USA: Alliant’s Employee Benefit Compliance Fast Facts & FAQ – September 9, 2016

September 9, 2016:

Asinta’s partner in the United States, Alliant, has provided us with the following compliance information:

DOL Audit Guide

The DOL Audit Guide is available on the portal! The Employer’s Guide to a DOL Audit is a tool our account teams can use to help the client be prepared for a possible DOL audit. The guide contains information around the audit process packaged together with existing Alliant tools, the Compliance Checklist and the Healthcare Reform Review tool. If a client wishes to complete the audit toolkit, the Checklist and Reform Review both need to be completed for the client. To review the guide, check it out here.

New Alliant Insights!

The Compliance Team has been hard at work creating new content. These reference pieces were developed in connection with our Pay or Play Penalty Risk Assessment tool (which is currently in beta testing), but are currently available on the portal:

Pay or Play Compliance for Employers with Federal Contract Workers
Pay or Play and Special Employee Classification
ACA Full-time Status Determination Methods

Take a spin around the Alliant Insights home page for a host of in-depth content on many important topics, including 105(h) nondiscrimination rules, comparability rules for HSAs, and flex credit and cash in lieu arrangements, among many others.

More on Cash in Lieu Designs

As many of you know, a cash-in-lieu is essentially a payment that an employer makes to an employee in exchange for opting out of coverage. They’re usually fairly nominal amounts, such as $50 per month. Until recently, employers were required to include these cash out payments as part of the cost of coverage. The latest guidance provides that an employer IS NOT required to include the cash out amount in the cost of coverage IF the employer requires proof that the employee and the employee’s tax dependents provide proof of other non-individual market coverage. (See our Alliant Insight on this topic, link above.) Reasonable minds agree that non-individual market coverage includes Medicare, Tricare, and Medicaid coverage, but the proposed regulations do not specifically provide this is the case. An industry group of which the Compliance Department is a part recently asked IRS to issue guidance specifically providing that Medicare, Tricare, and Medicaid count as non-individual market coverage for purposes of this rule. We will keep you apprised of any developments on this front.

FAQ on Corrected Forms

Q. What should we do if we get a notice from the IRS that our filing has an error?
A. Error notices are often generated by submission of a Form 1095-C with an incorrect taxpayer identification number (TIN) or an incorrect/misspelled name. The error notice will indicate that the individual’s name and/or TIN does not match the IRS database. These can be very minor variations – such as an accent mark over a letter that appears in the IRS filing but not in the existing IRS records. Employers will need to at a minimum verify and correct the name and TIN for each individual identified on the Form 1095-C. For record mismatches the employer should reach out to the employee. If the employer receives the correct TIN number or finds an error in the name/spelling they should file an updated or corrected form with IRS.
Note: If you’re working with a reporting vendor, we recommend engaging your vendor for support with filing and distributing corrected forms. For employers who are doing the reporting on their own, please view the IRS instructions here, starting on page 4 and Publication 5165 (relating to electronic returns) here.

Q. If there is an error on Form 1095, do we also have to submit another 1094?
A. Generally yes. If corrections are being made to just the 1094, the employer can submit that on its own, but if it’s for 1095s, then both the 1094 and 1095 need to be submitted with corrections (since the 1094 reflects aggregate employer data). This is done in stages, with the 1094 being submitted first by itself (no Forms 1095 attached). Then a separate Form 1094 is submitted along with the 1095s.

Q. What is the deadline for when corrections have to be done?
A. There does not appear to be a definitive deadline for submitting corrections, though employers will generally want to make corrections as soon as possible to minimize penalties.

Q. What are the penalties for filing/distributing incorrect forms?
A. Penalty information is provided below (note the penalty reduction deadlines for 2016 only).
The penalty amount is $250 for each return to which a failure relates, capped at $3 million per calendar year. These amounts are reduced if failures are corrected by the following dates:
• 30-Day Rule. If a failure is corrected within 30 days after the required filing date (or the deadline for furnishing individual statements), the per-return penalty is reduced from $250 to $50 per return, and the calendar-year cap is reduced to $500,000.

• August 1 Rule. If a failure is corrected after the 30-day rule described above but on or before August 1, the per-return penalty is reduced to $100 per return, and the calendar-year cap is reduced to $1.5 million.

Penalty Reduction Deadlines Extended for 2016. The IRS extended the filing deadlines for the 2015 tax year. The IRS adopted corresponding extensions to the deadlines for penalty reduction. The deadlines for 2016 are—
• 30-Day Rule. For paper returns, penalty reduction is available for corrected returns filed with the IRS by June 30, 2016. For electronic returns, penalty reduction is available for corrected returns filed with the IRS by July 30, 2016.

• August 1 Rule. For both paper and electronic returns, penalty reduction is available for corrected returns filed with the IRS by November 1, 2016.

Thanks again to Alliant for providing their Asinta Partners with this compliance content!

Do you have questions regarding employee benefits or compliance in the United States? By using Alliant’s contact form, your questions will get forwarded to our Partner in the United States, Sean Leary.