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ACA Reporting

What is it?

The IRS now requires all ALE's (Applicable Large Employers) to report on whether or not their employees were offered health insurance.

Is this a new employer requirement?

For 2015, the IRS required that ALE's put forth a "good faith effort" in filling out their 1095 C's.

For 2016, there are substantial penalties in place for failing to report correctly on these forms.

What do I need to do as an employer?

Determine whether or not you have 50 full time equivalent employees (FTEE'S).

You need to fill out the form, or find a partner to do so. EBC now offers packages that require little action on your part, but ensure that you will be in compliance and avoid penalties.

S125 Premium Only Plan

What is it?

The Section 125 Premium Only Plan provides tax savings by removing employee medical premiums from gross salary prior to calculation of federal income and Social Security taxes, as allowed under Internal Revenue Code (IRC) Section 125. S125 amendments are documents used to update prior years S125 Plan.

Do all employees receive the benefit automatically?

Yes, only if an employer's S125 Premium Only Plan includes particular language. If not, participants need to sign a S125 Premium Only Election/Waiver Form upon hire. This form enables employees to elect/waive the right to experience pre-tax deductions for their benefit plan(s). Participants may change their election status only after experiencing a qualifying event such as birth, marriage, divorce, etc.

Are there penalties if I don't have a S125 Plan on file?

The IRS can penalize an employer that does not have a S125 Premium Only Plan in force by disallowing employee pre-tax deductions, charge retro taxes, and other tax penalties. ERISA and the DOL can penalize an employer $110 per participant and up to $5,000 or 1 year imprisonment for willful violations respectively for not being compliant.

What do I need to do as an employer?

If your S125 Premium Only Plan does not include language covering all employee's deductions on a pre-tax basis, you need to ensure a S125 Premium Only Plan Election/Waiver Form is signed and on file for all participants. Employers also need to annually distribute a S125 Premium Only Plan Summary Plan Description. A S125 Premium Only Plan Summary Plan Description is a written summary of the benefits covered under the S125 Premium Only Plan.

How can I update my S125 Plan?

S125 amendments are documents used to update prior years S125 Plan. These amendment documents must be created and distributed to plan participants anytime there is a modification that must be disclosed to participants and beneficiaries ?i.e. change in premium amounts, change in employer contribution, change in employee contributions, change in eligibility, etc. Plan participants should receive amendments within 60 days after the modification is adopted or with communications provided at regular intervals if the plan sponsor provides communications at regular intervals of not more than 90 days. A new S125 plan must be created and distributed to plan participants every 5 years.

S125 POP Non-Discrimination Testing

What is it?

In order to qualify for tax-favored status, a Section 125 Premium Only Plan must not discriminate in favor of highly compensated employees (HCEs) and key employees with respect to eligibility, contributions, and benefits. In order to document compliance an annual test must be performed and the results documented.

Are there penalties if I don't have a S125 Premium Only Plan on file?

The IRS can penalize an employer that does not have a S125 Premium Only Plan in force by disallowing employee pre-tax deductions, charge retro taxes, and other tax penalties. ERISA and the DOL can penalize an employer $110 per participant and up to $5,000 or 1 year imprisonment for willful violations respectively for not being compliant.

Welfare Benefit Plan

What is it?

A DOL required legal document that summarizes various health or welfare benefit plans including medical, health reimbursement account (HRA), flexible spending account (FSA), employee assistance program (EAP), dental, vision, disability (short and long term), some voluntary plans (AFLAC, Allstate), etc.

Is this a new employer requirement?

Welfare Benefit Plans have been an employer requirement since the 1970's. Only recently, as the focus on this nation's health care increases, has enforcement of these required documents escalated.

Are there penalties if I don't have a Welfare Benefit Plan on file?

ERISA can penalize an employer $110 per day per policy for failure to distribute the SPD, $100 per day per occurrence if the employer did not know about the regulation, and $1,100 per day per plan for failure to file 5500's (only applies to groups with 100 or more participant at the beginning of a plan year)

Welfare Benefit Plan SPD

What is it?

It is a summary of benefits described in a plan administrator's Welfare Benefit Plan which is provided to participants and beneficiaries. A Summary Plan Description informs participants and beneficiaries about their plan and how it operates. This summary must include all information required by ERISA, including a description of the benefits, eligibility requirements, funding arrangements, claims procedures, and participant rights under ERISA.

Is this a new employer requirement?

Welfare Benefit Plans Summary Plan Descriptions have been an employer requirement since the 1970s. Only recently, as the focus on this nation's health care increases, has enforcement of these required documents escalated.

Are there penalties if I don't have a Welfare Benefit Plan on file?

ERISA can penalize an employer $110 per participant for failure to distribute the SPD, $100 per day per occurrence if the employer did not know about the regulation, and $1,100 per day per plan for failure to file 5500s (only applies to groups with 100 or more participant at the beginning of a plan year).

How can I update my Welfare Benefit Plan SPD?

SMR or Summary of Material Reduction and SMM or Summary of Material Modification amendments are documents used to update prior years' Summary Plan Descriptions. These amendment documents must be created and distributed to plan participants anytime there is a modification that must be disclosed to participants and beneficiaries ?i.e. change in premium amounts, change in employer contribution, change in employee contributions, change in eligibility, etc. Plan participants should receive amendments within 60 days after the modification is adopted or with communications provided at regular intervals if the plan sponsor provides communications at regular intervals of not more than 90 days. A new SPD must be created and distributed to plan participants every 5 years.

5500

What is it?

The Form 5500 Series is an important compliance, research, and disclosure tool for the Department of Labor, a disclosure document for plan participants and beneficiaries, and a source of information and data for use by other Federal agencies, Congress, and the private sector in assessing employee benefit, tax, and economic trends and policies. The Form 5500 Series is part of ERISA's overall reporting and disclosure framework, which is intended to assure that employee benefit plans are operated and managed in accordance with certain prescribed standards and that participants and beneficiaries, as well as regulators, are provided or have access to sufficient information to protect the rights and benefits of participants and beneficiaries under employee benefit plans.

Does this affect my business?

A Welfare benefit plan that is "unfunded" or "fully insured" or a combination of the two and covers 100 or more participants at the beginning of the plan year must file Form 5500 and required schedules. If your Welfare benefit plan covers fewer than 100 participants at the beginning of the plan year you are exempt from filing a 5500 form.

What are the Schedules mentioned above?

see Quick Reference Chart of Form 5500 below

When is it due to the DOL?

Form 5500 is due seven months after the end of the plan year, but may be extended to an additional 2 1/2 months by filling out Form 5558 ?Application for Extension of Time To file Certain Employee Plan Returns.

Are there penalties if I don't file?

ERISA can penalize an employer $1,100 per day with no maximum for a plan administrator who fails or refuses to file a complete report. The IRS can also penalize an employer of $25 per day, up to $15,000 per year, for not filing returns by the due date.

What is a Summary Annual Report?

It is an abstract of the information in the plan's Form 5500 annual report filed with the DOL. Employers must distribute its Summary Annual Report information within nine months after the close of the plan year.

Are there penalties if I don't distribute a Summary Annual Report?

A penalty of up to $110 per day can be imposed by a court if a Summary Annual Report is not provided to plan participants or beneficiaries. This penalty is payable to the participant or beneficiary filing the civil action.