, the maximum is $6,850 for “self-only” coverage and $13,700 for other coverage options. In a change from prior years, this “self-only” OOPM applies even if the individual is enrolled in family coverage. Further complicating issues, the High Deductible Health Plan (“HDHP”) out-of-pocket maximum for 2016 is $6,650 for self-only coverage and $13,100 for family coverage. Plan sponsors should carefully evaluate their out-of-pocket limits to ensure that plans comply with both Health Care Reform limits and, if the plan is intended to work with Health Savings Accounts, with HDHP limits.
11. End of Year: Compliance Review
Now that the Department of Labor has increased their audit activity for health and welfare plans, it’s becoming imperative to conduct annual reviews of plan documents and operational practices. Areas of common concern include: eligibility provisions (relating to employer responsibility rules), compliance with notice requirements and evaluation of preventive care coverage. Employers should also review their eligibility rules for same-sex spouses and determine if they are still taxing benefits provided to same-sex spouses (Michigan issued specific guidance requiring employers to adjust withholding on affected employees’ 2015 wages to correct for over-withholdings that occurred before the United States Supreme Court decision in Obergefell v. Hodges that was announced on June 26, 2015).
12. End of Year: Opt-out Payment Review
Recent guidance has been issued stating that “cash-in-lieu” or “opt-out” payments in a group health plan may have to be taken into account when calculating affordability under Health Care Reform. Employers should review the impact of this guidance on their existing opt-out payments and potential penalties.
At Warner Norcross & Judd, we help our clients stay informed on the latest Group Health Plan issues that can impact your organization and your employees. Contact April Goff at 616.752.2154 / agoff@wnj.com or Norbert Kugele at 616.752.2186 / nkugele@wnj.com for more information from our Employee Benefits/Executive Compensation Practice Group.