IRS Announces that Personal Protective Equipment Can Be Treated as Medical Expenses
IRS Extends the Individual Tax-Filing Deadline
IRS Announces New COVID-19 Related Guidance for Section 125 Cafeteria Plans and Related High Deductible Health Plans, and ICHRAs
COVID-19 State Quick Reference Chart,Updated 3/18/21
Benefits Compliance COVID-19 FAQ
10th Circuit Rules that Employee Was Entitled to Benefits Due to Ambiguous Eligibility Terms in Plan Documents
Final Reminder: Upcoming IRC 6055 and 6056 Reporting Deadlines
Employers that were ALEs in 2020 must comply with IRC Section 6056 reporting in early 2021. Specifically, ALEs must complete and distribute a Form 1095-C to full-time employees by March 2, 2021 (the IRS changed this from January 31, 2021). The form should detail whether the employee was offered minimum value, affordable coverage during 2020. The forms may be mailed, electronically delivered or delivered by hand (although proof of delivery in some manner is recommended).
If an employer sponsored a self-insured plan during 2020, it must comply with Section 6055 reporting in 2021. Self-insured employers with 50 or more FTEs must complete Section III of Form 1095-C detailing which months the employee (and any applicable spouse and dependents) had coverage under the employer’s plan. If the self-insured employer has fewer than 50 FTEs, it must complete and distribute a Form 1095-B with such information. Again, the forms must be delivered to employees by March 2, 2021.
Employers must also file the forms with the IRS by March 1, 2021 (as February 28, 2021, falls on a Sunday), if filing by paper, and March 31, 2021, if filing electronically. Those that are filing 250 or more forms are required to file electronically. Lastly, the employer is required to file the transmittal Form 1094-C (if filing Forms 1095-C) or Form 1094-B (if filing Forms 1095-B).
As a reminder, the IRS recently provided penalty relief for employers that will allow them to forgo distributing the Form 1095-B to individuals. This comes after the IRS accepted comments on the necessity of the Forms 1095-B now that the individual mandate penalty has been zeroed out. If employers post a notice on their website that the document is available upon request, and fulfil any such request within 30 days, then they will not have to distribute the Forms 1095-B to covered individuals. But keep in mind that there is no such penalty relief for Form 1095-C.
Reminder: 2020 HSA Contributions and Corrections Deadline May 17
Individuals who were HSA-eligible in 2020 have until the tax filing deadline to make or receive contributions. The IRS recently extended the 2020 tax-filing deadline, so 2020 HSA contributions must generally be made by May 17, 2021. This includes employer contributions. The 2020 contribution limit is $3,550 for self-only coverage and $7,100 for any tier of coverage other than self-only. Those aged 55 and older are permitted an additional catch-up contribution of $1,000. An individual’s maximum annual contribution is limited by the number of months they were eligible for the HSA.
There is an exception to this rule. An individual that was HSA eligible on December 1 is permitted to contribute the full statutory maximum for the year. However, if eligible employees do not remain HSA eligible through December of the following year, they may experience tax consequences.
Individuals who contributed more than the allowable amount for 2020 should be refunded the excess contributions and associated interest by May 17, 2021. The excess would be subject to income tax. If the excess is not refunded from the account, it will not only be subject to income tax, but also a 6% excise tax penalty. If an employer is aware of an employee who was not eligible for a contribution or who has contributed more than the allowable amount for 2020, they should work with the HSA bank/trustee to process the excess contribution.
FAQ: What are the penalties if an employer failed to timely file or distribute Forms 1094/95 B&C? Is there an obligation to self-report the violation or is there an IRS-approved self-correction process?
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