President Obama giving a speech

The 2017 Cures Act and Other Tax Updates You Need To Know…

16 Dec 2016

Just this Tuesday, December 13, 2016, President Obama signed off on the 21st Century Cures Act that becomes effective January 1, 2017. This Act creates the possibility of small employers to offer their employees a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA), even if they are enrolled in a health plan through the marketplace. Eligible Employers:

  • Average of fewer than 50 full-time and full-time equivalent employees (excluding seasonal employees), in the prior calendar year
  • Do not offer a group health plan to ANY of the employees
  • Must offer to ALL employees, on the same terms

Eligible Employees:

All employees of the eligible employer that have been employed for at least 90 days, except:

  • Seasonal employees
  • Part-time employees
  • Employees under the age of 25
  • Employees that are part of a collective bargaining agreement

Additional Requirements:

  • Employees seeking the reimbursement must have proof of medical coverage
  • The reimbursed funds must be used for medical expenses of the employee (or any family members covered on their plan)
  • The contributions to the QSEHRA must only be made by the employer (no employee salary deferrals)
  • Annual limitations on reimbursement are
  • $4,950 for an employee with an individual health plan
  • $10,000 for an employee with a health plan that includes any family members

Employers must provide notice to employees at least 90 days before a plan year that includes information about the QSEHRA and reimbursement amount. They must also disclose that the QSEHRA may affect the employee’s premium tax credit on their marketplace health plan. Also, the employee must have “minimum essential coverage” for the month, or the QSEHRA reimbursement for that month will be taxable.

Tax Updates also effective for 2017—

1. Employers are required to issue all W-2s to their employees by 1/31. They are now also required to file these with the Social Security Administration by this same date (which previously were due 2/28). This deadline applies whether you file paper forms or electronically. This January 31st deadline also applies to all 1099s. The recipient copy has always been due by January 31st but the Federal forms are due to the IRS by January 31st as well, for both paper forms and those electronically filed.

2. The deadline for Partnership tax returns will now be the 15th day of the 3rd month after year-end. This is a month earlier than in prior years. A calendar year-end partnership will now have a filing due date of March 15th (no longer April 15th). If an extension is filed, it is now a 6-month extension, with the same return deadline of September 15th.

3. The deadline for Calendar year-end C corporations will now be April 15th (no longer March 15th). If an extension is filed, it is now a 5-month extension, with the same return deadline of September 15th.