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Joint Council No. 40
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Affordable Care Act (ACA)

 

 

Why is the Welfare Fund still sending me an IRS Form 1095B and what do I do with it?

The Welfare Fund is sending participants who had medical coverage with this Welfare Fund for any period in the year an IRS Form 1095B because the law has not changed and the “Individual Mandate” still applies. If you had coverage from more than one health coverage provider, you may also receive a 1095A, 1095B or 1095C Form issued by some other entity. These forms inform you of the fact that the issuing provider has submitted information to the IRS to verify that you, and dependents listed on the forms, actually carried medical insurance for all or part of the year.

You will not be required to attach these forms with your IRS Form 1040 series tax return, but since your return asks whether you and your dependents had medical coverage for each month of the tax year, the Form 1095B we are furnishing will back up the statements you make on your tax return.

The IRS has many extensive explanations posted on its website on the many ACA topics. The IRS webpages specifically explaining the Form 1095 series information returns can be followed here: https://www.irs.gov/Affordable-Care-Act/Individuals-and-Families.

 


 

As a Welfare Fund participant will I be safe from the "Individual Mandate" penalties?

The ACA requires all Americans to have health coverage for each month beginning in 2014. This is the so-called "Individual Mandate", formally known as the "Individual Shared Responsibility Fee".

The Individual Mandate fee increases each year. Initially, for 2014 it was capped at $285 per family, but is now $2,085. The scheduled increases are shown below:

The IRS requires that you calculate and self-report your liability for the fee. It is collected as part of your Form 1040 federal tax return. If any member of your household does not have health coverage for any month, the fee is calculated for each month of non-coverage (subject to an allowable 3-month gap).


For completion of my IRS Form 1040, I need to report whether medical coverage through the Welfare Fund is “minimal essential coverage”.


All medical plans provided by the Welfare Fund are considered to be “minimum essential coverage”. Each month of coverage provided to each member of your family by the Welfare Fund is shown on IRS Form 1095B.


What information can the Fund provide to an employer who is required to report on whether “Affordable” coverage of “Minimum Value” is provided to its employees in connection with the “Employer Mandate”?


The ACA contains provisions which may allow the IRS to impose penalties under the employer shared responsibility provisions of the ACA (the so-called “Employer Mandate Penalty”). Employers with less than 50 “full-time equivalent” (FTE) employees are not subject to this provision. If an employer questions how it determines whether it has 50 or more FTE employees, or believes it may qualify for transitional relief, it should seek advice from its tax consultant or refer to guidance published by the IRS in Q&A format found here .


Beginning in the 2016 tax season, large employers became obligated to submit IRS Informational Forms 1094-C and 1095-C to enable the IRS to examine whether they offered affordable coverage of a minimum value to substantially all its full time employees. The Fund does not have information needed to establish whether an employer provides “Affordable” coverage. The law does not obligate the Fund to prepare these forms for contributing employers because some of the participant and dependent information possessed by the Fund is private and other information is not possessed by the Fund. However the Fund can confirm that from 2014 to the present all its medical plans satisfy the ACA “Minimum Value” standard.



Does the Welfare Fund impose a waiting period in excess of 90-Days?


No. This is relevant because the ACA prohibits plans from imposing waiting periods in excess of 90-Days. The terms of the Welfare Fund provide that an employee is covered on the first day of the second month after the employee has satisfied any applicable work (compensable service) requirement specified for the covered classification as defined in the applicable collective bargaining agreement. CBAs of different employers set forth numerous job classifications, such as full-time, part-time, casual, trainee, apprentice, temporary, probationary, and summer help. CBAs are negotiated by employers and labor unions to provide different compensation and rights to employees performing different functions.


The Welfare Fund provides coverage no more than 61-Days after an employee is otherwise eligible to be enrolled after satisfying the applicable CBA’s substantive requirement for eligibility.


 


Are employers required to report the cost of health coverage on IRS Form W-2s they issue to employees covered under this multiemployer fund?

Since the IRS has granted employers who contribute to multiemployer plans a temporary W2 reporting exception for health coverage provided by multiemployer plans, the Welfare Fund does not report the cost of medical coverage.


The IRS states reporting requirements for multiemployer fund contributions may change in the future, but as of this time, W-2 reporting is voluntary with respect to employees receiving health care coverage through a multiemployer fund.

While not legally required, an employer can voluntarily report the “medical only” COBRA rate provided by the Welfare Fund on the W-2. The IRS Affordable Care Act Tax Provisions Home Page states that the amount reported does not affect tax liability, as the value of the employer excludible contribution to health coverage continues to be excludible from an employee's income, and it is not taxable. This reporting is for informational purposes only, to show employees the value of their health care benefits.

For additional information see the article on the IRS website: Form W-2 Reporting of Employer-Sponsored Health Coverage


 

 

 
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