handling affordable care act replacements and corrections

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Handling Affordable Care Act Replacements and Corrections

Presented by Sovos Compliance

February 21, 2017

Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.

2 Agenda

Introductions

The difference between corrections and replacements.

Most likely cause of errors – handled how?

What the solicitation process looks like.

How and why to file corrections in a good-faith year.

What the penalties are.

Latest news from “The Hill”


3

Introducing SovosLeader in Business-to-Government Tax Compliance

4,500 clients operating in 120 different countries from SMB to Fortune 500 organizations

#1 private filer of 10-series forms with over 340M forms and more than 1 billion transactions filed to the IRS last tax year.

30 years of dedicated focus to Tax Information Reporting

Sales & Use Tax

1099 Reporting

Beverage Alcohol

ACA

AEOI

E-Commerce Tax Automation

LatAm Compliance

VAT Reporting


4 Sovos Compliance Presenters

Ray LittlefieldDirector of ACA SalesSovos Compliance

Gerry NelliganJunior Tax CouncilSovos Compliance

John KregerSenior Product ManagerSovos Compliance


Corrections & Replacements


6 Differences? Corrections vs. Replacements

A Replacement is used when an entire transmission is Rejected by AIR, or if a submission within a transmission, is rejected. The entire transmission or the entire submission will be retransmitted to replace the original filing.

A Correction is used when a submission within a transmission, has been Accepted or Accepted with Errors. One or more forms needs to be retransmitted as a Correction to fix an error.


7 Corrections vs. ReplacementsTimeline for Returns• Replacements within 60 days of receiving the transmission status• Corrections must be sent as soon as possible

Transmission Status • Accepted – and all submissions within the transmission were accepted and no errors

were found during processing • Accepted with Errors – No submissions were rejected • Partially Accepted – Transmission was accepted with at least one submission being

rejected and one submission being accepted• Rejected – Each and Every Submission within the Transmission was rejected due to a

fatal error


8 Changes in the Correction & Replacement ProcessCorrection and replacement process remains unchanged from the 2015

reporting yearIRS made some changes to help reporting organizations:• Identifying individuals associated with errors


9 Changes in the Correction & Replacement Process• Identifying IRS business rules directly


Regulatory Changes


11 Regulatory ChangesPub 5164 – early edition and final edition revised 9/2016Pub 5165 – early edition and revisions 12/2016 and 1/2017Pub 5258 – early edition and final edition revised 10/2016AIR Schemas and Business Rules- Known Issues and Solutions: 8/2016, 10/2016, 12/2016, 1/2017, 2/2017- Schemas V1.0 (9/2016) V3.3 (1/30/2017)- *2015 Schemas also updated and revised 1/13/2017


12 Regulatory Changes• New forms and instructions for 2016. Revised Pubs (5164, 5165, 5258) and new and

updated schemas and business rules• New due dates for furnishing recipient copies: March 2, 2017• 1095-Bs – now allow for other TIN Types• Qualifying offer method transition relief removed from form• Number of code changes to 1095-C including adding some new codes and removing

others• Plan start month box still optional• 100 MB Threshold• New instructions for reporting offers of COBRA continuation• Tax year – can file 2015 and 2016 returns. Must follow the 2015 specifications for

2015 and 2016 information


Error… Error… Error…


14 The Big 3 Reasons for Issues (so far)Incorrect or

invalid TIN on covered

individualsBad Name /

TIN combination

Simply missing for dependents

ALE EIN/Name Mismatch

Filing under a DBA name

Months of coverage

validationsOffer of

coverage code not matching

form coverage

data


15 ALE EIN/Name Mismatch

National Passenger Railroad Corporation

-vs-

dba: Amtrak

16


16 TIN Solicitation ProcessInitial solicitations are required when the account is

opened• The filer receives a substantially complete application for

new coverage, or a substantially complete application to add an individual to existing coverage.

• You should note that this rule will also apply for purposes of the initial solicitation for incorrect TINs.

The first annual solicitation (second actual solicitation) must occur within 75 days after the account was opened

• For any individual enrolled in coverage on any day before July 29, 2016, the account is considered open July 29, 2016

TIN solicitations made to the responsible individual for a policy or plan are treated as solicitations for every covered individual on the policy or plan


Good Faith?Transition Relief?


18 What makes a good faith effort?1. Must have provided the returns in a timely manner2. A reasonable cause waiver was obtained

• Any failure was due to causes outside your control• You can show that you had acted responsibly before the cause occurred• You have significant mitigating factors such as:

• A history of properly and timely submission of information returns• You were not previously required to file this particular type of return• You were a victim of a fire or other casualty that made relevant business records unavailable

3. Rumors include:• File at least one correction• Automatic waiver since the Good Faith Transition Relief was extended for 2016 filing


19 What do penalties look like?• $50 per return• $532,000 /yr. Large Business• $186,000 /yr. Small Business

Filed correctly within 30 days of due date

• $100 per return• $1,596,500 /yr. Large Business• $532,000 /yr. Small Business

Filed correctly after 30 days but before August 1st

• $260 per return• $3,193,000 /yr. Large Business• $1,064,000 /yr. Small Business

Filed correctly after August 1st or not filed

• $530 per return• No limitationIntentional disregard


20

Hear Ye, Hear Ye!What’s the latest news from “The Hill”?

The State of the Affordable Care ActThe State of the Affordable Care ActExecutive Order No. 13765

Budget Reconciliation Process

“Repeal and Replace” Plans

The “Repair” Approach

Department of Health and Human Services Proposals

Changes to Reporting Obligations


21

Executive Order: Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal

Direction to Dept. of Human Health Services (DHHS) Targets: Individual Mandate & Essential Benefits IRS penalties vs. DHHS penalties Focuses on areas in which the DHHS Secretary has discretion Actual repeal timing may come as late as 2018


22 The Budget Reconciliation Process Congress defunding what? Republicans plan to utilize a Reconciliation Bill Congress set a benchmark of January 27th

Congressional concern about replacement “Repeal” versus “Repair”


23 Three Approaches to Healthcare Reform Simultaneous “Repeal and Replace” Piecemeal “Repeal and Replace” The “Repair” Approach


24 Prospective Changes to Reporting Obligations

States could retain ACA: thus new reporting Associated Health Plans and Independent Health Pools: thus new

reporting Alternative State plans subject to federal assistance may require

reporting Expanded HSA reporting obligations and new requirements Physician tax deductions for charitable or uncompensated care Individual filing requirements when auto-enrolled Premium deduction and tax credits

Each of the proposed plans may entail modifications to filing requirements and entirely new obligations:


Thanks for attending!

Visit www.sovos.com/ACA for more information on Affordable Care Act reporting.

http://www.sovos.com/ACA