The Internal Revenue Service (IRS) has released guidance further clarifying the rules regulating qualified small employer health reimbursement arrangements (QSEHRAs). QSEHRAs—which are health reimbursement arrangements exempt from the Affordable Care Act's market reforms—may be offered by employers with fewer than 50 full-time equivalent employees that do not offer a group health plan to any of its employees to reimburse employees for medical expenses, including individual health insurance policy premiums.
On Oct. 17, 2017, the IRS released a statement on its ACA Information Center for Tax Professionals webpage for the upcoming 2018 filing season regarding a change in reporting requirements on individual federal income tax returns (Form 1040). The IRS won't accept electronically filed tax returns where the taxpayer doesn't address the health coverage requirements of the ACA on line 61 (Health Care: Individual Responsibility). So, electronic tax returns must indicate whether the taxpayer had coverage, had an exemption or will make a shared responsibility payment. Additionally, paper returns that don't address the health coverage requirements may be suspended pending the receipt of additional information, and any refunds may be delayed.
The 2018 filing season will be the first time the IRS won't accept tax returns that omit this information.
As background, the individual shared responsibility provision (i.e., the individual mandate) requires individuals to do at least one of the following:
Some taxpayers will have qualifying health care coverage for all 12 months in the year and will be able to check the "full-year coverage" box on line 61 of their return. This year, the IRS has put in place system changes that will reject tax returns during processing in instances where the taxpayer doesn't provide information related to health coverage (i.e., leaves the box unchecked).
As a reminder, the legislative provisions of the ACA are still in force until changed by Congress, and taxpayers remain required to follow the law and pay what they may owe. So, the IRS may still enforce the individual mandate, and Forms 1040 will be rejected at the time of filing. To avoid refund and processing delays when filing 2017 tax returns in 2018, taxpayers should indicate whether they and everyone on their return had coverage, qualified for an exemption from the coverage requirement or are making an individual shared responsibility payment.
When the IRS has questions about a tax return, taxpayers may receive follow-up questions and correspondence at a future date, after the filing process is completed, and taxpayers should work with individual tax advisors with respect to answering those questions and correspondence.
Update 10-25-2017 - A Federal District Court in California has upheld this decision in a lawsuit filed by Attorneys General in CT, MA, VT and 15 Other States.
The Trump administration announced yesterday that it will no longer make cost-sharing reduction (CSR) payments to insurance companies under the Affordable Care Act (ACA). According to a statement issued by the U.S. Department of Health and Human Services (HHS), the agency's decision to discontinue these payments immediately follows a legal review by HHS, the Department of Treasury, the Office of Management and Budget, and an opinion from the U.S. Attorney General.
Previously, the ACA required insurers to offer plans with reduced deductibles, copayments, and other means of cost sharing to eligible individuals who purchase plans through the Health Insurance Marketplace. In turn, insurers receive CSR payments arranged by the Secretary of HHS to cover the costs they incur because of this requirement. Whether CSR payments were properly appropriated by Congress has been the subject of litigation since 2014.
Two companion interim final rules issued by the U.S. Departments of Health and Human Services, Treasury, and Labor expand exemptions related to the Affordable Care Act requirement that non-grandfathered group health plans provide coverage without cost-sharing for contraceptive services (referred to as the "contraceptive mandate"). Previously, the contraceptive mandate was subject to exemptions for religious employers and accommodations for certain other non-profit religious organizations and closely held for-profit entities with sincerely held religious beliefs against certain contraceptives.
The new rules exempt entities that object to establishing, maintaining, providing, offering, or arranging (as applicable) coverage, payments, or a plan that provides coverage or payments for some or all contraceptive services based on their sincerely held religious beliefs or moral convictions. For this purpose, the term "contraceptive services" includes contraceptive or sterilization items, procedures, or services, or related patient education or counseling.
Exempt entities will not be required to comply with a self-certification process. However, where an exemption applies and all or a subset of contraceptive services are omitted from a plan's coverage, otherwise applicable ERISA disclosures must reflect the omission of coverage in ERISA plans
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Source: HR 360, Inc.
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