ERISAwookie

How many employees does the employer have? If its not an applicable large employer, no need to report. There are plenty of products and services out there being marketed for the reporting requirements, but who knows whether they will work effectively. Keep in mind that these forms will be submitted for the first time in 2016, so any product or sevice is probably going to have kinks. If the employer uses payroll software, I have seen some software vendors offering add-ons that are supposed to help with the 6055/6056 reporting. If I remember correctly, Microsoft has an add-on for one of its payroll products. Depending where you are, you might find some law firms offering "benefits consulting" services to handle the reporting requirements. I only know of one regional mid-size firm in my area that is doing this, but I heard the service comes as a package with other ACA compliance services and has a pretty hefty pricetag. Not too surprising, because the reporting and all the junk that comes with it is a major pain. So I don't know if you would find any law firms willing to actually do the reporting for a smaller fee. The employer can also think about engaging a benefits consulting service or benefits administrator to do the reporting but not sure that would be cost-effective either. If the employer is really that small the best bet is probably to do the reporting itself (after consulting with benefits counsel, of course). I'd be interested to see if anyone else knows of smaller employers who are outsourcing the reporting, and if so who is doing it for them.

I am also thinking of this in context of Form 8928. The instructions say: No tax is due for any failure... if it is established to the satisfaction of the Secretary of the Treasury that no one liable for the tax knew, or exercising reasonable diligence would have known, that the failure occurred. Additionally, no tax is due if the failure... was due to reasonable cause and not due to willful neglect and the failure was corrected during the 30-day period beginning on the first date anyone liable for the tax knew , or exercising reasonable diligence would have known, that the failure existed. Back to scenario 4 I posed above. Is requiring employees to attest to the fact that they are enrolled in GHP coverage an exercise of reasonable diligence?

Perhaps I am not being clear. I understand that non-integrated HRAs are nothing new. What I am saying is: the market reforms are relevant to the extent that a non-integrated HRA will be deemed to fail the market reform requirements and as a result will be subject to the $100 per participant per day penalty (Notice 2013-54). There isn't any concern about non-compliance currently, what I am contemplating is in the event a participant is, unbeknownst to the employer, NOT actually enrolled in underlying group health plan coverage, the HRA is now non-integrated, and the employer then makes credits to the HRA before discovering the issue: how is this "corrected" under 4980D to avoid the penalty? It comes to the employer's attention after-the-fact. The employer requires employees to be enrolled in GHP coverage as a condition of participation in the HRA but someone just slips through the cracks. It seems easy enough to uncredit the HRA, since its an employer account. But how do you place the person in an equivalent financial position? The scenarios I posed were potential corrections to a void being hit with the $100 per individual per day penalty tax. If I am missing something obvious please let me know.

The final forms and instructions are finalized. The forms themselves do not appear to have changed at all, but the instructions provide (some) clarifications. http://www.irs.gov/pub/irs-pdf/i109495c.pdf

Can you clarify why the scenarios posed would be incorrect? I understand your point about non-compliance being independent of the more recent guidance with respect to the market reform requirements, but are you implying there is no way to correct in the event credits are made to a non-integrated HRA? My reading of the more recent guidance that says non-integrated HRAs will not meet market reform requirements is that the possbility for correction under 4980D(f)(3) is still an option. So my question more specifically is, how do you put someone in as good a financial position they would have been but-for employer credits being made to the non-integrated HRA? If I am missing something here please let me know.

Does anyone have any ideas as to what the proper correction would be under 4980D(f)(3) for credits made to a non-integrated HRA? It is clear from the IRS, DOL, and HHS guidance that a non-integrated HRA will fail to comply with the annual dollar limit prohibition and preventive services requirements. If a plan sponsor (in the multiemployer plan context) makes credits to an HRA account and then later finds out the individual was not enrolled in a group health plan (rendering the HRA account "non-integrated"), what could be done to correct and avoid being slapped with the $100 per day/per individual excise tax penalty? 4980D(f)(3) states that: (3) Correction A failure of a group health plan shall be treated as corrected if— (A)such failure is retroactively undone to the extent possible, and (B)the person to whom the failure relates is placed in a financial position which is as good as such person would have been in had such failure not occurred. My thoughts: 1. The sponsor could "un-credit" the amount credited to the HRA. This addresses subsection (A) regarding the retroactive "undoing" of the failure. But what about (B)? If the plan also has an FSA feature, presumably the employer could "re-credit" the amount to the FSA, which should place the individual in as good a position they would have been under the HRA (no tax recognition, can reimburse eligible medical expenses, potentially a rollover feature). And if the plan doesn't have an FSA option?... 2. The sponsor could un-credit the HRA, turn around and give that amount to the employee after-tax and gross up his or her wages. 3. The noncompliance period under 4980D(b)(2) would run from the date the individual had both credits to his or her HRA account and was not enrolled in a group health plan, and would end on the date the HRA was un-credited and the employee was made whole. 4. The sponsor could potentially take advantage of the reasonable diligence exception under 4980D©(1) if it required employees to fill out an attestation form certifying that they are enrolled in group health plan coverage. If the employee is not enrolled in the sponsor's coverage, what more should the sponsor be expected to do to exercise reasonable diligence in knowing the failure (i.e., not being enrolled in GHP coverage) exists?