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Regulation and Compliance > Federal Regulation > IRS

IRS posts major PPACA employer advice packet

By Allison Bell

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Officials at the Internal Revenue Service (IRS) are emphasizing in a major new batch of answers to employers’ Patient Protection and Affordable Care Act (PPACA) questions that employers can get relief from penalties if they mess up their first wave of 1095-C coverage reporting notices.

“Applicable large employers” (ALEs) are supposed to send current and former employees their 1095-C’s by Jan. 31, or get an extension and send the notices by the end of the extension period. ALEs that file electronically have until March 31 to get copies of the 1095-C’s, and a 1094-C summary sheet, to the IRS.

PPACA is supposed to impose stiff penalties on employers that violate the 1095-C requirements, but, in the real world, the IRS said back in 2014 that it will not impose penalties on employers that get the notices out on time and show they made a good faith effort to follow the rules, officials say in one of the 26 new PPACA answers in IRS Notice 2015-87.

Even if employers miss the 1095-C deadline, they can still get relief from penalties if they show they have a “reasonable cause,” under IRS rules, for getting the notices out late, officials said.

In other answers, IRS officials talk about matters such as how PPACA interacts with the rules governing cafeteria plans, health reimbursement arrangements (HRAs) and flexible spending arrangements (FSAs).

See also: Is the stand-alone HRA making a comeback?

Officials look, for example, at whether employers can count contributions to HRA accounts when determining whether the health benefits they offered employees were affordable.

If, for example, an employer with a Section 125 cafeteria plan offers employer flex contributions of $600 for a plan year, and the employees who take the contributions have to use them to pay for their share of the group health premiums, the employer could count the contributions as making the coverage more affordable, officials say.

In another answer, officials say an employer’s HRA can be used to pay the premiums for individual insurance “excepted” from the PPACA major medical rules, such as dental insurance, disability insurance or long-term care insurance (LTCI), without causing the HRA or the employer plan to violate PPACA.

In still another answer, officials say that an employer that chooses to let an FSA user carry over some unused FSA value at the end of the year can limit how long the user can continue to keep and carry over the unused value.

See also: IRS eases FSA use-it-or-lose-it rule

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