The IRS has released draft forms that insurers and sponsors of self-insured plans can use to demonstrate compliance with the ACA’s individual mandate during their annual federal tax filing. The forms may be used beginning in early 2016 to report on the individuals who had coverage during the 2015 calendar year.481014627

The forms will also be used by employers with insured and self-insured plans who are subject to the ACA’s employer mandate to demonstrate compliance. This filing will also be made on the basis of the calendar year, regardless of the fiscal year on which the employer administers its health plan(s)—the first is due in early 2016 and will also be based on the 2015 calendar year.

Non-calendar year health plan sponsors that may defer compliance with the employer mandate until the first day of their plan’s 2015-16 fiscal year still need to file a report with the IRS for the entire 2015 calendar year. Our experts in the Lockton Health Reform Advisory Practice have posted a summary of the final regulations governing these reporting obligations, in the Spring 2014 Compliance News eBook, page 50 (click to download).

The forms are available here in a separate downloadable White Paper (click to download). The Lockton Health Advisory Practice noted that the draft forms do not contain instructions, but expects the IRS to make draft guidance available in September. They’re worth reviewing now because they indicate key data points that are important to the IRS, they said.

IRS Raises Affordability Threshold for 2015
In other news, the IRS will raise the affordability threshold for 2015. Employers subject to the ACA’s employer mandate understand that they must satisfy Tier 1 and Tier 2 obligations to avoid penalties. An employer satisfies Tier 1 by offering minimum essential coverage to an adequate percentage (70 percent for 2015, 95 percent for later years) of its full-time employees and their biological and adopted children to age 26 (perhaps through the month the child attains age 26).

An employer satisfies Tier 2 by ensuring the offer of employee-only coverage satisfies a minimum value requirement of an actuarial value of at least 60 percent (we’ve referred to this as qualifying coverage) and is considered affordable. Under the ACA, employee-only coverage is considered affordable if it doesn’t cost the employee more than 9.5 percent of his or her household income.

But the IRS must adjust the affordability threshold periodically to reflect differences in the increase in health insurance premiums relative to increases in income. For plan years beginning in 2015, this adjustment causes the affordability threshold to rise to 9.56 percent. In other words, employee-only coverage will be considered affordable as long as the employee is not asked to pay more than 9.56 percent of household income for it.

Please reach out with any questions. You can reach me at or at my direct line: (646) 572-3962.




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