July 28, 2021
Important ACA and employee benefit plan forms and fees are due in August
There are important upcoming due dates in the Affordable Care Act (ACA) and benefit plan arena. The Form 5500 and Patient Centered Outcomes Research Institute (PCORI) fees are due August 2, 2021. In addition, the COBRA subsidy under the American Rescue Plan Act (ARPA) ends September 30, 2021.
Form 5500 due August 2, 2021
Employee benefit plans must annually file the Form 5500 to comply with Employee Retirement Income Security Act's (ERISA) reporting requirements. All qualified retirement plans must file the Form 5500, as well as health and welfare plans covering more than 100 participants.
The forms are due the last day of the seventh month after the end of the plan year. For calendar year plans, this would be July 31st. Because July 31, 2021, is a Saturday, the due date this year is August 2, 2021. Employee benefit plans may obtain an automatic extension of time to file for 2 ½ months extending the due date to October 15, 2021.
PCORI fees due August 2, 2021
PCORI fees were established under the ACA to fund the PCORI. The fee is assessed per covered life on self-insured plan sponsors and health insurers. The fee is due July 31st of the calendar year following the last day of the plan year (for this year, August 2, 2021). The fee is paid once annually with the Form 720, Quarterly Federal Excise Tax Return.
For 2021, the PICORI fees are:
COBRA Subsidy ends September 30, 2021
The American Rescue Plan Act subsidizes 100% of COBRA coverage provided to qualifying employees who were laid off or had a reduction in hours. The subsidy went into effect April 1, 2021 and ends September 30, 2021 (see Tax Alerts 2021-1052, 2021-0605).
Employers recoup the COBRA premiums via a payroll tax credit. For ACA reporting purposes, the unusual COBRA cost of $0 for only six months may be challenging for employers and service providers. In completing Form 1095-C for each full-time employee, an applicable large employer must report the "employee required contribution." The temporary nature of a $0 COBRA premium presents employers and their service providers with the challenge of adjusting their reporting temporarily for the six months that the employee's cost of COBRA coverage is reduced. The premium reported on Line 15 of Form 1095-C must be adjusted to $0 for the impacted individuals (note that on the Form 1095-C, it is only the active employees who were enrolled and became eligible for COBRA that have a rate published on Line 15 of Form 1095-C). There is no Line 15 reporting for employees who were terminated in a prior tax year and continue COBRA coverage through the current tax year.
There are potential penalties from both the IRS and the Department of Labor (DOL) for late or missed returns of employers who are subject to the Form 5500 filing requirements. The IRS late filing penalty is $250 per day with a maximum penalty of $150,000 per plan year. The DOL penalty for late filing can be up to $2,233 per day with no yearly maximum (the DOL does have the Delinquent Filer Voluntary Compliance Program (DFVCP) to help mitigate these penalties). Employers should be aware of these penalties and plan accordingly.
In addition, employers should be cognizant of the end date of the COBRA subsidy in completing the Form 1095-C.