affordable care act plan and employer reporting requirementsmassgfoa.org/resources/documents/meeting...

Copyright © 2015 by The Segal Group, Inc. All rights reserved.

Affordable Care Act Plan and Employer Reporting Requirements

Presented by: Brian J. Malynn, JD, CEBSOctober 22, 2015

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In this presentation we will review:

IRC Section 6055: Plan Reporting

IRC Section 6056 – Applicable Large Employer Reporting

A look at reporting on Forms 1095-B (plan) and 1095-C (employer) and their transmittal forms

IRS Health Coverage Reporting

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IRS reporting (per IRC sections 6055 & 6056) will help facilitate IRS enforcement of:• The individual coverage mandate (via §6055 plan reporting); and• The Employer Shared Responsibility Penalty (via §6056 employer reporting)

Employers will have annual ongoing reporting obligations to both their employees and IRS, or pay penalties and interest • Employee statements must be distributed by January 31 (For 2015 coverage

reported in 2016, by February 1 because January 31, 2016 falls on a Sunday)• IRS encourages electronic reporting • Electronic reporting to IRS is mandatory if filing 250 or more returns/year• First reports to IRS due on or before February 29, 2016 (or March 31 if filed

electronically)• For all employers, the first data collection period for reporting purposes starts

January 1, 2015, even if the employer’s benefits plan year begins at a later date (e.g., July 1)

Required Reporting to IRS & EmployeesBeginning in 2016 (for coverage offered in 2015)

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All plans that provide minimum essential coverage must:

Submit annual report to IRS

Provide annual statement to plan participants

Applies to self-insured plans and insurers, as well as other providers of “MEC”

Insurers will report on behalf of insured plans

Plan Reporting (Section 6055)

ACA Reporting Obligations

Employer Reporting(Section 6056)

First reports due in 2016 for 2015 calendar year.

Large employers (those with 50 or more full-time employees, including FTEs) must:

Submit annual report to IRS

Provide annual statement to full-time employees

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Use IRS Forms 1094-B (transmittal) and 1095-B (participant statement)

File with IRS on or beforeFebruary 28 (or March 31 if filed electronically) of the year following the calendar year in which the coverage was provided

Statements to participants due by January 31

Use IRS Forms 1094-C (transmittal) and 1095-C (employee statement)

File with IRS on or before February 28 (or March 31 if filed electronically) of the year following the calendar year to which the return relates

Statements to employees due by January 31

Employers that self-insure will file a single reporting form (Form 1095-C), completing two different sections to report information required under both sections 6055 & 6056• For employers with insured coverage, the

insurer handles section 6055 reporting

Plan Reporting by Insurers or Multiemployer Plans Large Employer Reporting

ACA Reporting Obligations continued

No exception is available for non-calendar year plans

Reporting by an Insured Health Plan

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Form 1095-BThis form is sent by an insured health plan to each plan participant. It tells them about their coverage, so they can tell the IRS that they are covered by a health plan. That way, they do not get penalized for not having health coverage.

http://www.irs.gov/pub/irs-pdf/f1095b.pdf

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Form 1094-BInsured health plans will send this transmittal form to the IRS, with copies of the Forms 1095-B sent to each plan participant.

http://www.irs.gov/pub/irs-pdf/f1094b.pdf

Large Employer Reporting

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This form is completed by the large employer, and is sent to each full-time employee (with copy to IRS).

Form 1095-C

http://www.irs.gov/pub/irs-pdf/f1095c.pdfhttp://www.irs.gov/pub/irs-pdf/f1095c.pdf

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Any employee who is a full-time employee for at least one month (the entire month) of the calendar year• Report regardless of whether the employee is enrolled in the employer’s plan

Any part-time employee who is actually covered under an employer’s self-insured plan for at least one day of any month• Coverage for one day is considered coverage for the entire month• Report only if the part-time employee is enrolled in the employer’s plan• Would not report on employees covered under an insured option or a

multiemployer plan

Employers can use either Form 1095-C or Form 1095-B (the plan reporting form) to report enrollment for non-employees, retirees with full-year retiree coverage or individuals with full-year COBRA coverage who are covered under the employer’s self-insured plan We recommend using Form 1095-C for consistency in administration

For Which Employees Must Employer Complete the Form 1095-C?

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The months that the employee was a full-time employee

The type of coverage offered and for which months• Minimum value (i.e., meets the 60% test) or just minimum essential coverage

(less than 60%)

To whom the coverage was offered (employee only, children, spouse)

The required premium for employee-only coverage under the lowest-cost plan that provides minimum value

An explanation of why the employer is not subject to the employer penalty for a particular month • e.g., the employee was in a waiting period, the employee was actually covered

by the plan, or the coverage was affordable under a safe harbor (W-2, rate of pay, Federal Poverty Level)

Each month that the employee and family members were covered under a self-insured plan (with SSN for each person)

Data Needed to Complete 1095-C

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Large employers complete this form to report offers of coverage

Self-funded large employers also use this form to report actual enrollment in the plan’s coverage

For each FT employee, there must be only one Form 1095-C that reports information for all 12 months of the year

Aggregated Group: If an employee works for multiple Applicable Large Employer (ALE) members in the same month, the ALE member for whom they worked the most hours will be responsible for completing Form 1095-C for that month; each ALE member for whom the employee worked full time completes a separate 1095-C under its EIN

Form 1095-C, Part I:Employee and Applicable Large Employer Member

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This field shows the month in which the employer’s plan year begins; it is optional for 2015

Form 1095-C, Part II: Plan Start Month

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Form 1095-C, Part II:Employee Offer of Coverage (Line 14)

Enter code for Offer of Coverage for any employee who is FT for at least one month.

Also need to complete line 14 for non-full-time employee who enrolls in self-insured plan (code 1G).

Offer of Coverage Indicator Codes1A “Qualifying Offer” Minimum value and affordable (based on 9.5% of FPL)

coverage offered to FT employee and MEC offered to spouses and dependents

1B Minimum value coverage offered to employee only

1C Minimum value coverage offered to employee and MEC offered to dependent children, but not spouse

1D Minimum value coverage offered to employee and MEC offered to spouse, but notdependents

1E Minimum value MEC offered to employee and MEC offered to spouse anddependents

1F MEC offered to employee, or employee and spouse or dependents, or employee and spouse and dependents, but coverage is not minimum value

1G Offer to employee who was not FT for any month and the employee enrolled in a self-insured health plan for one or more months

1H No offer of coverage or no offer of MEC

1I Qualifying Offer Transition Relief 2015

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Form 1095-C Offer of Coverage (Line 14) Indicator Codes: Comments

Offer of Coverage Indicator Codes

1A “Qualifying Offer” – Minimum value and affordable (based on 9.5% of FPL) coverage offered to FT employee and MEC offered to spouses and dependents



1D Minimum value coverage offered to employee and MEC offered to spouse, but notdependents

1E Minimum Value coverage offered to employee and MEC offered to spouse anddependents

1F MEC offered to employee, or employee and spouse or dependents, or employee and spouse and dependents, but coverage is not minimum value

1G Offer to employee who was not FT for any month and the employee enrolled in a self-insured health plan for one or more months

1H No offer of coverage or no offer of MEC

1I Qualifying Offer Transition Relief 2015

Protects employer from 4980H(b) penalty.

4980H(b) penalty may apply because not minimum value.

1B & 1D: 4980H(a) may apply because no

offer to children.

No 4980H(b) penalty because not FT

employee.

4980H(a) or (b) penalty may apply.

1C & 1E: 4980H(b) may apply if coverage

is not affordable.

No 4980H(a) penalty. 4980H(b) could apply if this FT employee did not receive offer.

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Form 1095-C, Part II:Employee Offer of Coverage (Line 15)

Employee Share of Lowest Cost Monthly Premium for Self-Only Minimum Value Coverage. Code needs to be entered ONLY if codes 1B, 1C, 1D, or 1E are entered in Line 14.



1D Minimum value coverage offered to employee and MEC offered to spouse, but not dependents

1E Minimum value coverage offered to employee and MEC offered to spouse anddependents

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Form 1095-C 4980H Safe Harbor & Other Relief(Line 16) Indicator Codes

2C is a priority code — use if it applies.If 2B and 2D apply, use 2D. If no Safe Harbor Indicator Code is applicable, leave blank.

Section 4980H Safe Harbor Indicator Codes – Use One

2A Employee was not employed during the month

2B Employee was not a full-time employee during the month and did not enroll. Also use if employee was a full-time employee whose offer ended before end of month because employee terminated employment but offer would have continued if employee had not terminated.

2C** Employee was enrolled in coverage offered for each day of the month

2D Employee was in a limited non-assessment period (LNAP) during the month (use even if 2B also applies)

2E Multiemployer interim rule relief applies (use even if 2C, 2D, 2F, 2G or 2H also apply)

2F Form W-2 affordability safe harbor applies

2G Federal Poverty Line affordability safe harbor applies

2H Rate of pay affordability safe harbor applies

2I Non-calendar year transition relief applies to the employee

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Form 1095-C Section 4980H Safe Harbor & Other Relief (Line 16) Indicator Codes: Comments

Section 4980H Safe Harbor Indicator Codes

2A Employee was not employed during the month

2B Employee was not a full-time employee during the month and did not enroll, etc.

2C Employee was enrolled in coverage offered for each day of the month

2D Employee was in a limited non-assessment period (LNAP) during the month

2E Multiemployer interim rule relief applies

2F Form W-2 affordability safe harbor applies

2G Federal Poverty Line affordability safe harbor applies

2H Rate of pay affordability safe harbor applies

2I Non-Calendar Year transition relief applies to the employee4980H(b) penalty should not apply

because coverage also provides

minimum value

No 4980H(b) penalty in any

month with these codes

If applicable, no 4980H(b) penalty for months before the start of the 2015

Plan Year

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Employees in a Limited Non-Assessment Period (LNAP): Do not count toward the 95% offer test (70% test in 2015) Are not counted as full-time employees if the employer must pay the 4980H(a) penalty Are not counted as full-time employees in the monthly count of full-time employees on the

transmittal form (but are included monthly total employee count on transmittal)

LNAPs include the following:1. The calendar month during which a FT employee starts (if the start date is not the 1st of the

month) 2. The initial 3 full calendar months of employment when employer uses the monthly

measurement method3. The initial 3 full calendar months of employment for a new FT employee under the look-

back measurement method4. The initial measurement and administrative periods for new variable hour, seasonal, and

part-time employees under the look-back measurement method5. The period after a change to FT status during the initial measurement period, provided the

employee is offered coverage by a certain deadline

Limited Non-Assessment Periods (LNAP)

All but #1 are LNAPs only if employee is offered MEC by the 1st day of the 1st month following the end of the LNAP. Employer is protected from the 4980H(b) penalty during the

LNAP only if the employee is offered minimum value coverage at the end of the LNAP.

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This serves as the 6055 report for an ALE regarding employees (FT or otherwise) who enroll in a self-insured health plan.

Form 1095-C, Part III:Covered Individuals in Self-Insured Plan

Social security numbers are important to obtain! Follow the rules for reasonable efforts.

Coverage for at least one day = coverage for the entire month for reporting purposes.

(Note that for the purpose of Section 4980H penalties, coverage must be offered for the entire month.)

Check this box if the employer provided self-insured coverage

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The employer leaves Part III blank. The health insurer will handle section 6055 report for employees enrolled in the plan.

Form 1095-C, Part III:Insured Group Health Plan

Do not check this box because the employee is enrolled in insured coverage

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For terminating employees, do not report the offer of COBRA

For active employees (offered COBRA due to reduction in hours), report as offer of coverage, whether employee elects COBRA or not

See following slides for examples

Employer Reporting and COBRA

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Employer offers minimum value coverage to employee, spouse and children (code 1E)

Self-only premium for lowest-cost minimum value plan is $95

Employee terminates employment on June 15, but active coverage continues through June 30

Do not enter 2C in line 16 for July – December even if employee elects COBRA

Covered Employee Terminates Employment

Part II Employee Offer and Coverage Plan Start Month (Enter 2-digit number):

All 12 Months Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

14 Offer of Coverage (enter required code)

1E 1E 1E 1E 1E 1E 1H 1H 1H 1H 1H 1H

15 Employee Share of Lowest Cost Monthly Premium, for Self-Only Minimum Value Coverage

$ $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $ $ $ $ $ $

16 Applicable Section 4980H Safe Harbor (enter code, if applicable) 2C 2C 2C 2C 2C 2C 2A 2A 2A 2A 2A 2A

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Employee reduces hours at end of October and loses coverage October 31; employee is not a full-time employee for November or December

Employee does not elect COBRA effective November 1; self-only COBRA premium for lowest-cost minimum value plan is $500

Covered Employee with Reduction in Hours: No COBRA Election




1E 1E 1E 1E 1E 1E 1E 1E 1E 1E 1E 1E


$ $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $500.00 $500.00

16 Applicable Section 4980H Safe Harbor (enter code, if applicable) 2C 2C 2C 2C 2C 2C 2C 2C 2C 2C 2B 2B

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Employee reduces hours at end of October and loses coverage October 31

Employee elects COBRA effective November 1; self-only COBRA premium for lowest-cost minimum value plan is $500

Covered Employee with Reduction in Hours: Elects COBRA




1E 1E 1E 1E 1E 1E 1E 1E 1E 1E 1E 1E


$ $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $500.00 $500.00

16 Applicable Section 4980H Safe Harbor (enter code, if applicable) 2C 2C 2C 2C 2C 2C 2C 2C 2C 2C 2C 2C

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Form 1094-C (Transmittal), Part I

Designate who will be the person for the IRS to contact with questions

Enter the total number of 1095-C reports that you submit with the transmittal

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Form 1094-C (Transmittal), Part I

Designated Government Entity—option for certain government employers to designate another related government entity as reporting entity

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ALE = Applicable Large Employer

Form 1094-C (Transmittal), Part II

Lines 19 – 22 should be completed only on the Authoritative Transmittal for the employer.

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Form 1094-C, Part II: ALE Member Information

Enter the total number of 1095-C reports that were submitted for the year, even if filed with other 1094-C forms.

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Form 1094-C, Part II: ALE Member Information

For 2015, large employers will generally check box C: Section 4980H Transition Relief (at a minimum)

Certifications of Eligibility: Employers using alternative reporting/furnishing would check A, B and/or D, as

applicable

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Form 1094-C, Part III: ALE Member Information – Monthly

If the information is the same for all 12 months, use first row; otherwise, enter separately for each month

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Was Minimum Essential Coverage (MEC) offered to at least 95% of full-time employees and their dependents?

If not, does any Transition Relief apply?

Transition Relief Permitting “Yes” in 1094-C, Part III, column (a)

4980H(a) relief if MEC was offered to at least 70% of FT EEs and their dependents

4980H(a) relief for certain plans not offering coverage to dependents

4980H(a) relief for employers with non-calendar year plans

Transition relief for January 2015

No separate codes are provided to reflect the transition relief above

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ALEs using the 98% Offer Method do not need to specify the number of FT employees.

Enter count of ALL EMPLOYEES (not just FT); if count is the same for the entire year, enter in “All 12 Months” box. Count consistently on the first, 12th, or last day of each month (or on specific dates related to payroll periods).

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Form 1094-C, Part III: Aggregated Group

If employer is part of an aggregated ALE group, check the box and list the other members (along with their EINs) in Part IV

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Indicator Code Who Can Use? 4980H(a) Penalty Implications

A ALEs with 50-99 FT EEs (including FTEs)

No penalties for 2015 Plan Year

B ALEs with 100+ FTEEs (including FTEs)

Penalty formula relief allows reduction of first 80 FT EEs (instead of first 30 FT EEs)

Depending on the indicator code used here, ALE may be eligible for Section 4980H(a) penalty transition relief.

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Form 1094-C, Part IV: Aggregated Group

If employer is part of an aggregated ALE group, list the other ALE members (along with their EINs).

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Questions?

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