IRS releases draft forms for Employer reporting of Health Coverage

The Affordable Care Act (ACA) created new reporting requirements under Internal Revenue Code Sections 6055 and 6056.  Under these new reporting rules, certain employers must provide information to the IRS about the health plan coverage they offer (or do not offer) to their employees.

On July 24, 2014, the Internal Revenue Service released draft versions of the following forms that employers will use to report under Sections 6055 and 6056:

1. Form 1094-B:  Transmittal of Health Coverage Information Returns;
2. Form 1095-B: Health Coverage;
3. Form 1094-C:  Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Return;
4. Form 1095-C:  Employer-Provided Health Insurance Offer and Coverage.

Forms 1094-C and 1095-C will be used by applicable large employers (ALEs) that are reporting under Code Section 6056.  Forms 1094-B and 1095-B will generally be used by entities reporting as health insurance issuers or carriers, sponsors of self-insured group health plans not reporting as ALEs, sponsors of multiemployer plans and providers of government-sponsored coverage under Section 6055.  However, a reporting entity that is reporting under Section 6055 as an ALE will file under a combined reporting method, using forms 1094-C and 1095-C. 

According to the IRS, these are draft forms currently and are intended to help stakeholders prepare for these new reporting provisions.

Overview of Sections 6055 and 6056

The Code Sections 6055 and 6056 reporting requirements are intended to promote transparency with respect to health plan coverage and costs. They will also provide the government with information to administer other ACA mandates, such as the employer and individual mandates. 

Reporting for Medium-sized ALEs

On Feb 10, 2014, the Treasury released final rules implementing the ACA's employer shared responsibility provisions.  These final rules include transition relief delaying compliance for medium-sized ALEs for one year, until 2016.  Medium-sized ALEs are those with at least 50 full-time employees but fewer than 100 full-time employees. 

ALEs eligible for this transition relief will still report under Section 6056 for 2015.  As part of this transition relief, the ALE must certify on its Section 6056 transmittal form (Form 1094-C) for calendar year 2015 (that is, for the Section 6056 transmittal form that will be filed in 2016) that it meets the following eligibility conditions:

1. The ALE employs a limited workforce of at least 50 full-time employees (including full-time equivalents), but fewer that 100 full-time equivalents), but fewer that 100 full-time employees (including full-time equivalents) on business days during 2014
2. Between Feb. 9, 2014 and Dec 31, 2014, the ALE does not reduce the size of its workforce or the overall hours of service of its employees in order to satisfy the workforce size condition
3. During the coverage maintenance period (that is, the period ending Dec 31, 2015 or the last day of the plan year that begins in 2015) the ALE does not eliminate or materially reduce the health coverage, if any, it offered as of Feb 9, 2014.

DC Appeals Court Overturns Subsidies for Federal Exchange

Federal Appeals Court invalidates some ObamaCare subsidies, in blow to health law.




In what could be a major blow to the Affordable Care Act, a three-judge panel for the U.S. Court of Appeals in Washington ruled today that subsidies may not be offered in the federal health exchange. The decision overturned a lower court ruling.


Though the ruling is likely to be appealed, the decision threatens to gut the foundation of the law by potentially nixing subsidies that millions of people obtained through the federally run exchange known as HealthCare.gov.


The suit maintained that the language in ObamaCare actually restricts subsidies to state-run exchanges -- of which there are only 14 -- and does not authorize them to be given to the 36 states that use the federally run system, which Ohio is one of. 


Background
Through the Affordable Care Act (ACA) in 2010, the federal government asked states to establish exchanges on which to sell qualified health plans. If a state did not establish its own exchange, the federal government would do so. Section 36B of the Internal Revenue Code (IRC) states premium assistance (i.e., tax subsidies) is available to individuals “… who were enrolled … through an Exchange established by the State under 1311” of the ACA. However, in 2012, the Internal Revenue Service determined that “established by the State” also included exchanges established by the federal government.




Two appellate court cases heard arguments regarding whether the subsidies are only available on the state-based exchanges, and not available on the federally run exchanges that are used by the majority of states:

• The Court of Appeals for the DC Circuit ruled that the ACA only authorized premium tax subsidies for people who enrolled in coverage through a state-based exchange, a more literal interpretation of section 36B of the IRC.
• The Court of Appeals for the Fourth Circuit ruled to uphold the interpretation that the intent of the ACA was to provide subsidies to anyone buying qualified coverage.

What does this mean in Ohio?


In Ohio, which has a federally facilitated exchange, everything stays the same for now. Subsidies are still available to our customers.  These appellate court decisions change nothing right away.


We will continue to follow the law as additional ruling are made.


We cannot speculate at this time what the outcome will be.  We will follow the issue closely and prepare ourselves appropriately,


Because there is a conflict between the rulings of the appellate courts, the losing side of each case can choose one of two options:

1. Request an "en banc" review, which is a full review by all judges in the particular court
2. Petition the Supreme Court to hear the case (the Supreme Court will begin hearing cases again this October)

Five Ways to Perk up Your Day

It happens to everybody. Sometimes we wake up on the wrong side of the bed. We miss trains. We dunk our neckties in coffee, and we don’t realize it until after an important meeting.

 

Every now and then a storm cloud will settle over your head. Rather than letting it ruin your day, try these simple steps to bring in a bit of sunshine!

 

1. Call a friend on his or her birthday. Check Facebook to find out which of your friends are celebrating birthdays today. Instead of just sending a short message, give them a call and wish them well. They will be glad to know you are thinking of them, and they will most likely send some good vibes your way, too!

 

2. Return a book you borrowed. Your friend lent you her personal copy of Don Quixote two years ago. She scribbled in the margins, spilled a little coffee on the cover, and dog-eared many, many pages. In other words, she loved that book. Don’t feel bad about returning it late. Even if you didn’t get around to reading it, she will be thrilled to see it again and it will take a little weight off your shelf and your shoulders.

 

3. Treat yourself to something sweet. Numerous studies have sought to measure the effects of chocolate on human happiness. It’s possible that dark chocolate can lower the stress hormone known as cortisol. It’s also possible that it’s delicious and you deserve it anyway.

 

4. Take lunch in the park. A little sunshine will help your body produce vitamin D and thereby increase serotonin—a mood neurotransmitter. Lunch in the park also dramatically increases your likelihood of sharing your sandwich with a duck.

 

5. Smile. According to the facial feedback hypothesis, exercising zygomatic (smiling) muscles can boost emotional activity in the brain. Simply smile a few times throughout the day. Think of it as an exercise, with you as a champion bodybuilder of positive energy.

Health Care Reform: Cost-Sharing Limits for Health Plans

Beginning in 2014 the ACA requires certain health plans to comply with cost-sharing limits with respect to essential health benefits coverage. The cost sharing limits include both an annual out-of-pocket maximum and anannual deductible limit.


 Call me for a copy of the Legislative Brief summarizing the ACA's cost sharing limits.


On April 1, 2014 President Obama signed into law the Protecting Access to Medicare Act which repels the ACA's deductible limit, effective as the date the ACA was enacted.


The affected plans are Grandfathered plans not subject to the ACA's cost-sharing limits.  There was some uncertainty regarding which types of non-grandfathered plans must comply with the cost-sharing limits.  However, the final rule provides the guidance on the types of health plans that must comply.

Funding College with Universal Life

Saving for college is a big concern for many young families.  There are many options available.  It can really confusing to choose.
An option that should be in the mix but generally gets overlooked-Permanent life Insurance.


Of course, the primary purpose of life insurance is to pay a death benefit when someone dies, but it can also be a very flexible alternative to traditional college funding programs.  This can really be appealing to certain clients because it includes features not found in any other program.


Think about it--what other college savings program is self-completing in the event of a premature death?  None.
However, the life insurance death benefit immediately creates a pile of money at death that can be used to fund the college savings goal and cover the college costs.


It also provides tax-deferred growth, just like most of the other programs do.  Income taken from the plan can be income tax-free through the use of loans and withdrawals and can supplement your other college savings sources.  You also have the added benefit of not having to include the accumulating cash values when filling out the required Federal Application for Federal Student Aid (FAFSA) form each year when applying for student aid.
That's Big !!
And finally, the policy can be repositioned after paying for college to then help supplement retirement planning.  And through all this it's still protecting the family with the death benefit.  That's pretty comprehensive.  None of the other programs have all these benefits.

CD Alternative Can Provide Benefit

Many of my clients today have become very comfortable with investing in CD's.  They invest in them more out of habit than anything else.  Here are some questions you can ask yourself the next time you consider a CD:

• Am I looking for guaranteed principal?
• Am I looking for tax deferral?
• Am I looking for a guaranteed income stream?
• Am I looking for potentially higher interest returns than what I am currently getting with my Bank CD's?

If you answer "Yes" to any of these questions, you may to look at one of my Deferred Annuities. 


While both a CD and an annuity can offer you a guarantee of principal, my Annuities off other benefits that CDs do not, including tax-deferred growth, a guaranteed income stream in the future, and a higher potential interest rates.


And with my Flexible Premium Annuity, you also have the ability to add additional money to your account at any time during the contract term, something you cannot do with most CD's.

Supreme Court Rejects Contraceptives mandate for some Corporations

by Adam Liptak; New York Times

The Supreme Court ruled on Monday that requiring family-owned corporations to pay for insurance coverage for contraception under the Affordable Care Act violated a federal law protecting religious freedom.

 

The 5-to-4 decision, which applied to two companies owned by Christian families, opened the door to challenges from other corporations to many laws that may be said to violate their religious liberty.

Justice Samuel A. Alito Jr., writing for the court's five more conservative justices, said a federal religious-freedom law applied to for-profit corporations controlled by religious families. He added that the requirement that the companies provide contraception coverage imposed a substantial burden on the companies' religious liberty. He said the government could provide the coverage in other ways.

Justice Ruth Bader Ginsburg, writing for the court's four-member liberal wing, said the contraception coverage requirement was vital to women's health and reproductive freedom. Justices Stephen G. Breyer and Elena Kagan joined almost all of the dissent, but they said there was no need to take a position on whether corporations may bring claims under the religious liberty law.

On that point, Justice Ginsburg, joined by Justice Sonia Sotomayor, said the

court's decision "is bound to have untoward effects" in other settings.

"The court's expansive notion of corporate personhood," Justice Ginsburg wrote, "invites for-profit entities to seek religion-based exemptions from regulations they deem offensive to their faiths."

The contraception coverage requirement was challenged by two corporations whose owners say they try to run their businesses on religious principles: Hobby Lobby, a chain of crafts stores, and Conestoga Wood Specialties, which makes wood cabinets

The health care law and related regulations require many employers to provide female workers with comprehensive insurance coverage for a variety of methods of contraception. The companies objected to some of the methods, saying they are tantamount to abortion because they can prevent embryos from implanting in the womb. Providing insurance coverage for those forms of contraception would, the companies said, make them complicit in the practice.

The companies said they had no objection to other forms of contraception, including condoms, diaphragms, sponges, several kinds of birth control pills and sterilization surgery.

The court ruled that corporations controlled by religious families cannot be required to pay for contraception coverage for their female workers.

The Obama administration said it did not question the sincerity of the companies' beliefs, and it has offered exemptions to other groups on such grounds.

 

A federal judge has estimated that a third of Americans are not subject to the requirement that their employers provide coverage for contraceptives. Small employers need not offer health coverage at all; religious employers like churches are exempt; religiously affiliated groups may claim an exemption; and some insurance plans that had not previously offered the coverage are grandfathered in.

 

But the administration said that for-profit corporations like Hobby Lobby and Conestoga Wood must comply with the law or face fines.

 

The cases are Burwell v. Hobby Lobby Stores, No. 13-354, and Conestoga Wood Specialties v. Burwell, No. 13-356.

 

The companies challenged the coverage requirement under the Religious Freedom Restoration Act of 1993. The law was a response to a 1990 Supreme Court decision that declined to recognize religious exceptions under the First Amendment's free exercise clause to generally applicable laws. Congress effectively reversed that decision.

 

"What this law basically says," President Bill Clinton said before signing the bill, "is that the government should be held to a very high level of proof before it interferes with someone's free exercise of religion."

The threshold question in the new case was whether the companies were permitted to raise a claim under the law.

 

The companies argued that they were, and they said the coverage requirement imposed a "substantial burden" on religious practices by subjecting Hobby Lobby, for instance, to fines of $1.3 million a day if it chose not to offer comprehensive coverage, and to different fines of $26 million a year if it stopped offering insurance entirely.

 

Some scholars responded that the company would be better off financially if it dropped coverage, and so does not face a substantial burden.

 

The administration argued that requiring insurance plans to include comprehensive coverage for contraception promotes public health and ensures that "women have equal access to health care services." The government's briefs added that doctors, rather than employers, should decide which form of contraception is best.

 

A supporting brief from the Guttmacher Institute, a research and policy group, said that many women cannot afford the most effective means of birth control and that the law will reduce unintended

  

A copy of the Supreme Court Decision can be obtained by clicking on the link below: