On December 18, 2015, President Barrack Obama signed, and Congress approved, the Consolidation Appropriations Act of 2016. The legislation includes a two-year delay of the Affordable Care Act’s so-called “Cadillac Tax” provisions and makes them tax deductible for employers.
The Cadillac Tax was originally slated to take effect in 2018, but will now take effect in 2020. The Cadillac Tax is an excise tax on high-cost health plans that will have to be paid by employers. Health plans that cost more than a projected $10,200 for an individual or $27,500 for a family will be subject to a 40% tax on the amount of the plan that exceeds the threshold. The amounts will also be adjusted annually for inflation once the tax takes effect.
What Does This Mean For You? If you are an employer who has historically offered a rich health insurance plan to your employees, you now have additional time to prepare for the implementation of the Cadillac Tax and develop strategies to deal with the tax when it becomes effective.
On December 29, 2015, the Internal Revenue Service (“IRS”) issued Notice 2016-4 which extends the time for the information reporting requirements under Sections 6055 and 6056 of the Internal Revenue Code as amended by the Affordable Care Act. Under the Notice, Employers have until March 31, 2016 to furnish Form 1095-B or Form 1095-C to employees (previously February 1, 2016). Employers have until May 31, 2016 (or June 30, 2016 if filing electronically) to file either Form 1094-B or Form 1094-C with the IRS (previously February 29, 2016 and March 31, 2016, respectively).
Section 6056 and the accompanying regulations provide that the reporting requirement can be fulfilled by filing a separate return for each employee (Form 1095-C Employee Statement) along with a transmittal form (Form 1094-C Transmittal Form). Alternative reporting methods may be available for certain groups of employees. Applicable Large Employers who sponsor a self-insured health care plan are subject to additional reporting requirements pursuant to Section 6055 of the Internal Revenue Code (Form 1094-B Transmittal of Health Coverage Informational Returns and Form 1094-C Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns).
What Does This Mean For You? While employers have received an extension of time to comply with the reporting requirements, Employers are advised to furnish employee statements and file informational returns with the IRS as soon as they are complete. If you have previously applied to the IRS for an extension of time and have not yet received a response, you will not receive a decision on your request.
If you have any questions about these or any other employment or labor law issue, please contact Grace Nguyen Bond at (717) 509-7226 or firstname.lastname@example.org or Whitney Rahman at (717) 509-7237 or email@example.com.