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Takeaways

  • Employers may post a notice on their website instead of automatically furnishing Forms 1095-B and 1095-C to all full-time employees.  The first due date for such a notice is March 3 for 2024 forms, and the notice must remain accessible until October 15.

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The Employer Reporting Improvement Act and the Paperwork Burden Reduction Act (the Acts) introduced significant changes to the reporting and enforcement rules of the Affordable Care Act (ACA).  We discussed the Acts in an earlier blog.  Recently, the IRS issued Notice 2025-15, which provides the promised guidance for reporting entities on how to furnish Forms 1095-B and 1095-C.  Here is what plan sponsors need to know:

Alternative Method for Furnishing Forms

  • Rather than automatically sending out Forms 1095-B and 1095-C, sponsors may post a notice on their website indicating that such forms are available upon request.
  • Sponsors must ensure the notice is clear, conspicuous, and accessible to anyone entitled to such a form.
  • Forms must be provided within 30 days of any request or by January 31, whichever is earlier.
  • In order to ensure compliance with the new IRS guidance, we recommend posting the notice to the sponsor’s website, even if the notice is also provided via email or otherwise.

Additional Compliance Requirements

  • Notices must be posted by the due date for delivering the forms, including the automatic 30-day extension.
    • For example, for 2024 forms, sponsors must post the notice by March 3, 2025.
  • Entities must also adhere to any state requirements for furnishing the forms, and some states do require that the forms (or their state equivalent) be sent to all individuals.
    • Note that forms still must be filed with the IRS, even if they are not provided to all employees.

Effective Date

  • The guidance is effective starting with the 2024 calendar year forms.

Following these steps can help ensure compliance with IRS requirements for ACA forms.  The Jackson Lewis Employee Benefits Practice Group members can assist if you have questions or need assistance. Please contact a Jackson Lewis employee benefits team member or the Jackson Lewis attorney with whom you regularly work.  Subscribe to the Benefits Law Advisor Blog here.

Under the Affordable Care Act (ACA), applicable large employers (ALEs) — i.e., those with, on average, fifty (50) or more full-time or full-time-equivalent employees in the preceding year — must offer in the following year affordable, minimum value group health plan coverage to their full-time employees and those employees’ dependents or risk imposition of ACA penalties. Affordability is determined by using the employee’s premium for the lowest-cost employee-only coverage under the employer’s plan. The coverage is affordable if the employee premium for this coverage is 9.5% (as adjusted) or less of the employee’s household income.

Recognizing that employers might have a very difficult — if not impossible — time determining full-time employee household income, the ACA employer mandate final regulations set forth three (3) safe harbor proxies for employee household income that employers can select from to make affordability determinations:  the federal poverty line, W-2 wages, or rate of pay.

In the recently issued Rev. Proc. 2023-29, the Internal Revenue Service announced the affordability percentage that will apply for plan years beginning in 2024:  8.39%. This percentage is a notable reduction from the previously applicable 9.12% for 2023 and is the lowest applicable percentage since the employer mandate’s inception.

With open enrollment for calendar year plans just around the corner, ALEs should take immediate steps to make sure their offers of coverage for 2024 will satisfy the new affordability percentage.

If you have questions concerning the affordability percentage or any other aspect of the ACA, the Jackson Lewis Employee Benefits Practice Group members are available to assist. Please contact a Jackson Lewis employee benefits team member or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.

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Just three weeks ago, we wrote that employers likely would not receive certain Affordable Care Act reporting relief to which they’ve become accustomed.

But in a welcome turn of events, the IRS just released proposed regulations that make permanent a 30-day automatic extension for furnishing Forms 1095-B and 1095-C to individuals.  Such forms will now be due each year on March 2nd (or the next business day if March 2nd falls on a weekend/holiday), and the relief is immediate—furnishers can rely on the proposed regulations for 2021 reporting (due in 2022).

The proposed regulations do not change the February 28th/March 31st due dates for submitting these forms to the IRS when filing by paper or electronically, respectively.

The proposed regulations also offer an alternative manner of satisfying the requirements for health insurance issuers and governmental agencies to furnish Forms 1095-B to health plan participants and for self-insured employers to furnish Forms 1095-C with certain health care coverage information to part-time employees and non-employees (such as former employees).  Under the new rules, these forms need not be automatically provided, as long as the furnisher prominently posts a notice on its website indicating the availability of the forms (with certain required language and contact information) and provides any such form within 30 days of an individual’s request.  This rule is being put in place to simplify administration, given that the individual shared responsibility payment (i.e., the individual mandate) is currently $0 and, therefore, the forms aren’t required for individuals to complete their tax returns.  It is subject to change if the individual mandate is increased in the future.

Self-insured employers furnishing Forms 1095-C to full-time employees may not use this alternative means and must provide Forms 1095-C to all such employees by the new deadline set forth above.

One caveat is that it isn’t yet clear whether these new (or analogous) rules will apply for states with their own individual mandate and reporting requirements (currently, California, Massachusetts, New Jersey, Rhode Island, Vermont, and the District of Columbia).

And, in perhaps their only downside, the proposed regulations confirm the end of the transitional good-faith relief for incorrect or incomplete ACA reporting. However, the general penalty exception remains for filers with reasonable cause for failing to timely or accurately complete their reporting requirements.

Please contact a team member or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.

As employers with 50 or more full-time (or full-time equivalent) employees are well aware, the Patient Protection and Affordable Care Act (”ACA”) requires annual submission of Forms 1094-C and 1095-C with the Internal Revenue Service, and distribution of Forms 1095-C.  These submissions and distributions are generally due:

 Furnishing of Forms 1095-C to employees: January 31

Paper submission of Forms 1094-C and 1095-C to the IRS (if applicable):

 February 28

Electronic submission of Forms 1094-C and 1095-C to the IRS (required for employers submitting 250+ forms):

 March 31

Over the years since these requirements became effective, however, the IRS has often extended these deadlines.  First, such extensions were intended to aid employers as they got used to the new rules. Most recently, an extension was announced via Notice 2020-76 regarding the 2020 deadlines to recognize the challenges brought by the COVID-19 pandemic.

No such luck, it appears, for the 2021 reporting as no such extension has been announced (nor is one expected).  This means that employers subject to the ACA’s reporting requirements should be working internally or with their outside vendors to meet these deadlines.

One issue we are seeing is that employers who have fluctuated in size a great deal over the past two years (sometimes getting smaller and then growing again quickly, or vice versa) are unsure of whether the ACA reporting requirements apply to them.  Generally, the reporting requirements apply starting the year after which the employer first averages 50 or more full-time (including full-time equivalent) employees on business days.  As with all things tax code, however, there can be a lot more to the analysis.

The Employee Benefits practice group is available to help employers navigate these rules’ nuances and ensure they don’t get tripped up with unexpected reporting penalties.  Please contact a team member or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.

The Department of Health and Human Services (HHS) announced Monday it now interprets—and will enforce—Section 1557 of the Affordable Care Act (ACA) to prohibit discrimination based on sexual orientation and gender identity, effective immediately. Section 1557 generally prohibits discrimination based on race, color, national origin, sex, age, and disability in any health program or activity receiving federal financial assistance.

Background

Whether Section 1557 protects LGBTQ+ individuals from discrimination has received considerable attention and varying positions from HHS and the courts. The 2016 final rule interpreted “on the basis of sex” under Section 1557 as including “an individual’s internal sense of gender, which may be male, female, neither, or a combination of male and female, and which may be different from an individual’s sex assigned at birth.” The 2020 final rule on Section 1557 reversed the position taken in the 2016 final rule and walked back protections for gender identity, gender expression, sex stereotyping, and termination of pregnancy (addressed here). But a New York court issued an injunction on enforcing the 2020 final rule’s position, as discussed here, and several other courts have cases pending on whether the rule violates the Religious Freedom Restoration Act as to providers that have sincerely held religious beliefs against providing this care.

“Because of Sex”

In making Monday’s announcement, HHS relied on the United States Supreme Court’s 2020 decision in Bostock v. Clayton County.  The Court ruled that Title VII’s ban on “sex”-based discrimination prohibits discrimination based on sexual orientation and that Title VII prohibits discrimination against transgender claimants based on their transgender status. HHS noted that the rationale underlying Bostock—that the meaning of “because of sex” in Title VII includes discrimination because of sexual orientation and gender identity—applies to prohibiting sex discrimination applicable to Section 1557 under Title IX.

Employer Action Required

Given this new guidance and HHS’s statement that it will enforce this interpretation immediately, employers should review their plans to determine whether they need to take any action. The new guidance might not directly apply to certain employee health plans if neither the sponsoring employer nor the plan receives HHS funding. Still, HHS Secretary Xavier Becerra has stated, “It is the position of the Department of Health and Human Services that everyone, including LGBTQ+ people, should be able to access health care, free from discrimination or interference, period.”

Many questions remain unresolved about the scope of this guidance—but one thing is certain: HHS will have more to say on this issue, and so, too, will the courts. Thus, employers should know whether their plans contain provisions that could be discriminatory and could therefore put the employer at risk for enforcement action or discrimination claims.

Please contact a team member or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.

Employers who provide health benefits to their union workforce through a multiemployer group health plan must satisfy all the Affordable Care Act (ACA) reporting requirements regarding their union employees… More

As employers and their third-party administrators begin to wrap-up their Patient Protection and Affordable Care Act (“ACA”) reporting for the 2018 tax year, we’ve started to receive questions about what comes next.  As we discussed here, with the implementation of the Tax Cuts and Jobs Act of 2017 (the “Act”), the ACA’s “individual mandate” effectively lost its teeth—while the ACA still contains a requirement that individuals obtain health insurance coverage, the Act reduced the penalty for not doing so to $0.

This led to confusion initially for individuals who assumed the reduced penalty would become effective immediately (i.e., for 2018); however, this provision of the Act did not become effective until 2019.  Still, confusion remains, and for employers.  We’ve received several questions from clients about whether, given the Act’s changes, ACA reporting will be required for the 2019 tax year and beyond.  This is partly due to the effective end of the individual mandate, and partly due to uncertainty over whether the ACA’s other penalty provisions remain intact.  In short, with respect to the latter, they do.  As of this writing, employers with 50 or more full-time or full-time equivalent employees must continue to provide minimal essential overage that is affordable and provides minimum value to their full-time employees, or risk penalties under the ACA’s “employer mandate”.  (Similarly, the ACA’s insurance mandates for coverage of dependents until age 26, no exclusions for pre-existing conditions, etc. also remain in place.)  Certain states also have their own individual mandates that remain in effect.

The implementation of, and effective dates for, the various provisions of the ACA have been a moving target since its adoption, and it appears the ACA is poised to continue its evolution based on the federal election results in the coming years.  We also understand that the Internal Revenue Service is looking at whether there will be changes regarding the requirement to provide employees with their annual Form 1095-Cs going forward (i.e., the reporting of offers of coverage to employees that employees may use to prepare their individual tax returns).  Regarding the 2019 reporting, however, we are advising employers that the ACA remains the “law of the land”, and to assume that reporting for 2019 will look a lot like the 2018 reporting until we hear differently.

We will, of course, provide an update if new guidance on the future of ACA reporting is provided this year, and remain available for any past, present, or future ACA reporting questions our clients may have.

Exemption to ACA Contraceptive Mandate Extended to For-Profit Entities and Individuals

Under the ACA, employers must provide plans that cover birth control and other preventative health services with no out-of-pocket costs. Certain religious employers with religious objections to providing contraceptive services have been exempt from the requirement. (Accommodations have also been provided to non-profit religious organizations objecting to the rule and expanded to closely held for-profit entities objecting to the mandate on religious grounds, see https://www.benefitslawadvisor.com/2014/07/articles/employee-health-welfare-plans/1007/).

The new rules, issued through the IRS, DOL, and HHS, broaden the exemption in scope and in application to for-profit entities that object to providing or covering identified contraceptive services due to sincerely held religious beliefs or moral convictions.

Exemptions for Plan Sponsors

For employers, the temporary and proposed regulations issued by the administration extend use of the religious exemption to for-profit, non-governmental plan sponsors of group health plans, including closely-held and publicly held for-profit entities, non-religious non-profit organizations, and institutions of higher education in their arrangements of student health insurance coverage.

The regulations also provide an exemption based upon sincerely held moral convictions to non-Federal governmental plan sponsors, including non-profit organizations, for-profit entities with no publicly traded ownership interests, and institutions of higher education in the arrangement of student health insurance coverage.

Exemptions for Health Insurance Issuers

Health insurance issuers offering group or individual insurance coverage (“issuers”) that object to providing coverage for certain contraceptive services are provided an exemption from offering coverage of mandated contraceptive services to the extent the exemption is based upon the issuer’s sincerely held religious beliefs or moral convictions.

An issuer is also exempt from providing coverage where the exemption is provided to a plan sponsor due to the sponsor’s religious or moral objection (regardless of whether the issuer has its own objection).

The issuer exemption does not exempt a group health plan from providing mandated contraceptive services under the ACA. Therefore, unless the plan sponsor itself is exempt under the regulations, issuers that hold religious or moral objections should notify plan sponsors of any contraceptive services not covered due to the issuer’s exemption.  The issuer should also inform the plan sponsor that the group health plan remains obligated to provide mandated contraceptive services.

Exemptions for Individuals

Individuals who object to coverage or payment of certain contraceptive services by a sponsoring employer are exempt to the degree that the plan sponsor and health insurance issuer agree to offer separate benefit package option, policy, or insurance certificate or contract omitting contraceptive coverage to the objecting individual. The individual exemption cannot be used to require a plan sponsor or insurance issuer to omit contraceptive coverage if the plan sponsor or issuer has no objection to providing such coverage, nor can it be used to prevent application of laws requiring contraceptive coverage under State law.

The individual exemption may be recognized by private and governmental employers. A non-exempt governmental employer may choose to offer an individual participant coverage omitting contraceptive services that honors the individual’s objections.  Note, however, this exemption is limited to the ACA mandate for contraceptive services and is not applicable to state laws requiring contraceptive coverage.

Exemption Notification Requirements for Employers

Plan sponsors are not required under the new rules to file an exemption notice or comply with a self-certification process to claim a religious or moral exemption from the ACA’s contraceptive mandate. Nevertheless, employer-provided group health plans remain subject to ERISA and its disclosure requirements.  Employers objecting to the provision of certain contraceptive services must make sure that any coverage exclusions are clearly identified in the plan document.   Any contraceptive services subsequently omitted from plan coverage must be adequately communicated to participants and beneficiaries through all applicable ERISA disclosures. 

Rules are available at: https://www.federalregister.gov/documents/2017/10/13/2017-21851/religious-exemptions-and-accommodations-for-coverage-of-certain-preventive-services-under-the

and

https://www.federalregister.gov/documents/2017/10/13/2017-21852/moral-exemptions-and-accommodations-for-coverage-of-certain-preventive-services-under-the-affordable

Although the interim final rule is effective immediately, HHS is requesting public comments on the rule (see http://www.regulations.gov). Written comments must be received by December 5, 2017.

In the wake of the President’s January 20, 2017 Executive Order directing a reduction in regulatory burdens imposed by the Affordable Care Act (ACA), the IRS has quietly announced that it will continue to process income tax returns lacking confirmation that the taxpayer has maintained ACA-required health coverage.

The ACA requires that taxpayers who do not qualify for an exemption from the requirement to maintain health coverage must either purchase minimum essential coverage or make a “shared responsibility payment” when they file their tax returns. Individual tax returns contain a box (Line 61 on Form 1040) asking the taxpayer to certify whether he or she had health coverage for all or part of the tax year. Forms on which this line was not completed had previously been scheduled for automatic rejection for processing by IRS. Taxpayers who failed to certify coverage thus risked late filing penalties and delayed tax refunds.

Following the Executive Order, IRS will process returns regardless of whether the taxpayer’s coverage status is indicated. According to the IRS website, “taxpayers remain required to follow the law and pay what they may owe,” and “may receive follow-up questions and correspondence at a future date, after the filing process is completed.”

Section 1557 of the Affordable Care Act (“ACA”), in effect since 2010, prohibits discrimination in any federally funded health program on the basis of race, national origin, sex, age, or disability.  The Department of Health and Human Services (“HHS”), through the Office of Civil Rights, has been enforcing the provision since it was enacted in 2010.  HHS has now issued the Final Rule, “Nondiscrimination in Health Programs and Activities,” providing guidance to covered entities affected by the civil rights provision.  The Final Rule requires certain covered entities to include specific nondiscrimination protections in their benefit plan design by the first day of the first plan year, beginning on or after January 1, 2017.

The Final Rule applies to “every health program or activity, any part of which receives Federal financial assistance provided or made available by the Department,[1] every health program or activity administered by the Department [HHS]; and every health program or activity administered by a Title I entity.”[2]

Under the Final Rule, “Federal Financial Assistance” means any “grant, loan, credit, subsidy, contract (other than a procurement contract but including a contract of insurance),” or any other type of arrangement in which assistance is provided or made available by the federal government in the form of funds, services of federal personnel, or real or personal property (including property use or interest in property).  The definition of “Federal Financial Assistance” also means any federal financial assistance HHS provides or makes available,

[I]ncluding Federal financial assistance that the Department plays a role in providing or administering, including all tax credits under Title I of the ACA, as well as payments, subsidies, or other funds extended by the Department to any entity providing health-related insurance coverage for payment to or on behalf of any individual obtaining health-related insurance coverage from that entity or extended by the Department directly to such individual for payment to any entity providing health-related insurance coverage.[3]

Health programs or activities conducted by the Department (HHS), include programs administered by the Centers for Medicare and Medicaid Services (“CMS”), Health Resources and Services Administration (“HRSA”), Centers for Disease Control and Prevention (“CDC”), Indian Health Services (“IHS”) (including IHS tribal hospitals), and the Substance Abuse and Mental Health Services Administration (“SAMHSA”).  Entities established under Title I of the ACA are the seventeen state-based and 34 federally-facilitated health insurance marketplaces.

Under the Final Rule, a “covered entity” means:

  • An entity operating a health program or activity that receives Federal financial assistance for any part of the health program or activity;
  • An entity established under Title I of the ACA that is administering a health program or activity; or
  • The Department [HHS].[4]

Section 92.208 of the Final Rule, “Employer liability for discrimination in employee health benefit programs,” provides that a covered entity providing an employee health benefit program to employees will be liable under § 1557 only when:

  • The entity is principally engaged in providing or administering health services, health insurance coverage, or other health coverage;
  • The entity receives Federal financial assistance a primary objective of which is to fund the entity’s employee health benefit program; or,
  • The entity is not principally engaged in providing or administering health services, health insurance coverage, or other health coverage, but operates a health program or activity, which is not an employee health benefit program, that receives Federal financial assistance; except that the entity is liable under this part with regard to the provision or administration of employee health benefits only with respect to the employees in that health program or activity.

Application to State Agencies Receiving Federal Funds

As noted in the Summary to the Final Rule,[5] the limitations of § 92.208 were not restricted or revised in any manner from the original version of the section as set forth in the proposed rule, which provided that “unless the primary purpose of the Federal financial assistance is to fund employee health benefits, we propose to not apply Section 1557 to an employer’s provision of employee health benefits where the provision of those benefits is the only health program or activity operated by the employer.”  As explained further in the preamble, if an organization “uses grant funds to support personnel costs, including employee health benefits, Section 1557 would not apply to the organization’ s provision of employee health benefits.”[6]

Based on the definitions and summary explanations provided in the Final Rule, a state agency receiving non-HHS grant funds that may be applied in part for supporting personnel costs that would include employee health benefits would not be subject to liability under § 1557 of the ACA.  Under the Final Rule, § 1557 liability will not attach to such an agency unless the agency is either 1) principally engaged in providing or administering health services or coverage or operating a health program or activity; or, 2) receives federal financial assistance for which a primary objective is to fund the agency’s employee health benefit program.

[1] “Department” means the “U.S. Department of Health and Human Services.”  Final Rule, p. 334.

[2] Final Rule, § 92.2 Application, p. 330-31.

[3] Id., § 92.4 Definitions, p. 334-35.

[4] Final Rule, § 92.4 Definitions, p. 333.

[5] Id., p. 226.

[6] 80 Fed. Reg. 173, at 54191, Preamble to the proposed rule.