In a previous post, we overviewed three main areas that nonprofits should consider before the 2016 healthcare renewal season begins on November 1: compliance, cost-effectiveness, and employee needs. In this post, we’ll look more closely at compliance, specifically grandfathered plans, applicable large employer (ALE) status, and new IRS reporting requirements.
· With regards to grandfathered healthcare plans, at
the end of the 2015 tax year one of three things may happen: your grandfathered plan will be canceled; your plan will change to adopt ACA guidelines and requirements; or you will be allowed to renew your plan. It is advised to call your insurance carrier as soon as possible to determine if your plan will be canceled or changed since this may be state dependent, and to determine any next steps that need to be taken.
· If you have 50+ full-time staff on your roster in 2015, you will be considered ALE for 2016. Therefore you will be responsible for providingaffordable minimum essential coverage to all full-time employees and dependents. Not offering affordable coverage may result in heavy penalties (“pay or play” requirements). If you expect to shift into ALE status for 2016, you will want to begin developing group health coverage plans as soon as possible to ensure you are in compliance with the ACA.
· In addition, if you are ALE you are also responsible for specific IRS reporting requirements under Section 6056 beginning in 2016. According to the IRS, for the 2015 tax year ALEs must “file information returns with the IRS and provide statements to their full-time employees about the health insurance coverage the employer offered.” This is the first year these reporting requirements will be mandatory.
The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources believed to be reliable, but there is no guarantee as to its accuracy. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a ‘covered opinion’ or other written tax advice and should not be relied upon for any purpose other than its intended purpose