On July 31, US President Barack Obama extended the funding for US highways when he signed H.R. 3236 (now Public Law No. 114-41) into law, but tucked into the law were changes to some significant benefits-related tax filing dates and veterans’ benefit rules.
We describe the tax filing and veterans’ benefits changes below.
Tax Filing Dates
The new law includes a number of revised automatic extensions of the due dates for income tax and information returns, including the Form 5500 (the annual return for employee benefit plans) and the Form 990 series (the annual return for tax-exempt organizations).
Typically, Form 5500 returns for employee benefit plans are due the last day of the seventh month after a plan year ends. This is July 31 for calendar-year plans. Plans may file an extension of this filing date, which, under current law, is limited to a two and a half month extension (or October 15) for a calendar-year plan. The new law requires the US Treasury Secretary to modify Treasury regulations to provide an automatic extension of the 5500 filing due date of three and a half months (or until November 15) for calendar-year plans.
The law provides a similar automatic maximum extension for tax-exempt organizations (including Voluntary Employees’ Beneficiary Association (VEBAs)) filing their Form 990 series returns. Under the new law, tax-exempt organizations filing Form 990 series returns are able to take advantage of an automatic six month extension that ends on November 15 for calendar-year filers. Under current law, the automatic extension is only for three months (or August 15) for calendar-year plans.
The filing deadline changes will apply for taxable years beginning after December 31, 2015. This means that they will affect tax returns filed in 2017 for most taxpayers, so we suggest to mark your calendars now!
Public Law No. 114-41 also impacts the determination of whether an employer is an “applicable large employer” under the Affordable Care Act (ACA) and veterans’ eligibility to participate in health savings accounts (HSAs).
Applicable Large Employers
The determination of whether an employer is an “applicable large employer” under the ACA is important because it determines whether they are subject to the shared responsibility employer mandate. Generally, an employer is subject to the employer mandate if, combined with any members in its controlled group, it employs an average of at least 50 full-time employees (including full-time equivalent employees) during the preceding calendar year.
Under the new law, employers do not need to count individuals for that determination if an individual has coverage under TRICARE or a specified health program from the VA, including
- chapter 55 of title 10, United States Code, including coverage under the TRICARE program; or
- under a health care program under chapter 17 or 18 of title 38, United States Code.
Note that this change does not affect any aspect of the “pay or play” rules other than the determination of applicable large employer status. This new rule is retroactive and is effective for determinations made as of 2014.
Health Savings Accounts (HSAs)
The new law also provides that an individual remains eligible to participate in an HSA even if he or she receives medical care from the Veterans Health Administration (VA) for a service-connected disability.
Veterans are generally the individuals eligible for medical benefits through the VA, and under current law, veterans who have received medical benefits from the VA at any time during the previous three months are not HSA eligible. The new law provides that veterans receiving medical care for a service-connected disability from the VA will not be barred from participating in an HSA merely because they accessed VA benefits in the prior three months.
This HSA eligibility expansion for veterans is effective January 1, 2016.