We know that we have been flooding you with a lot of information the past couple of weeks so we limited this edition of the newsletter to only four topics and two pages.
PCORI Fee and Form 5500 Deadline Fast Approaching
Employers sponsoring self-funded health plans (including HRAs) have to report and pay the PCORI fee by the end of this month regardless of the plan year or policy renewal date.
The 2014 Form 5500 is due the end of this month for plans maintained on a calendar year basis. The forms are due if there were at least 100 participants (i.e. employees) on the plan as of the first day of the plan year. You look at all lines of coverage to determine the count. So, for example, there could be 85 employees receiving medical benefits but 115 employees on the company-paid life insurance. In this case, you would need to file the forms. Also, different rules apply if the plan is maintained in conjunction with a trust.
Again, the Form 5500 is due seven months after the close of the plan year. As a result, the forms are due the end of this month if the plan is maintained on a calendar year basis. If the forms are due the end of this month but you are unable to file the forms on time, you can request a 2½-month extension by filing IRS Form 5558. However, this form has to be filed prior to the end of this month. Failure to file the forms on time can result in penalties of up to $300 per day up to $30,000 per year.
US Supreme Court Ruling on Same-Sex Marriages
By now everyone is aware of the US Supreme Court ruling that state and local governments have to recognize same-sex marriages. However, there is some confusion as to whether employers have to offer health benefits to same-sex spouses. The answer is No/Maybe. Technically speaking, the court case said state and local governments have to recognize same-sex spouses. The ruling did not mandate private employers recognize same sex spouses. HOWEVER, the analysis does not end there!!
In the context of a fully insured health plan, there may be a state law that requires the carriers to offer coverage to same-sex spouses. If the private employer is sponsoring a self-funded health plan, then those state laws would be preempted by ERISA. Nevertheless, the certificate or booklet for the self-funded health plan may define “spouse” as someone legally married to the employee. Since same-sex spouses are now mandated under all state laws, this type of definition would automatically include same-sex spouses.
Finally, there are other Federal and state statutes that may require same-sex spouses to be treated the same as opposite sex spouses. For example, the EEOC has indicated that treating same-sex spouses differently than opposite-sex spouses may be discretionary under Title VII of the Civil Rights Act.
Unfortunately but not surprisingly, there are no easy answers with respect to the employer’s obligation or desire to offer health coverage to same-sex spouses. Therefore, the employer cannot automatically assume it can or cannot offer health coverage to same-sex spouses. Although the recent US Supreme Court certainly addressed some of the issues, this area continues to involve.
Deadline Posted for Small Employers Paying Premiums for Individual Health Policies
We have reported several times the government does not allow employers to pay the premiums for the employees’ individual health policies. The government gave small employers until the end of last month (i.e. June 30, 2015) to stop the practice.
The penalty for violating the rule is $100 per day or $36,500 per year for each violation. The violation is supposed to be self-reported and paid on IRS Form 8928.
Trade Legislation Reinstates Tax Credit But Increases Some Penalties
President Obama signed new trade legislation that contained a variety of provisions, two of which impact the benefits arena. First, the law reinstated the health coverage tax credit. Second, the legislation also increased the penalty for not properly completing the new IRS Forms 1094 and 1095.
Although the potential penalties for failing to comply with the health care reform reporting requirements have been increased, the IRS indicated no penalties will be assessed for the 2015 forms as long as the employer makes a good-faith attempt to comply.
See Q&A 3 for the relief from penalties as long as the employer makes a good-faith attempt to comply. This is not an automatic “get out of jail pass,” and the employer will have to demonstrate that it really did try to comply.s