3 Critical Employee Benefits Compliance Questions that Employers Must Answer Now.

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CFO’s, Directors of Human Resources and employers in general are under tremendous pressure to stay compliant with a high number of regulations and mandates imposed by the Affordable Care Act, ERISA, and recent Supreme Court decisions.  Here are three critical areas to consider:


1)       Is your Section 125 plan document up to date regarding the Supreme Court’s Windsor decision?

Internal Revenue Code (IRC) Section 125 provides the basis for which certain employer health insurance plans (and certain other benefits) can be provided, tax-exempt, to employees.  Can you confidently state that your company’s plan documents have been adjusted to accommodate the Windsor decision, as it applies to same-sex, legally-married spouses and the applicable non-discrimination requirements?  If your plan documents are found to be non-compliant, could your employees owe back-taxes on the benefits that they were provided?  If your plan documents are found to be non-compliant, will your company owe back-taxes for the FICA and FUTA amounts that the company did not pay on the value of these benefits?  As you can see, this is an important issue to look into.


2)       Are your plan documents subject to (and compliant with) the foreign language requirements of the ACA?

The Affordable Care Act (ACA) considers that employees should have access to plan documents and information in a format and language that they can understand.  Certain companies are required to provide their plan documents in certain foreign languages, based on a two-tier test.  These requirements include both testing based on the language fluency of the company’s employees as well as language fluency determinations made based on recent geographic census data.  Are your plan documents required to be made available in a foreign language?  If so, which languages?  How are they required to be made available?  The answers to these questions are crucial to compliance with the ACA.


3)       Are you prepared to submit the required Section 6056 return to the IRS?

The ACA requires certain companies to report employer-sponsored health coverage information to the IRS and to employees.  The IRS will use the information verify employer‐sponsored coverage and consider compliance issues. This reporting requirement is found in IRC Section 6056.

In addition, the ACA requires every health insurance company and sponsor of a self‐insured health plan to file an annual return with the IRS reporting information for each individual who is provided with this coverage.  This reporting requirement is found in IRC Section 6055.

The IRS systems compare the information submitted by the employer, with the information submitted by the insurance company and the information on the employee’s W-2, to make certain that they match.

Are you prepared to complete these IRS forms in a manner that will match the reporting that is being submitted by the insurance company?  How will you handle IRS inquiries if the reports do not match?  What are your options if one of your employees seek government subsidies through a state or Federal exchange/marketplace?


If you have questions or comments about this article, please feel free to contact our offices at (813) 818-7600, or to email us at contactus@burriandcompany.com


The Affordable Care Act places extremely high levels of compliance burden on employers, and the learning curve is tremendously steep.  Penalties and fines can quickly mount, and arise from unexpected places.  This article is not legal advice and should not be relied on as legal advice.  It is important that you contact an employee benefits attorney to review your specific situation and to understand areas of potential concern.

TAX ADVICE NOTICE:  we inform you that any U.S. tax advice contained in this communication (or in any attachment) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in this communication (or in any attachment).

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