Podcast Episode 107: Mid-Summer Compliance Reminders (Oldies, Revivals and Newbies!)
July Get Wise Wednesdays – Register Now
Reminder: Form 5500 Filing for Calendar Year Plans Due July 31
Reminder: PCOR Fee, Form 720 Filing Due July 31
Reminder: ARPA Tax Credit, Form 941 Filing Due July 31
In this episode, Chase Cannon and Suzanne Spradley review and discuss three upcoming mid-summer compliance obligations with a July 31 due date: Form 5500 (an oldie), PCOR Fee (a revival) and ARPA COBRA subsidy tax credits (a newbie). Chase outlines the requirements, forms and challenges relating to those obligations as Suzanne relays some frequently asked questions that employers ask as they seek to comply. The two close by discussing a quick scenario relating to the ARPA tax credit filing process.
Every other week, NFP's legal experts make the subject of compliance personal for a wide audience. By breaking down the daunting details of emerging policies and bridging the gap between legislation and what it means for the listener, Chase Cannon and Suzanne Spradley make compliance issues relatable and relevant. Visit our Soundcloud page every two weeks for the most up-to-date episode.
Join us as we discuss various leaves of absence and their impact on benefits administration. We will discuss topics such as benefit eligibility, contributions, and COBRA applicability. In addition, we will review considerations under the Affordable Care Act (ACA), Family and Medical Leave Act (FMLA), emergency paid sick leave (EPSL)/expanded FMLA (EFMLA), Section 125, and state law. By the end of the presentation, participants should have a better understanding of benefits compliance issues that are implicated with administering leaves of absence.
Parting is Such Sweet Sorrow: Leaves of Absence and Benefits Compliance Considerations
July 21, 2021
2:00 to 3:00 p.m. CT (3:00 to 4:00 p.m. ET)
A recording will be posted to the NFP Webinars Page within 48 hours of the live webinar. Those listening to a recorded webinar aren’t eligible for recertification credit.
All programs are pending approval for 1.0 (general) recertification credit hour toward PHR, SPHR and GPHR recertification through the HR Certification Institute. For more information about certification or recertification, visit the HR Certification Institute website at hrci.org.
Applicable plan sponsors must file Form 5500-series returns on the last day of the seventh month after their plan year ends. As a result, calendar-year plans generally must file by July 31 of this year (reporting on the 2020 plan year). (Keep in mind, though that the actual due date will be August 2, 2021, since July 31 falls on a Saturday.) Plans may request a two-and-a-half-month extension to file by submitting Form 5558, Application for Extension of Time to File Certain Employee Plan Returns, by that plan's original due date.
As a reminder, group health plans sponsored by a governmental or church entity aren’t required to file a Form 5500, as those plans aren’t subject to ERISA. Additionally, unfunded, insured or combination unfunded and insured health plans with fewer than 100 participants on the first day of the plan year are also exempt from the filing.
NFP has vendors available to assist with filings. Please ask your advisor if you need assistance.
The ACA imposed the PCOR fee on health plans to support clinical effectiveness research. The PCOR fee applies to plan years ending on or after October 1, 2012, and before October 1, 2029. The PCOR fee is generally due by July 31 of the calendar year following the close of the plan year. (Keep in mind, though that the actual due date will be August 2, 2021, since July 31 falls on a Saturday.)
PCOR fees are required to be reported annually on Form 720, Quarterly Federal Excise Tax Return, for the second quarter of the calendar year. Plan sponsors that are subject to PCOR fees but no other types of excise taxes should file Form 720 only for the second quarter. No filings are needed for the other quarters for such employers.
The PCOR fee is generally assessed based on the number of employees, spouses and dependents that are covered by the plan. For plan years ending in 2020 on or before October 1, 2020, the fee was $2.54 multiplied by the average number of lives covered under the plan. For plan years ending between October 1, 2020, and October 1, 2021, the fee increased to $2.66. Form 720 and corresponding instructions were revised to reflect the increased fee.
The PCOR fee can be paid electronically or mailed to the IRS with the Form 720 using a Form 720-V payment voucher. According to the IRS, the fee is tax-deductible as a business expense.
As a reminder, the insurer is responsible for filing and paying the fee for a fully insured plan. The employer plan sponsor is responsible for filing on a self-insured plan, including an HRA. A stand-alone dental or vision HRA would be excepted and wouldn’t be subject to the PCOR fee.
The American Rescue Plan Act (ARPA) allows employers and insurers to claim a tax credit for the COBRA premium subsidies they pay on behalf of assistance eligible individuals (AEIs). The credit is credited against the Medicare hospital insurance tax and is fully refundable, which means that the employer or insurer claiming the credit can receive a payment from the IRS if the amount of the credit exceeds their Medicare hospital insurance tax obligations (including where they do not owe any Medicare hospital insurance tax).
Remember that employers are eligible for the tax credit if they maintain self-insured plans or their fully insured plans are subject to federal COBRA. Insurers can claim the credit if they cover plans that are subject only to state healthcare continuation laws. Note that in the event of multi-employer plans, the plan itself can claim the credit.
The employer or insurer can claim the credit for periods covered by the premium subsidy, and they are entitled to the credit as of the date the AEI elects COBRA coverage. For instance, if an AEI elects COBRA coverage on July 1, and that coverage is retroactive to April 1 (the first day of the ARPA premium subsidy period), then the employer or insurer can claim the credit for the period beginning on April 1 through July 1. If the AEI continues the COBRA coverage through July, then the employer or insurer can claim a credit for that period too.
The employer or insurer claims the credit on its quarterly employment tax return, Form 941. They may reduce deposits of federal employment taxes (including amounts withheld from employees) up to the amount of the anticipated tax credit and then report the tax credit claimed, and the number of individuals receiving the tax credit for that quarter, on the Form 941. Since the return covers the months of April, May and June, the next filing is due on July 31, 2021.
Employers and insurers can obtain an advance on the tax credit by filing Form 7200 (which can only be filed via fax); however, they are still responsible for claiming the credit on Form 941.