House health care bill and April Treasury report bring big news for ALEs
May 9, 2017
By Lori Stewart, SPHR®, SHRM-SCP, HCS, Partner, Human Resources Consulting
The latest health care-related news affecting business comes from the April 2017 Treasury report and the House’s newly-passed health care bill on May 4, 2017, which is now in the Senate’s hands. The April 2017 Treasury report sheds light on the actual execution of applying the Employer Shared Responsibility penalty (tax) on 2015 tax returns, while the future status of this provision is affected by the House’s new bill.
Treasury report on employer-filed 1094s and 1095s for 2015
Early in April 2017, the Treasury Inspector General for Tax Administration presented a 43-page summary report entitled “ACA: Assessment of Efforts to Implement the Employer Shared Responsibility Provision” (by the IRS). The report identified system failures which prevented the IRS from accurately assessing Employer Shared Responsibility penalties for calendar year 2015, but it does not indicate they have ceased assessing penalties for 2015.
The report does indicate procedures to identify employers who did not file 1094/1095s who should have for tax year 2015. The report also indicates the IRS is implementing different processes to correctly assess the 2015 filings and to identify any Applicable Large Employers (ALEs) who did not file and therefore would be assessed penalties. The new systems and procedures will also allow for more efficient processing of 2016 Employer Shared Responsibility penalties and beyond.
House health care bill passed on May 4, 2017: Now on to the Senate
The health care bill that passed in the House on May 4, 2017, deletes the Employer Shared Responsibility mandate and the IRS reporting requirements retroactively effective Jan. 1, 2016. If this bill also passes the Senate, ALEs would not need to file 1094s or 1095s in first quarter 2018, and they would not be subject to penalties for not offering coverage to full-time employees in 2016 or 2017. However, this bill will need to pass the Senate.
Many Senators have indicated that the Senate will be more deliberative in their process of bringing a health care replacement bill to the floor for a vote. We can expect that they will present a CBO (Congressional Budget Office) score, which will forecast the cost of each provision in the bill, relative to the current ACA legislation. All of this will take time. And, similar to the House, there are moderate Republicans, and there are conservative Republicans, with wildly different ideas of how to fix, repeal or improve upon the ACA.
HKP will continue to provide updates as they become available.