What You Need to Know About Form 1095-C

If, at any time in 2015, you were a full-time employee of a large organization (usually a company that has 50 or more full-time people in their employ), you may receive a new tax form, Form 1095-C, early in 2016. Part-time employees of large organizations who work less than 30 hours per week may also receive this form. This form may be sent via email or post, or simply hand-delivered to you at work.

Why am I getting this new tax form?
Because Form 1095-C provides proof of health insurance coverage offered to you (and your family, as an extension) by your employer in 2015. If you had purchased health insurance coverage through the Health Insurance Marketplace and wish to claim premium tax credit, this kind of information will help determine whether you are eligible.

What kind of information is on the form?
Form 1095-C is divided into three parts:

  • Part I – This section contains employee and employer identifying information, like the employer’s address and EIN, the employee’s Social Security number, etc.
  • Part II – This section determines whether coverage was offered to you and your dependents, and also indicates the lowest monthly premium for self-only coverage that was offered to you in the past year.
  • Part III – This section lists the people in your household that were covered by health insurance and the periods they were covered. This part will only be completed if your employer’s insurance coverage wasn’t provided through an insurance company.

IMPORTANT: Save your Form 1095-C. This provides key information about your health insurance coverage; it will also help you fill out your tax return.

What if I switched jobs or didn’t enroll in my employer’s insurance?
If you were employed full-time by a large organization in 2015, you will be provided with a Form 1095-C regardless of whether you were offered health insurance coverage or if you elected to enroll in the benefits through your employer. If you worked full-time for several large employers in the past year, you will receive a Form 1095-C from each of them.

Will I need to file this form with my tax return?
No, you don’t need to. But, as mentioned earlier, it is beneficial to save this new tax form, because it provides information that can help you complete your income tax return for the year. The Internal Revenue Service (IRS) will receive its own copy for filing and comparison purposes.

It’s important to note that the form you receive may vary based on the status of your employment and the type of insurance your employer offers.

Download the full Employee Benefits Bulletin. If you would like to learn more about Form 1095-C or if you have any questions about Nevada health insurance options, contact Clark and Associates today!

Reasons to Get Health Insurance for Your Small Business Employees [Infographic]

As a business owner, you know how important it is to keep your employees happy, healthy, and productive. One way of doing that is to offer comprehensive health coverage. If you’re a small business owner in Nevada, you aren’t mandated to provide small business health insurance, but it may be worth your while to do so. Offering health insurance can help you attract and retain the best talent. Additionally, it can also help you save money on health care costs, since insurance providers can negotiate fees with hospitals, doctors, and other health care providers. Contrary to popular belief, small business health insurance in Nevada isn’t a waste of money. If your employees are happy and healthy, they are more productive. The more productive they are, the better for your bottom line.

Need more reasons to purchase health insurance for your small business employees? Check out this infographic. For more information or to get a quote, contact Clark & Associates today.

Nevada Small Business Health Insurance Infographic

Download “Small Business Health Insurance: Reasons to Buy Health Coverage for Your Employees” [Infographic]

Senate Passes ACA Small Group Market Rule Repeal

The U.S. Senate on October 1, 2015 passed legislation repealing the Affordable Care Act (ACA) requirement that the small group market in every state be expanded to include businesses with 51 to 100 employees.

The Protecting Affordable Coverage for Employees (PACE) Act was passed by the U.S. House of Representatives earlier in the week. It has been reported that President Obama will sign the Act into law, although some sources previously indicated that he might veto it.

Small Group Market Expansion
Most states have historically defined “small employers” as those with 50 or fewer employees for purposes of defining their small group health insurance market.

Effective for 2016 plan years, the ACA expanded the definition of a “small employer” to include those that employed an average of between one and 100 employees.

Impact on Employers
The expansion of the small group market was expected to have a significant effect on mid-size businesses. These businesses would have been required to buy coverage for employees in the small group market, which is more heavily regulated than the large group market.

This change was expected to increase premiums costs for employers and employees and reduce flexibility in plan design due to added small group market requirements.
Some states have already amended their state laws to adopt the expanded small group market definition. These states will have to take action to undo those changes.

Most states are taking already taking advantage of a transition rule provided by the Department of Health and Human Services (HHS). HHS has said it will not enforce small group market regulations for mid-size businesses if their policies are renewed by Oct. 1, 2016.

This means that many employers have already been able to delay moving from the large group to the small group market. The PACE Act will make this relief permanent.

The PACE Act gives states the option of expanding their small group markets to include businesses with up to 100 employees.

Download the full Health Care Reform Bulletin.

Do you feel like you are paying too much for health insurance?

We can help! Clark & Associates and Solutions At Work teamed up to offer Professional Employer Organization (PEO) solutions to give business owners like you not just administrative relief, but also comprehensive employee benefits.

What does a Nevada PEO have to do with health insurance? PEOs are able to group their clients together, which gives them greater buying power for employee benefits and workers’ compensation insurance. They can negotiate on behalf of their clients, collectively.

Other benefits business owners can get when they join a Nevada PEO include:

  • 401K, FSA
  • Employee Enrollment & Termination Assistance
  •  HR Compliance and Support
  • Large Group Benefits and Rates for Small Businesses
  • Payroll Services
  • Recruitment/ Job Placement
  • Time Keeping
  • Workers’ Compensation

Want to learn more? Check out our Professional Employer Organization infographic.

Know Your Benefits: Understanding Voluntary Benefits

You know the importance of having health care coverage and a 401(k), but are you taking full advantage of all the benefits? Voluntary benefits are additional benefit options offered through the company. Unlike traditional benefits like Nevada health insurance, employees are responsible for paying most or all of the cost of these voluntary options.

What’s the Advantage?
You may wonder, if you’re responsible to pay, then why elect any voluntary benefits? There are several advantages:

  • Lower Price. If the benefit in question is something you are planning to purchase for yourself regardless, then it is probably more cost-effective to purchase through. The group rate we can secure is generally lower than what you’d pay buying individually from an insurance company.
  • Convenience. When you elect a voluntary benefit option through our open enrollment, your premium is paid through convenient payroll deductions just like your other benefits (and you receive the same benefit of pre-tax payroll deductions). Plus, you can skip the hassle of shopping around to find and purchase a plan – simply elect what you need during enrollment time.
  • Protect Yourself and Your Family. Many of these types of insurance may seem unnecessary, but they are designed to protect you in the event of an unexpected illness, accident, death or other event. For instance, you may be skeptical about needing disability insurance, but consider if you could afford to be disabled and without a paycheck for weeks or months, plus having medical bills to pay? Paying a small premium now can help protect you financially.

Common Types
There are a variety of voluntary benefit options; some of the common ones include:

  • Life Insurance – employees can typically elect up to a certain amount without needing to go through medical underwriting
  • Vision Insurance – typically includes free annual eye exam and discounts on glasses and contacts
  • Dental Insurance – generally covers preventive services and offers a discount on other treatments
  • Long-Term Care Insurance – covers the care people need when they have lost the ability to perform certain daily activities (care that may not be covered under Medicare or Medicaid)
  • Short-Term Disability – covers a percentage of lost pay due to time away from work because of a disability, generally up to three or six months
  • Long-Term Disability – covers care needed over a longer period of time, for injuries that could affect someone for years
  • Accidental Death & Dismemberment – coverage in case an employee dies in an accident or loses a limb, vision or hearing.

Please call at 775-828-7420 or leave Clark & Associates a message to get more information on offering voluntary benefits to your employees.

Download the full document.

HR Insights: Marijuana in the Workplace

Marijuana, derived from the Cannabis sativa plant, is classified as a Schedule I substance under the Controlled Substances Act, indicating it has a high potential for dependency and no accepted medical use. Although isolated components of the raw marijuana plant have recognized medicinal uses, smoking marijuana has not passed the Food and Drug Administration’s rigorous research and testing process to become an approved medicine.

Marijuana contains psychoactive chemicals, and the main active chemical is delta-9-tetrahydrocannabinol (THC). Distribution of marijuana is a federal offense, and it is the most commonly used illicit drug in the United States.

Legal Status of Marijuana Use

Although marijuana use violates federal law, many states have passed laws allowing marijuana in various amounts and contexts. Restrictions vary widely by state; some states only allow medical marijuana, while others have legalized recreational marijuana. Various state laws may do one of the following:

  • Legalize medical marijuana, meaning an individual may defend against criminal charges if he or she can prove a medical need for marijuana under state law
  • Legalize the possession and use of recreational or medical marijuana
  • Decriminalize marijuana, meaning penalties for possession and use of small amounts of marijuana may be reduced

In 1996, California became the first state to legalize medical marijuana. Since then, 23 states and the District of Columbia have also legalized medical marijuana. However, only a few states have legalized recreational marijuana use. As of November 2014, Colorado, Washington, Alaska and Oregon have passed laws allowing recreational marijuana.

Download the Full Document on Marijuana in the Workplace

Inviting All Large Group Employers: Seminar on ACA Employer Reporting Forms for 2015

Clark & Associates of Nevada, Inc. invites all our Over 50 Employee Groups to attend the workshop on the Affordable Care Act Employer Reporting Forms for 2015, on January 27, 2015. The event will give you thorough step-by-step guidance on filing accurate and timely reports.

On the agenda:

  • What is the deadline to file the reports?
  • Which reports must be filed by employers with insured health plans?
  • Which reports must be filed by employers with self-insured health plans?
  • What information is required for each report and each individual statement?
  • What is a “qualified offer” that will allow simplified reporting?
  • If an employer offers minimum value coverage to at least 98% of its full-time employees, what simplified reporting method applies?
  • What are the penalties for inaccurate filings or failure to file?
  • Are there any penalty relief provisions?

Sponsored by the Nevada Business Group on Health (NVBGH). This event is free for NVBGH members, and they have offered a discounted rate of $25.00 (includes meal) for guests of Clark & Associates. Regular price for this program is $50.00.

Save the date, everyone, and see you at the workshop! Download the PDF flyer.


Employer Reporting of Health Coverage—Code Sections 6055 & 6056

The Affordable Care Act (ACA) created new reporting requirements under Internal Revenue Code (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. The additional reporting is intended to promote transparency with respect to health plan coverage and costs. It will also provide the government with information to administer other ACA mandates, such as the large employer shared responsibility penalty and the individual mandate.

On March 5, 2014, the Internal Revenue Service (IRS) released two final rules on these reporting requirements.

  • The section 6055 final rule requires health insurance issuers, self-insured health plan sponsors, government agencies that administer government-sponsored health insurance programs and any other entity that provides minimum essential coverage (MEC) to report information on that coverage to the IRS and covered individuals. This rule finalizes proposed regulations issued on Sept. 5, 2013.
  • The section 6056 final rule requires applicable large employers (ALEs) subject to the pay or play rules to report to the IRS and covered individuals information on the health coverage offered to full-time employees. This rule finalizes proposed regulations issued on Sept. 5, 2013.

Download the full article: HCR Employer Reporting of Health Coverage – Sections 6055 and 6056

Paying Premiums for Individual Health Insurance Policies Prohibited

Due to the rising costs of health coverage, some employers have considered helping employees pay for individual health insurance policies instead of offering an employer-sponsored group health plan. In response, on Sept. 13, 2013, the Internal Revenue Service (IRS) issued Notice 2013-54 to address how the market reforms under the Affordable Care Act (ACA) apply to health reimbursement arrangements (HRAs), cafeteria plans, and other employer payment plans. Also, on May 13, 2014, the IRS issued two FAQs clarifying the consequences for employers that reimburse employees for premiums they pay for individual health insurance.

Finally, on Nov. 6, 2014, the Departments of Labor (DOL), Health and Human Service (HHS) and the Treasury (Departments) issued additional FAQ guidance clarifying that these arrangements do not comply with the ACA’s market reforms and may subject employers to penalties. Although it was widely believed that these penalties would apply only to pre-tax arrangements, the FAQs clarify that after-tax reimbursements and cash compensation for individual premiums also do not comply with the ACA’s market reforms and may trigger the excise tax penalties.

This guidance essentially prohibits all employer arrangements that reimburse employees for individual premiums, whether employers treat the money as pre-tax or post-tax for employees.

Health Reimbursement Arrangements

HRAs have been used by employers to help employees pay for the cost of individual insurance policies on a tax-free basis. Unlike health flexible spending accounts (FSAs) and health savings accounts (HSAs), HRAs can be used to reimburse health insurance premiums. Also, unlike an HSA, an individual does not need to be covered under a high-deductible health plan (HDHP) to participate in an HRA. This has made HRAs particularly compatible with individual health insurance policies.

Notice 2013-54 addresses how the ACA’s market reforms apply to HRAs, including HRAs that are not integrated with other group health coverage, or “stand-alone” HRAs. An HRA used to purchase coverage on the individual market cannot be integrated with that individual coverage, and is considered a stand-alone HRA. Some stand-alone HRAs are not subject to the ACA’s market reforms because they fall under an exception, such as retiree-only HRAs. However, beginning in 2014, stand-alone HRAs that do not fall under an exception will not be permitted due to the ACA’s annual limit prohibition and preventive care requirements.

Thus, effective for 2014 plan years, employers will not be able to offer a stand-alone HRA for employees to purchase individual coverage, inside or outside of an Exchange, without violating specific provisions of the ACA and risking exposure to severe financial penalties.

Employer Payment Plans

In Revenue Ruling 61-146, the IRS provided that if an employer reimburses an employee’s substantiated premiums for non-employer sponsored hospital and medical insurance, the payments are excluded from the employee’s gross income under Internal Revenue Code (Code) section 106. This IRS guidance allowed an employer to pay an employee’s premiums for individual health insurance coverage without the employee paying tax on the amount.

Notice 2013-54 referred to this type of arrangement as an “employer payment plan.” An employer payment plan appears to also include any tax-advantaged arrangement to pay for individual health insurance premiums, including employee pre-tax salary reduction contributions paid through a cafeteria plan.

Similar to the guidance for HRAs, Notice 2013-54 provides that an employer payment plan that reimburses employees for their individual insurance policy premiums will not comply with the ACA’s annual limit prohibition and preventive care requirements. Thus, effective for 2014 plan years, these plans will essentially be prohibited.

On May 13, 2014, the IRS issued FAQs addressing the consequences for employers that do not establish a health insurance plan for their own employees, but instead reimburse those employees for premiums they pay for health insurance (either through an Exchange or outside of an Exchange). Because these employer payment plans do not comply with the ACA’s market reforms, the IRS indicated in the FAQs that these arrangements may be subject to an excise tax of $100 per day for each applicable employee ($36,500 per year, per employee) under Code section 4980D.

The Departments’ prior guidance suggested that an employer payment plan does not include an employer-sponsored arrangement that allows an employee to choose either cash or an after-tax amount to be applied toward health coverage. Thus, it was widely believed that premium reimbursement arrangements made on an after-tax basis would generally still be permitted.

However, FAQ guidance issued on Nov. 6, 2014, clarified that after-tax reimbursements and cash compensation for individual premiums also do not comply with the ACA’s market reforms and may trigger the excise tax penalties. This guidance essentially prohibits all employer arrangements that reimburse employees for individual premiums, whether employers treat the money as pre-tax or post-tax for employees.

Cash Reimbursements

According to the new FAQs, an employer arrangement that provides cash reimbursement for an individual market policy is considered to be part of a plan, fund or other arrangement established or maintained for the purpose of providing medical care to employees, without regard to whether the employer treats the money as pre-tax or post-tax for the employee. Therefore, the arrangement is group health plan coverage subject to the ACA’s market reform provisions.

The Departments stressed that these employer health care arrangements cannot be integrated with individual market policies to satisfy the ACA’s market reforms. As a result, these plans will violate the ACA’s market reforms, which can trigger penalties, including excise taxes under Code Section 4980D.

Employees with High Claims Risk

The FAQs also clarify that an employer cannot offer a choice between enrollment in the standard group health plan or cash only to employees with a high claims risk. This practice constitutes unlawful discrimination based on one or more health factors, in violation of federal nondiscrimination laws.

Although employers are permitted to have more favorable rules for eligibility or reduced premiums or contributions based on an adverse health factor (sometimes referred to as benign discrimination), the Departments assert that offering cash-or-coverage arrangements only to employees with a high claims risk is not permissible benign discrimination.

Accordingly, these arrangements will violate the nondiscrimination provisions, regardless of whether:

  • The employer treats the cash as pre-tax or post-tax for the employee;
  • The employer is involved in purchasing or selecting any individual market product; or
  • The employee obtains any individual health insurance.

The Departments also noted that the choice between taxable cash and a tax-favored qualified benefit (the election of coverage under the group health plan) is required to be a Code Section 125 cafeteria plan. Offering this choice to high-risk employees could result in discrimination in favor of highly compensated individuals, in violation of the cafeteria plan nondiscrimination rules.

Cafeteria Plans

A Section 125 Plan, or a cafeteria plan, can be used by employers to help employees pay for certain expenses, including health insurance, on a pre-tax basis. The proposed cafeteria plan regulations from 2007 allow for the pre-tax payment or reimbursement of individual health insurance policy premiums under a cafeteria plan. However, the ACA changes this rule and now prohibits cafeteria plans from paying or reimbursing premiums for individual health insurance policies, effective for 2014.

The ACA’s prohibition on including individual health insurance policies under a cafeteria plan applies to policies purchased on an Exchange and through the private market, as follows:

  • Exchange Coverage: The ACA provides that individual health insurance offered through an Exchange cannot be reimbursed or paid for under a cafeteria plan. Exchange coverage may be funded through a cafeteria plan only if the employee’s employer elects to make group coverage available through the Exchange’s Small Business Health Options Program (SHOP).
  • Non-Exchange Coverage: Notice 2013-54 indicates that, effective for 2014, cafeteria plans may not be used to pay premiums for individual health insurance policies that provide major medical coverage. However, it appears that this restriction does not apply to individual policies that are limited to coverage that is excepted from the ACA’s market reforms, such as retiree-only coverage or limited-scope dental or vision benefits.

Thus, effective for 2014, the tax exclusion provided through a cafeteria plan is only available when group coverage is purchased. However, Notice 2013-54 provided a transition rule for certain cafeteria plans for plan years beginning before Jan. 1, 2014. For cafeteria plans that, as of Sept. 13, 2013, operate on a plan year other than a calendar year, the restriction on purchasing individual Exchange coverage through a cafeteria plan did not apply before the first plan year that begins after Dec. 31, 2013. However, individuals were not permitted to claim a subsidy for any month in which they are covered by an individual plan purchased through an Exchange as a benefit under a cafeteria plan.

Code Section 105 Reimbursement Plans

The Departments also noted in the new FAQ guidance that certain vendors are marketing products to employers claiming that, instead of providing a group health insurance plan, employers can establish a Code Section 105 reimbursement plan that works with health insurance brokers or agents to help employees select individual insurance policies allowing eligible employees to access subsidies for Exchange coverage.

The FAQs assert that these arrangements are problematic for several reasons. First, these arrangements are, themselves, group health plans. Therefore, employees participating in the arrangements are ineligible for Exchange subsidies. The mere fact that the employer is not involved with an employee’s individual selection or purchase of an individual health insurance policy does not prevent the arrangement from being a group health plan.

Second, as explained in previous guidance, these arrangements are subject to the ACA’s market reform provisions, including the annual limit prohibition and preventive care coverage requirement. As noted before, these employer health care arrangements cannot be integrated with individual market policies to satisfy the market reforms and, therefore, can trigger penalties, including excise taxes under Code Section 4980D.

More Information;The Department of Labor (DOL) also issued Technical Release 2013-03 on Sept. 12, 2013, which is substantially identical to IRS Notice 2013-54. In addition, the Department of Health and Human Services (HHS) issued guidance onSept. 16, 2013, to reflect that it concurs with Notice 2013-54. On Jan. 24, 2013, the DOL and HHS also issued FAQs that addressed the ACA’s application to HRAs.

Download the PDF version of the Legislative Brief

Employee Benefits Insights: Open Enrollment Education Opportunities

Open enrollment is a period of time each year when employers permit new employees to enroll in a health insurance plan and allow current employees to make changes to their existing medical coverage. During open enrollment, employees may decide to change plans, add or drop a dependent, or add an optional benefit like a dental plan.

Employers can assist employees during open enrollment by distributing materials that explain new health options and changes to existing benefits. To help employees select the plan option that best meets their needs, employers should provide information:

  • A general summary of what benefits are covered by the plan
  • Limits on coverage, as well as limits on coverage for certain conditions
  • Pre-existing condition clauses that restrict coverage for a specific period of time
  • Coverage for preventive services, procedures and medications
  • Prescription drug coverage details
  • Cost-sharing, i.e. premium contribution, deductible, copayment or coinsurance requirements
  • Consumer directed and high deductible health plans or other non-traditional plan types

The following are ways for employers to improve their open enrollment communication strategies:

  • Communicate frequently with employees regarding their health coverage options, but avoid overwhelming employees with information. Give them ample time to absorb new information, ask questions and express concerns.
  • Use simple terms to explain changes.
  • Thoroughly explain the goals and rationale of health care benefits to managers and business leaders so they can effectively explain health plans to employees.
  • Be honest and direct when discussing health benefits, especially if employees are facing cost increases for their coverage.
  • Discuss the “Five Cs” of enrollment with employees: Cost, coverage information, changes to plans, comparisons to last year’s plans and current options.
  • Provide information to employees about the health care providers or networks that will be available to them in new or revised plan options.
  • Provide testimonials from other employees about their experiences with changes in health care coverage.
  • Use a variety of communication methods, such as the Internet, printed materials and face-to-face discussions.
  • Be ready to answer questions and face challenges from employees regarding changes.
  • Some groups of employees may need additional assistance, particularly those with mental or physical disabilities, low or fixed incomes, parents of children with special needs and non-English speakers. Without special assistance, these groups may miss open enrollment periods or have large gaps in their coverage.

Article adapted with permission from the National Business Group on Health article “Primary Care and the Medical Home: Promoting Health, Preventing Disease, and Reducing Cost.” Download the PDF version or contact Clark & Associates of Nevada, Inc. for more information.