Industry News

Pay or Play Penalty—When to Begin Tracking Employee Hours

The Affordable Care Act (ACA) imposes a penalty on applicable large employers (ALEs) that do not offer health insurance coverage to substantially all full-time employees and dependents. Penalties may also be imposed if coverage is offered, but is unaffordable or does not provide minimum value. The ACA’s employer penalty rules are often referred to as “employer shared responsibility” or “pay or play” rules.

IRS Issues Final Rules on Large Employer Reporting Requirements

Section 6056 requires applicable large employers to file information returns with the IRS and to provide statements to full-time employees each year.  On March 5, 2014, the Internal Revenue Service (IRS) issued final regulations on the section 6056 information reporting requirements. These regulations finalize proposed rules issued on Sept. 5, 2013.

Types of Coverage Subject to Form W-2 Reporting

The Affordable Care Act (ACA) requires employers to report the aggregate cost of employer-sponsored group health coverage on employees’ Forms W-2. The purpose of the reporting requirement is to provide employees with useful and comparable information on the cost of their health coverage. It does not cause employer-provided health coverage to become taxable.  This Legislative Brief contains a chart provided by the Internal Revenue Service (IRS) that outlines the types of coverage subject to the Form W-2 reporting requirement.

Health Reimbursement Arrangements (HRAs)—Changes for 2014

HRAs are employer-funded arrangements that reimburse employees for certain medical expenses on a tax-free basis, up to a maximum dollar amount for a coverage period. In general, the rules surrounding HRAs have been less strict than for other types of tax-advantaged medical savings accounts, providing employers with flexibility in designing their HRAs.

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