Stock Plan Solutions/Green Zapato (“SPS/GZ”) announced its 20th anniversary as a national, comprehensive stock plan and tax form reporting firm. SPS/GZ was formed as a merger of two firms, Stock Plan Solutions and Green Zapato Consulting, with the desire to offer the best-of-breed stock plan administration, accounting, and financial reporting services of both legacy firms. SPS/GZ has been continuously finding ways to meet the needs of its clients. In 2010, when the IRS adopted IRC 6039 for reporting income related to certain equity compensation awards, SPS/GZ developed a leading-edge, secure portal, spsgzXchange, to offer a reliable tax reporting service to clients. Satisfied clients began requesting assistance with other tax form reporting needs, such as Forms 1099 and the tax forms required under the Affordable Care Act. So, SPS/GZ expanded to become a full-service tax reporting provider.
From its inception in 2001, SPS/GZ has partnered with E*TRADE Financial Corporate Services to offer clients the best-in-class platform for managing the complexities of their equity compensation programs. Clients of all sizes, both public and private, benefit from the deep expertise of SPS/GZ’s certified professionals. The combination of robust technology with exceptional client service has made SPS/GZ a market leader in third-party stock plan administration services.
“Rick Zatz and I take great pride in what we’ve been able to accomplish over the past 20 years,” said Mary Pat Wood, Co-Founder and Principal. “We consider all of our clients as friends and value the relationships we develop with them. Hitting the 20-year mark reflects the commitment that SPS/GZ has shown to its clients over the past two decades. We are fortunate to not only have experienced continued year-over-year growth, but also to have maintained client loyalty that has generated multiple referrals throughout the years.”
Over the past 11 years, SPS/GZ has grown its tax form reporting segment to include nearly all information returns required by the IRS. Its solution includes a user-friendly corrections portal that interfaces with the IRS and knowledgeable professionals supporting the entire process, from form creation to printing, mailing, and e-filing with the IRS. A client recently remarked, “We really aren’t used to working with organizations who provide the level of customer service that you’ve provided throughout this process.” SPS/GZ thinks this sums up the core value of its business model.
About SPS/GZ:
Stock Plan Solutions/Green Zapato LLC (SPS/GZ), is a leading provider of stock plan outsourcing and tax form reporting solutions. Our experienced professionals work closely with clients to ensure they are fully satisfied and compliant. For more information on SPS/GZ and our full-service solution, please contact us at (888) 375-3049 or visit our website, www.spsgz.com.
Only a few months ago, there were hearings on what the future of the Affordable Care Act (“ACA”) would be and whether the legislation would be considered unconstitutional and struck down. Although the Supreme Court decision on the fate of the ACA is not expected until late June, legal scholars summarize the November 2020 oral arguments as almost certainly in favor of keeping the ACA in place. Additionally, as our country is dealing with a pandemic and the Biden administration is expanding access to affordable health insurance, we do not see ACA going anywhere.
One of the significant components of ACA legislation is that health insurance is affordable. Under the Employer Mandate, Applicable Large Employers (“ALEs”) must offer full-time employees, and their dependents, affordable minimum essential coverage that provides minimum value. Every year the IRS adjusts the affordability percentage to determine if health insurance premiums are considered affordable under ACA regulations. The affordability threshold for 2021 is 9.83%, which is a slight increase from the 2020 affordability rate of 9.78%.
Employers need to take into account the cost to their employees for health coverage when determining the health plan options. To avoid possible penalties, a company must offer single-only health insurance coverage that is below the affordability threshold. To determine whether a plan is affordable, according to ACA regulations, the IRS has established three safe harbors to calculate if the employee contribution to obtain coverage is considered affordable.
It is important to use the proper safe harbor to avoid the possibility of penalties. When working with your broker to choose a health plan for your organization, you should determine the best option to measure affordability and meet the requirements of the ACA. Now more than ever, it is prudent for ALEs to utilize certified professionals and robust solutions for their ACA reporting needs. Please contact SPS/GZ at sales @greenzapto.com with any questions you may have about ACA reporting or to learn more about our tailored solutions.
Form 1099 reporting is oftentimes straightforward, but there can be gray areas as to how to report certain payments and which form should be used. SPS/GZ has had many clients ask, “Where should I report payments made to an attorney, Form 1099-NEC or Form 1099-MISC?” Prior to 2020, attorney fees aggregating $600 or more were reported on Form 1099-MISC in Box 7, non-employee compensation. In tax year 2020, the Internal Revenue Service resurrected Form 1099-NEC, which was discontinued in 1982, to replace Box 7 on the 1099-MISC form. This change did cause some confusion since now many companies had to use two separate forms depending on the type of payments that were made. When reporting attorney fees here are some things to consider
An example of gross proceeds paid to an attorney would be payments made by an insurance company, or other organization, in the full amount to an attorney to settle a claim. In this case, the insurance company/organization would file two forms: a 1099-MISC reporting the amount paid to the attorney in Box 10 as part of a settlement and a 1099-MISC to the attorney’s client in the full amount of the settlement reported in Box 3. The attorney who received the settlement payment and paid the client directly for the settlement would not need to file a 1099 to report the payment.
The major reason the IRS brought back the Form 1099-NEC was to alleviate confusion with the varying filing deadlines based on type of payments being reported on Form 1099-MISC. Prior to 2020, the 1099-MISC had a different deadline for Box 1 payments, non-employee compensation, versus other payment types being reported on the same form. Now the 1099-NEC form that reports non-employee compensation payments has a filing deadline of January 31st, while the other payment types being reported on Form 1099-MISC have a filing date of March 31st.
It is important that companies and attorneys, know the rules for 1099 reporting to avoid costly penalties. The IRS heavily audits these forms and are quick to issue penalties for forms that are filed incorrectly or late. Now that the IRS has separate forms with specific filing deadlines, it will make it much easier for the IRS to track late filings and issue penalties. The late filing penalty is $50 per form if you file within 30 days of the deadline. After 30 days but before August 1st, the penalty increases to $110 per form. After August 1st, the penalty is $270 per form. If a company blatantly disregards their reporting requirement, a penalty of $560 per form penalty can be accessed.
SPS/GZ is a full-service tax reporting firm that provides personalized service and exceptional support, utilizing state-of-the-art technology to create and e-file Forms 1099, Affordable Care Act tax forms, and Forms 3921 and 3922. Reach out today at sales@greenzapato.com or call at (888)375-3049.
The IRS released a notice on March 30, 2021 warning students and staff that they have received many complaints regarding recent emails, impersonating the IRS, targeted at educational institutions. The emails use the IRS name and logo, with a subject line indicating the recipient may be owed a tax refund.
The bogus emails are asking the recipient to provide sensitive information such as Name, Address, Social Security Number, Date of Birth, Driver’s License, and income. This information then can be used to steal a person’s identity or file for a tax refund under the victim’s name. If you believe you are owed a refund, the IRS recommends you go to the “Where’s My Refund” page on their website, www.IRS.gov.
The IRS advises anyone who receives such an email to NOT click on the link in the email, but instead to report it to the IRS. To report such emails to the IRS, save the email using “save as” or forward the email as attachment to phishing@irs.gov.
To prevent identity theft, individuals can apply for an Identity Protection PIN, which helps prevent identity thieves from filing fraudulent tax returns under the victim’s name.
Since this scam seems to be targeted at educational institutions, students and staff should be on high alert for these types of emails to prevent possible identity theft. If you are concerned that your personal data has been compromised, you can go to, https://www.irs.gov/identity-theft-central to determine what steps should be taken.
SPS/GZ is a full-service tax reporting firm that provides personalized service and exceptional support, utilizing state-of-the-art technology to create and e-file Forms 1098-T, various 1099s and Affordable Care Act tax forms 3921 and 3922. For more information, reach out to us at sales@greenzapato.com or call at (888)375-3049. Our complete and affordable solution allows administrators to simply upload their tax form data file to our secure portal in a few easy steps and we handle everything else to keep your organization compliant. Contact us today!
On Thursday, March 11, 2021, President Joe Biden signed a $1.9 trillion dollar bill, the American Rescue Plan Act of 2021 (ARP), into law. “This historic legislation is about rebuilding the backbone of this country and giving people in this nation, working people, middle class folks, people who built the country, a fighting chance,” President Biden said in the Oval Office before signing. “That’s what the essence of it is”.
The legislation includes direct relief payments of up to $1,400 for individuals, major improvements to the affordability of healthcare coverage and access, funding for distribution of vaccines, and the reopening of schools and colleges. Also included is an extension of Unemployment payments, an expanded Child Tax Credits program, as well as relief to states, local governments, veterans, farmers and foreign assistance.
The president, vice president, first lady and second gentlemen, along with other members of the cabinet, are set to travel the country to explain ARP’s benefits to the public. Governors, mayors, local community leaders and others will also help spread the word.
ARP benefits include:
The changes to the Affordable Care Act provide significant funding to make premiums more affordable across the board. Under the ARP, no one would have to pay more than 8.5% of income for a benchmark silver plan, which is the second cheapest plan available.
As an example, those earning from 100% to 150% of the poverty line ($26,500 to $39,750 for a family of four) would go from a maximum premium of 4.14% to zero premium. Those earning twice the poverty threshold would move from a maximum outlay of 6.52% of income to 2%.
With every passing year, it appears more likely that the ACA will remain a part of America’s healthcare system, especially when improvements, such as through the ARP, continue to be passed.
SPS/GZ is a full-service tax reporting firm that provides personalized service and exceptional support, utilizing state-of-the-art technology to create and e-file Forms 1099, Affordable Care Act tax forms, and Forms 3921 and 3922. Reach out today at sales@greenzapato.com or call at (888)375-3049.
In COVID Tax Tip 2021-09, which was issued January 15, 2021, the IRS announced that it will begin accepting and processing 2020 tax year returns on Friday, February 12, 2021. Tax Tip 2021-12 and COVID Tax Tip 2021-13 were issued in the first week of February 2021. In each update, the IRS encourages federal tax returns to be filed electronically and combined with direct deposit. Pandemic related delays associated with paper filing and a backlog are the main reasons given in all three statements.
Direct deposit is fast, secure, easy, and provides options, such as splitting refunds into more than one financial account. Checking, savings, health, education, and some retirement accounts are allowed. U.S. Savings Bonds can also be purchased with refunds, up to $5,000.00, using IRS Form 8888.
COVID Tax Tip 2021-13 covers a number of COVID-19 pandemic tax topics, including who should file a federal tax return, the Recovery Rebate Credit, the Unearned Income Credit, Unemployment Benefits, and two education credits.
The majority of people with gross income of $12,400 or more are required to file federal tax returns. Some with lower incomes aren’t required to file but should consider filing for a refund if they had federal income tax withheld because they may be eligible for tax credits.
Millions of Americans are now receiving or have received taxable unemployment compensation during the pandemic. Taxable benefits include any of the special unemployment compensation authorized under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in spring, 2020. Federal law allows recipients to choose to have a flat 10% withheld to help them avoid owing taxes on this income when they file. Form 1099-G should have been received in January 2021.
Most eligible people have already received full Economic Impact payment amounts for the recovery rebate credit. For those who are eligible and have not received the full amounts of the credits may be eligible to file a claim. In order to file the claim, people must file a tax return, even if they are not normally required to file.
The maximum Economic Impact Payments for qualifying individuals were:
Taxpayers with children, who are eligible for Earned Income Tax Credit, may be given temporary relief if their income was higher in 2019 than in 2020. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 can be used to figure your EITC for 2020. See Publication 596, EIC.
People, who don’t owe taxes, but pay certain higher education expenses may qualify for one of two education credits: The American Opportunity Credit, and the Lifelong Learning Credit, which would both use Form 8863.
SPS/GZ is a full-service tax reporting firm that provides personalized service and exceptional support, utilizing state-of-the-art technology to create and e-file Affordable Care Act tax forms, Forms 1099, and Forms 3921 and 3922. Reach out today at sales@greenzapato.com or call at (888)375-3049. Our solution allows companies to simply upload their data file to our secure portal in a few easy steps and we handle everything else.
On Tuesday, November 10th, the Supreme Court heard arguments in the controversial and closely watched case, California v. Texas (known as Texas v. U.S. in the lower courts). Several Republican led states have joined the Trump Administration In a challenge to the 10-year old legislation.This is the third time that the Affordable Care Act, aka “ACA,” or “Obamacare,” has come before the high court.
It is not clear how the Supreme Court will respond, in what is probably the most controversial case to date, especially since the pandemic is still raging and healthcare is on everyone’s minds. The decision to invalidate the law could impact at least 20 million people who participate in exchanges. In addition, low-income adults who became eligible with the expansion of Medicaid would be affected. Most Americans are in favor of protecting two popular ACA provisions: protecting those with preexisting conditions and allowing parents to keep their children on their health insurance plans until the age of 26.
Mongan told the justices of the court that they “should not invalidate any more of Congress’ work than absolutely necessary.” It would seem that Chief Justice Roberts and Justice Kavanaugh may side with the three liberal justices to uphold the ACA. Both remarked that it isn’t the Supreme Court’s role to invalidate the Affordable Care Act, whether or not any one or more of ACA’s provisions are deemed unconstitutional. Roberts went on to say that if President Trump and the Republicans wanted to strike the law, they should have done it when they had the opportunity to, rather than leaving it up to the courts.
California Solicitor General, Michael Mongan’s closing argument defending ACA follows: “The plain intent of the 2017 amendment was to make 5000A inoperative and unenforceable, not to impose the very commands this court said would be unconstitutional. And the current statutory framework makes clear that Congress wanted every other ACA provision to remain in effect if 5000A were unenforceable, because that’s the precise situation Congress created.”
States, lawmakers, insurers, brokers, and tax reporting firms (like SPS/GZ) are waiting to see what the outcome will be and if any changes will be made to impact the insurance market and the Applicable Large Employer’s insurance and reporting mandates. The Supreme Court’s ruling on this latest ACA challenge is not expected until the end of June.
President-elect Joe Biden responded, “These ideologues are once again trying to strip health coverage away from millions of people. We’re going to build a health-care system that puts you and your families first and that every American can be proud of.”
SPS/GZ is a full-service tax reporting firm that provides personalized service and exceptional support, utilizing state-of-the-art technology to create and e-file Affordable Care Act tax forms, Forms 1099, and Forms 3921 and 3922. Reach out today at sales@greenzapato.com or call at (888)375-3049. Our solution allows companies to simply upload their data file to our secure portal in a few easy steps and we handle everything else.
The IRS released IR-2020-181 on August 17, 2020. This issue notifies taxpayers of deadlines and considerations as they renew Individual Taxpayer Identification Numbers (“ITINs”).
Since 1996, the IRS has issued ITINs to taxpayers and family members who are not eligible to receive a Social Security Number (SSN). Prior to the 2015 Protecting Americans from Tax Hikes (PATH) Act, ITINs could be used indefinitely. ITINs assigned prior to 2013 are scheduled to expire. The PATH Act placed renewal requirement provisions into effect, starting in October 2016. Since then, taxpayers using expired ITINs face refund delays and ineligibility for certain tax credits. Renewals are being processed now. ITINs that do not have a middle digit of 88, 90, 91, 92, 94, 95, 96, 97, 98 or 99 and not used on a tax return for tax years 2017, 2018 or 2019 will not expire in 2020.
Estimates total more than 1 million taxpayers hold potentially expiring ITINs. Expiring ITIN holders may have already received a letter from the IRS informing them of the December 31,2020 expiration date. Those not required to file a tax return are not required to renew the ITIN, however, if future reporting is expected, renewal consideration should be given.
Three groups of taxpayers who need to renew follow:
What should you do if you need to renew your ITIN? To renew an ITIN, the taxpayer should complete Form W-7, “Application for IRS Individual Taxpayer Identification Number,” along with the required documentation. If you fall into one of the above categories, you do not need to wait to receive a CP-48 Notice to renew your ITIN.
The ITIN assignment date can be found on the CP565 ITIN Assignment notice. If you no longer have your CP565, call the IRS at 1-800-829-1040 within the U.S., or 1-267-941-1000 (not a toll-free number) if you are outside the U.S.
SPS/GZ is a full-service tax reporting firm that provides personalized service and exceptional support, utilizing state-of-the-art technology to create and e-file Forms 1099, Affordable Care Act tax forms, and Forms 3921 and 3922. Reach out today at sales@greenzapato.com or call at (888)375-3049. Our solution allows companies to simply upload their 1099 data file to our secure portal in a few easy steps and we handle everything else.
Although there have been attempts by the Trump administration to repeal the Affordable Care Act (“ACA”), it is still in effect and there is important information you should be aware of for 2020 ACA reporting. As always, healthcare costs need to be affordable under the new 2020 guidelines.
If you are an Applicable Large Employer (“ALE”), which is a company that employs 50 or more full-time, or full-time equivalent employees, healthcare cost for single-only coverage cannot exceed 9.78% of household income for 2020. There are three ways to measure affordability under the ACA. If an employer satisfies affordability under one of these three safe harbors, their insurance is considered affordable.
If insurance premiums are not considered affordable, the employer can be penalized. The penalty for 2020 is $3,860.00 per employee per year. This is applied to all employees and not just the employees who were not offered affordable coverage. Typically, this penalty is discovered when an employee, who is classified as full-time, has received a premium tax credit, or has gone onto the Marketplace for coverage. These penalties can be significant, so it is important that companies evaluate their workforce and healthcare plans to determine which safe harbor makes the most sense for their organization when it comes to ACA reporting.
To learn more about ACA compliance and what affordability safe harbor might best fit your needs, please contact SPS/GZ at sales@greenzapato.com or call (888)375-3049.
On July 27, 2020, IR-2020-169 was issued by the IRS, granting a temporary regulation and a proposed regulation to employers under the Families First Coronavirus Response Act (“Families First Act”) and the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). IR-2020-169 issued a proposed regulation to reconcile advance payments of refundable employment tax credits and recapture the benefit of these credits, when necessary, to employers who had paid sick leave and paid family leave.
Employers with fewer than 500 employees are generally required to provide paid sick leave for up to 80 hours and paid family leave for up to 10 weeks if the employee is unable to work or telework due to related COVID-19 reasons. Qualified employers are entitled to fully refundable tax credits to cover the cost of leaves that are required under these acts.
An additional credit available under The CARES Act provides credit for employers experiencing economic hardship due to COVID-19. Certain employers who pay qualified wages to their employees are entitled to the employee retention credit.
The IRS is in the process of revising the following forms: Form 941, Form 943, Form 944, and Form CT-1. Employers will use these returns to claim paid sick and family leave and employee retention credits.
Advance payment of the credits, up to the total allowable amounts, may also be received by employers. Form 7200, Advance Payment of Employer Credits Due To COVID-19 has been created for employers to request the advance. On employment tax returns, employers will be required to reconcile any advance payments claimed on Form 7200 with total credits claimed and total taxes due.
Any credit amount that exceeds the allowable taxpayer amount is considered to be an erroneous refund. Regulations released on July 27, 2020 allow the IRS to efficiently recover any refund while preserving taxpayer administrative protections.
SPS/GZ is a full-service Affordable Care Act (“ACA”) reporting firm that provides personalized service and exceptional support, utilizing state-of-the-art technology to create and e-file ACA forms. Reach out today at sales@greenzapato.com or call at (888)375-3049. SPS/GZ welcomes the opportunity to be your trusted ACA tax form reporting provider.
The July 31, 2020 fee deadline for the Patient-Centered Outcomes Reseach Institute (“PCORI”) is quickly approaching. The payment due on July 31st 2020, covers the plan year for the previous calendar year, see schedule below. The IRS released Notice 2020-44 on June 8, 2020. In this notice, a revised applicable rate was increased from $2.45 to $2.54 for plan sponsors and self-insured health insurance polices. The increased rate should be used to calculate the fee for plans within the time frame between October 1, 2019 and before October 1, 2020. The PCORI fee was established under the Affordable Care Act (“ACA”) to fund research, helping physicians, policy makers and patients, make informed healthcare decisions based on evidence-based medicine.
The PCORI fee has been extended to either 2029 or 2030, an additional 10 years, depending on the plan end date, with the enactment of the 2020 Further Consolidated Appropriations Act. Originally under the ACA, they were set to expire for plan years ending after September 30, 2019. The fees are reported annually on the second quarter IRS Form 720 by self-funded plan employers directly. The fee is calculated by multiplying the average number of covered lives under the plan or policy by the applicable rate. In addition to the rate increase, the notice also offers transition relief for companies that were not expecting the fees to be collected. Transition relief applies to plan years ending between October 1, 2019 and October 1, 2020. The IRS is allowing plan sponsors and self-insured companies to use any “reasonable method” to calculate fees. Employers with fully funded health plans are not required to file, at this time, as insurance carriers are paying PCORI fees and pass the cost on to the employer.
Now more than ever, it is prudent for businesses to utilize certified professionals and robust solutions for their ACA reporting needs. Contact SPSGZ to learn more about ACA compliance, click here.
PCORI PAYMENT SCHEDULE
| PLAN YEAR | PAYMENT AMOUNT | DUE DATE |
| February 1, 2018 – January 31, 2019 | $2.45 | July 31st 2020 |
| March 1, 2018 – February 28, 2019 | $2.45 | July 31st 2020 |
| April 1, 2018 – March 31, 2019 | $2.45 | July 31st 2020 |
| May 1, 2018 – April 30, 2019 | $2.45 | July 31st 2020 |
| June 1, 2018 – May 31, 2019 | $2.45 | July 31st 2020 |
| July 1, 2018 – June 30, 2019 | $2.45 | July 31st 2020 |
| August 1, 2018 – July 31, 2019 | $2.45 | July 31st 2020 |
| September 1, 2018 – August 31, 2019 | $2.45 | July 31st 2020 |
| October 1, 2018 – September 30, 2019 | $2.45 | July 31st 2020 |
| November 1, 2018 – October 31, 2019 | $2.54 | July 31st 2020 |
| December 1, 2018 – November 30, 2019 | $2.54 | July 31st 2020 |
| January 1, 2019 – December 31, 2019 | $2.54 | July 31st 2020 |
IRS website link follows: https://www.irs.gov/affordable-care-act/patient-centered-outreach-research-institute-filing-due-dates-and-applicable-rates
Is your stock administration department stretched too thin this year? How are your department goals working for you? Have you been bogged down with online meetings and reporting? Are there enough hours in the day for you to do all that you need to do? Do you have projects that are not getting your attention due to your daily work? Are you overwhelmed and consumed with challenges?
SPS/GZ is ready to jump in and come to your assistance with your E*TRADE’s Equity Edge Online (“EEO”) platform. We offer short-and long-term remote stock plan administration staffing and outsourcing services. Our experienced team is flexible and accustomed to working remotely. Five immediate tasks that SPS/GZ will manage in order to relieve the burden of administering your equity compensation program follow:
*** SPS/GZ also handles IRC 6039 and 1099 reporting to assist companies with year-end tax reporting responsibilities
Why hobble through the year when our comprehensive services can bring peace of mind and assurance that allow you to free up your time to carry on?
SPS/GZ’s team of certified professionals (CEPs, CPAs) offer affordable, best-in-class administration solutions. Our comprehensive offerings include EEO database audits and implementations, managing all daily administration processes and database maintenance.
SPS/GZ distinguishes itself with our dedication to details, customized & creative solutions, and our commitment to exceeding our clients’ service expectations. Our stock plan administration outsourcing and consulting clients know who their representatives are and call on them to obtain prompt answers to their questions and swift resolution of complex issues.
Contact us today to schedule a call with the team. What are you waiting for?
On July 13, 2020, the IRS released Drafts of the Forms 1094-C and 1095-C for tax year 2020 Affordable Car Act (“ACA”) reporting. The Form 1094-C has remained the same as previous years, but there have been some significant changes to the Form 1095-C. In Part II of the Form 1095-C, the IRS has added two new fields: “Employee’s Age on January 1” in the top portion of Part II, as well as Line 17, “Zip Code”. Additionally, there were new codes added to Line 14, “Offer of Coverage,” labeled 1K through 1S. These changes were made in response to the Departments of Health and Human Services, Labor, and Treasury’s final ruling, “Promoting Healthcare Choice and Competition Across the United States”, which now allows companies to offer Individual Coverage Health Reimbursement Arrangement (“ICHRAs”) to their employees, to be used in combination with nongroup coverage. ICHRAs are a type of Health Reimbursement Accounts (“HRAs”). The coding on Form 1095-C for companies using ICHRAs (a type of HRAs) is complex and requires significant modification to the existing software platforms and service offerings for ACA.
An HRA is an account-based health plan that allows employers to offer a monthly allowance, tax-free, to employees, which can be used to reimburse qualified out-of-pocket medical expenses including reimbursement for the monthly cost of individual plans through the Marketplace or private insurance companies. Currently, there are four types of HRAs:
HRA Integrated with Employer-Sponsored Health Coverage – An integrated HRA, is an HRA that is offered with another group health plan, that on its own meets the ACA requirements.
This type of HRA is typically linked with a high deductible health plan.
Individual Coverage HRA (ICHRAs) – If an employer offers employees an individual coverage HRA, Employees and their dependents must be enrolled in individual health insurance coverage before being eligible for any reimbursements under the Individual Coverage HRA.
Qualified Small Employer HRAs (QSEHRA)– Small Employers, non-applicable large employers, who don’t offer group health plans to their employees can help employees pay for medical expenses through a QSEHRA.
Excepted Benefit HRA (EBHRAs) – The Excepted Benefit HRA offers employers of any size an opportunity to use pretax money to reimburse certain limited expenses such as, vision, dental or other benefits that would not fall under the ACA required covered health benefits. Companies offering EBHRAs must also offer group health coverage. Employees do not need to enroll in the group health plan to participate in the excepted benefit HRAs. An employer cannot offer both an excepted benefit HRA and an ICHRA to the same employee.
As of January 1st, 2020, Individual Coverage HSAs (ICHRAs) is an option for companies to meet the ACA regulation of Minimum Essential Coverage (“MEC”) for Applicable Large Employers (“ALEs”), which are companies with 50 or more full-time or full-time equivalent employees, as long as the ICHRA is affordable. Line 17 was added to the Form 1095-C, which is populated monthly, with the zip code the employer used to determine affordability. Affordability can be based on either the employee’s primary residence or the employee’s primary employment site zip code. As discussed above, there also has been an addition of eight Series 1 codes (1L, 1M, 1N, 1O, 1P, 1Q, 1R & 1S) for Line 14, to report the employer’s offer of an Individual Coverage HRAs (ICHRAs) and seven Series 1 codes that are identified as “reserved for future use.”
The variety of HRAs and their requirements can be very complicated. Therefore, if your company is considering incorporating an HRA plan as part of your healthcare strategy, it is advisable to discuss your options with your company’s insurance broker. Also, if your company is an ALE, it is important to ensure that the plans are compliant and that the ALE is meeting all obligations under the Affordable Care Act, including the reporting requirements, to avoid exposure to possible penalties.
Now more than ever, it is prudent for ALEs to utilize certified professionals and robust solutions for their ACA reporting needs.
To learn more about ACA compliance, click here.
We are here to help! Please contact SPS/GZ with any questions you may have about ACA reporting.
It is important that employers make sure they are aware of the distinction between a small employer and a large employer when it comes to the health care laws and other tax provisions. According to the Affordable Care Act (“ACA”), companies that have 50 or more full-time or full-time equivalent employees are considered Applicable Large Employers (“ALEs”). As an ALE, companies are subject to the employer shared responsibility provision, which requires employers to offer minimum essential coverage that is “affordable” and provides “minimum value” to their full-time employees and their dependents, or face a possible penalty by the IRS. Along with offering health coverage that meets ACA requirements, ALEs are responsible for furnishing Form 1095-C to employees and e-filing these forms with the IRS. Form 1095-C, which is entitled, “Employer-Provided Health Insurance Offer and Coverage,” indicates the months employees were offered affordable, minimum value health insurance during the year. ALEs are also required to file Form 1094-C, “Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns,” with the IRS. The reporting requirement is necessary to determine if an employee is eligible to claim the Premium Tax Credit, offered pursuant to the ACA, for any months during the calendar year.
To determine if your company is an ALE for the current tax reporting year, an employer would add its total number of full-time employees (someone who works 30 or more hours a week) for each month of the prior calendar year to the total number of full-time equivalent employees for each calendar month of the prior calendar year and divide that total number by 12. Full-time equivalent employees are calculated by adding all the part-time employees’ hours for the month divided by 120. If the number of full-time AND full-time equivalent employees is over 50, the employer must offer health coverage to their employees and fulfill this reporting obligation. If a company has affiliates with common ownership, the consolidated employer group is treated as a single employer for determining ALE status and thus, the employee counts of FT and FTEs employees should be combined.
If an employer is not considered an ALE and has fewer than 25 employees, it may be eligible for a Small Business Health Care Tax Credit (“SBHCTC”), which could offer a savings of 50% off the costs it pays for its employees’ premiums. To be eligible for the SBHCTC, an employer needs to meet the following criteria:
– Purchase coverage through the Small Business Health Options Program (SHOP) Marketplace
– Pay average wages of less than $50,000 a year per full-time equivalent, adjusted for inflation.
– Pay at least 50% of the qualified employees’ health care premiums
It is important to note that the employer mandated reporting requirements under the ACA apply to any self-insured company, regardless of size. The annual reporting requirement for self-insured companies include the disclosure of health coverage for their employees and dependents. Self-insured employers that are not ALEs need to complete Forms 1095-B and the transmittal Form 1094-B to meet the ACA reporting requirements. If an employer is an ALE and self-insured, they need to report health coverage information as required by fully-insured companies. In addition, they also need to complete information on the health coverage for their dependents in Part III of the 1095-C Form.
For more information on ACA reporting requirements depending on the size of your company please visit the IRS website.
Sound complicated? It is! Now more than ever, it is prudent for ALEs to utilize certified professionals and robust solutions for their ACA reporting needs.
To learn more about ACA compliance, click here.We are here to help! Please contact SPS/GZ with any questions you may have about ACA reporting. sales@greenzapato.com.
On June 3,2020, the IRS released Notice 2020-42. This notice provides temporary administration relief and flexibility to participants or beneficiaries and plan administrators in qualified retirement plans and other tax-favored retirement arrangements.
For the period between January 1,2020 through December 31,2020, participants or beneficiaries and plan administrators will be relieved of the physical presence requirement. In states that allow remote notarization, individuals are now able to access electronic mediums to be used to make participant elections. The electronic system must be designed to preclude any person other than the participant to make the election. In addition, the system must also provide reasonable time to review, make changes or to rescind the terms of the election before it becomes effective, as well as provide a way to confirm the election, either in writing or under a system to include applicable notice requirements. In the case where a participant election is witnessed by a plan representative, the individual may use an electronic system with audio-video technology. As permitted by the Coronavirus, Aid, Relief, and Economic Security Act (“CARES Act”), guidance is also given to accommodate social distancing practices in local shutdowns where the intent is to safely facilitate payments of COVID-19 related plan loans and distributions. SPS/GZ is a full-service ACA reporting firm that provides personalized service and exceptional support, utilizing state-of-the-art technology to create and e-file ACA forms. Let SPS/GZ be your trusted ACA tax form reporting provider.
