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How Does the FFCRA Affect My Employee’s Coverage?

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The Families First Coronavirus Response Act is an Act of Congress meant to respond to the economic impacts of the ongoing 2019–20 coronavirus pandemic. The act will provide funding for free coronavirus testing, 14-day paid leave for American workers affected by the pandemic, and increased funding for food stamps. So, how does the FFCRA affect my employee’s coverage?

As the effects of Coronavirus continue to unfold, we have seen many changes to how companies have to adjust their benefits. Here are some strategies that employers can utilize to prepare for the changes:

Employer-provided health coverage: The Families First Coronavirus Response Act ensures that group health plans cover COVID-19 screenings without cost-sharing. The law, however,  does not require coverage for treatment without cost-sharing; treatment costs will be based on the terms of the benefits plan.

The IRS states that employees who have coverage with a high-deductible health plan are able to get COVID-19 testing and treatment without additional expenses. 

Paid leave and short-term/ long-term disability coverage: Employees with less than 500 employees must provide up to 12 weeks of leave related to child care with the expansion of the Family and Medical Leave Act, and up to 80 hours of emergency paid sick leave to employees who are full-time. 

Families first does not address employees who were on disability or leave before the outbreak. 

Employer tax credits for paid leave: The FFRCA has provided multiple tax credits to aid employers as they attempt to meet the new requirements. These tax credits are equivalent to 100% of the qualifying leave wages against the employer’s portion of Social Security tax. 

Continuing health coverage during furloughs and mandated leaves of absence. During unpaid leaves of absences that are extended, like a temporary layoff of furlough, health benefits are typically halted. 

Review your insurance contracts and stop-loss policies to determine how to regard employees who lose eligibility due to an extended leave of absence.Group health brokers can help you navigate extended leave coverage for W-2 employees. 

(COBRA), where furloughed employees can choose to remain on the group health coverage the employer must collect the amount of the employees premium. If an employee is receiving payments from accrued time-off, it is possible to collect premiums from those payments. 

Employer inquiries, screenings, and disclosures for infected employees: Asking employees about their health condition is  not a HIPAA violation. Other laws, like the ADA, don’t allow confidential information to be disclosed that concerns employees. If employers screen employees onsite, test results are not associated with a health plan.

Telemedicine programs: The use of virtual medicine gives employees the ability to remain home while being cared for medically, which helps halt the spread of COVID-19.  

Employer expenses with a quarantine employee: Some expenses incurred while an employee is quarantined can be considered deductible. 

As we continue to navigate through COVID-19 we will likely see more changes to benefits that are being offered to employees. Check back for updates

What You Need to Know about 2020 1094/1095 Filing

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Due to the Coronavirus outbreak, the IRS has pushed back the tax filing deadline to June 15, 2020, for individuals, but there have been no specific details into filing for 1094/1095. The only information they gave was that the 30-day extension that can be filed past March 2 can be extended an additional 30 days. Here’s what you need to know about 2020 1094/1095 filing.

Form 1094-C/1095-C

Form 1095-C, which is filed to any full-time employee of an Applicable Large Employers member (employers with 50 or more full-time employees), who is full-time for one or more months of the tax year. These members report information regarding each employee for all 12 months of the year.

The information that is reported from both 1094-C and 1095-C is used to determine employer liability for payment under the employer’s shared responsibility provision, section 4980H, and the amount, if any, that is owed. 

Employers that are subject to the ACA must distribute 1095 reporting forms to employees and transmit copies to the IRS, with a few exceptions:

Form 1095 B, Health Coverage

  • . Transmittal Form 1094-B to accompany Form 1095-B
  • Instructions for Forms 1094-B and 1095-B
  • Form 1095-C, Employer-Provided Health Insurance Offer and Coverage
  • Transmittal Form 1094-C to accompany Form 1095-C
  • Instructions for Forms  1094-C and 1095-C

Forms 1094-B/ 1094-B

Information in form 1095 B is reported to the IRS and taxpayers regarding employees who are covered by minimum essential coverage (which includes government-sponsored programs, eligible employer-sponsored plans, individual market plans, other Department of Health and Human Services coverage). Eligibility for this coverage may affect a taxpayer’s eligibility for the premium tax credit.

Everyone who provides minimum essential coverage to employees during a year must file an information return that reports the coverage, using forms 1094-B and 1095-B.

There is an automatic 30-day extension for both forms 1094-B and 1095-B, which you can receive by completing Form 8809 and filing it with the IRS on or before the due date. There is no need for a signature or explanation to receive the extension, but form 8809 must be filed before the due date of the returns. You may also apply for an additional 30-day extension under certain hardship conditions.

At SBMA, we take the complexity of 1094/ 1095 filing off your plate.  Our team will take care of all of the filings and, in the event the IRS sends a letter saying the filing was incorrect, we will take care of the refiling on your company’s behalf. 

ACA Penalties May Affect Your Business

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Under the Affordable Care Act (ACA), large employers are required to offer health insurance to their employees. Despite everything going on, the IRS will continue issuing letters to large employers regarding penalties for years prior. Beginning in 2015, employers that do not meet the ACA standards can be assessed by a shared responsibility payment. Here are a few of the details behind the ACA health plan penalties and what that may mean for your business:

What are the standards for coverage under the ACA?

For employers to avoid penalties, they must meet three requirements:

Minimum essential coverage: Employers must offer healthcare coverage to at least 95% of full-time employees as well as their dependents until they reach the age of 26. Part-time employees who work fewer than 30 hours a week are not required to have coverage by their employer. 

Employers who do not meet the minimum essential coverage requirements could receive a penalty equal to the number of full-time employees, minus 30, multiplied by $2,000. This penalty can incur if one full-time employee purchases coverage with premium tax credits within the Health Insurance Marketplace. For 2020, the penalty is $2,570 for the year. 

Minimum value: The ACA also required employers to offer health coverage of a predetermined minimum value. The plan should cover certain medical expenses and pay at least 60% of the employee’s health care costs to meet this minimum value requirement. Employees would pay the additional 40% with deductibles and copays. 

Employers can determine insurance value by looking at the Summary of Benefits and Coverage document or by asking the health insurance providers. Employers can also calculate the minimum value on their own by using a government calculator or engage an actuary to determine the value. It is important to have written documentation that shows that your coverage supports the minimum value requirement.

Affordability: Lastly, the healthcare plan must meet the ACA’s affordability standard. This limits the amount employers can charge employees for self-only coverage. To be considered ‘affordable’ employee’s cost for self-only coverage can’t go above 9.5% of the employee’s wages in box 1 of their W-2 Form, the employee’s rate of pay, or the federal poverty level. 

If an employer does not meet the affordability requirement, they could open themselves up to a $3,000 annual penalty for the full-time employees that purchase health coverage on the Marketplace. The penalty adjusts for inflation rates, and for 2020 the rate is $3,860. 

What is considered a large employer?

Employers with at least 50 full-time employees (including full-time equivalents) from the previous year are considered large employers. Aggregated groups can make this consideration sometimes difficult. Companies with fewer than 50 full-time employees, but are involved in an aggregated group with other companies, will be considered large employers. 

These aggregated groups include a parent-subsidiary group if one company owns 80% of one or more companies; brother-sister groups with five or fewer employees, estates or trusts own 80% of two or more entities and have 50% identical ownership of those entities; tax-exempt organizations if 80% of directors or trustees of one organization are representatives of or controlled by another organization; firms that provide services, like healthcare, law, engineering, accounting, etc. if the firms have common owners, provide services for each other, or work together to provide services to customers; and lastly, any firm whose main revenue comes from the management of other companies.

As you begin calculating the number of individuals you employed last year, determine the number of employees who have worked at least 30 hours a week on average. Those who haven’t reached that number are added together and divided by 120 to determine full-time equivalents. 

What to do if you receive a penalty?

The employers that do not offer health coverage and meet the ACA requirements will owe penalties for full-time employees that report premium tax credits on their income tax returns for health insurance when purchased through the Marketplace. If this happens, the IRS will mail them a tax liability notice and allow them to respond prior to any required payment. 

Forms 1095- C and 1094- C and employee’s 1040 Forms are where the IRS will determine any shared responsibility payment. Once an employer receives notice from the IRS, employers have 30 days to respond by giving the IRS an explanation of why the assessment is incorrect in their view or pay the penalty. 

At SBMA, we ensure all of the coverage that is offered is ACA compliant. We help file your 1094 and 1095 Forms. Contact us for more information!