navigating aca reporting-...• employer/plan sponsor completes and files for both fully-insured and...

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Navigating ACA Reporting-What Employers Need to Know About

the IRS Forms 1094 and 1095

Presented by | Adam Jensen

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Agenda

•Who has to report?

•Section 6055 MEC Reporting

•Section 6056 ALE Reporting

•ACA Reporting Forms

•Reporting Deadlines

•Penalties

•What do I have to file?

•1094-C

•1095-C

•Examples

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Who has to report?

Some employers have wondered how the IRS will know

whether or not they are complying with the ACA…

You’re going to tell them!

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Who has to report?

Providers of Minimum Essential Coverage (MEC)

• Section 6055 MEC reporting on IRS Form 1094-B and1095-B (fully insured)

• Section 6055 MEC reporting on IRS Form 1095-C, Part III (self-funded)

Applicable Large Employers (ALEs)

• Section 6056 ALE reporting on IRS Form 1094-C and 1095-C

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Section 6055 MEC Reporting

Section 6055 MEC reporting applies to insurers, self-insuring

employers, and other providers of minimum essential coverage

• Name, address and TIN of the primary insured and the name and TIN of

each other individual obtaining coverage under the policy

• Dates during which such individual was covered under minimum essential

coverage during the calendar year

• Whether or not the coverage is a qualified health plan offered through an

Exchange

• Amount (if any) of any advance payment under section 1412 of the Patient

Protection and Affordable Care Act of any cost-sharing reduction under

section 1402 of such Act or of any premium tax credit under section 36B

with respect to such coverage

http://www.law.cornell.edu/uscode/text/26/36B

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Who reports?

Fully Insured Plan Insurance Carrier

Self-funded, Single Employer Employer

Self-funded, multiemployer plan Board of trustees, or other group who

establish or maintain the plan,

including a union

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• Addresses whether coverage is offered to all full time employees

and their dependents.

• Used by the IRS to assess the Play or Pay $2,000 fine per full time

employee.

• Will be done by insurance carriers for fully insured groups and by

employers/unions for self-funded groups.

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Section 6056 ALE Reporting

•Addresses whether employee was covered and whether coverage

met the 9.5% affordability test and minimum actuarial value test of

60%

•Used by the IRS to assess the Play or Pay $3,000 fine per full time

employee who files for and receives a MarketPlace subsidy

•Will be done by all ALEs (50 FTEs and over)

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Section 6056 ALE Reporting

ALEs must report even if they didn’t have to offer coverage

• 50 or more Full Time Equivalents (FTEs) in 2014

• Non-ALEs do not report

• 50-99 FTEs don’t have to provide coverage in 2015, but do have to report!

• 100+ FTEs must provide coverage in 2015 AND must report

• Section 6056 ALE reporting on IRS Form 1094-C and 1095-C

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ACA Reporting Forms

Finalized ACA Reporting Forms:

• Form 1095-A, Health Insurance Marketplace Statement

• Form 1094-B, Transmittal of Health Coverage Information Returns

• Form 1095-B, Health Coverage

• Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and

Coverage Information Returns

• Form 1095-C, Employer Provided Health Insurance Offer and Coverage

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ACA Reporting Forms

Non-Employer Forms

• Form 1095-A is used by Insurance Exchange/MarketPlace only that allows

individuals to apply for a Premium Tax Credit

• This form is not used by employers!

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ACA Reporting Forms

1094-B and 1095-B

• Insurance Carrier completes and files for Fully-insured groups

• 1094-B and 1095-B are filed with the IRS

• 1095-B also mailed to Employees

• These forms are not used by employers!

• Self-funded groups report MEC on Part III of Form 1095-C

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ACA Reporting Forms

1094-C and 1095-C

• Employer/Plan Sponsor completes and files for both fully-insured and self-

funded plans

• 1094-C and 1095-C are filed with the IRS

• 1095-C is also sent to full time Employees (and all covered employees

for self-funded plans)

• Self-funded groups report MEC on Part III of Form 1095-C

• Self-insured plans complete additional Part III of 1095-C to report MEC

for self-insured plan

• Fully-insured plans just leave Part III blank

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ACA Reporting Forms

1095-C, Part III MEC reporting for self-funded groups

• Self-funded groups must also on any covered employee, not just full time

employees

• Report coverage for non-employee partners, retirees and COBRA

continuees

• Report months each covered individual had coverage, even if just one day

• Must report SSNs for dependents!

• Can use DOB if SSN is not available, but must make a reasonable effort

to obtain

• Initial request, plus two supplemental requests

• Start by asking TPA if they have the information

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ACA Reporting Forms

1095-C, Part III MEC reporting for self-funded groups

• Employer self-funded coverage does NOT include multiemployer plan

coverage!

• Union/trust fund is the entity providing coverage and must provide the Part III

reporting.

• Union trust fund will provide MEC reporting to members via 1095-B.

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Reporting Deadlines

IRS Filing Deadlines

• Follows W-2 Rules

• Employers who file 250 or more W-2s must file their 1094-C/1095-C

electronically with the IRS not later than March 31, 2016 for the 2015

tax year

• Employers who file fewer than 250 W-2s may file electronically or use

paper filing

• Paper filing deadline is the end of February each year

• February 29, 2016 (yes, it’s a Leap Year)

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Reporting Deadlines

Individual Statement Deadline

• Employers must provide employees with 1095-C not later than February 1,

2016 for the 2015 tax year. (January 31, 2016 is a Sunday).

• End of January for subsequent years.

• Must send paper statement to employee’s last known address

• May provide electronically IF individual has provided consent

• Affirmative consent required!

• Consent may be electronic or by paper

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Penalties

Penalties for both IRS filings and individual statements!

• Filing late

• Failing to include required information

• Including incorrect information

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Penalties

Penalties were just increased!

• Small employers have penalties capped at lower amounts

• Small employers have average gross receipts of less than $5,000,000 for the most

recent three taxable years.

General Penalty Was $100 per record/$1,500,000 max./yr

Now $250 per record/$3,000,000 max./yr

Corrected w/in 30 days Was $30 per record/ $250,000 max./yr

Now $50 per record / $500,000 max./yr

Over 30 days but before Aug. 1 Was $60 per record/ $500,000 max./yr

Now $100 per record/$1,500,000 max./yr

Intentional Disregard Was $250 per record minimum, no cap

Now $500 per record minimum, no cap

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Penalties

Penalty relief available in 2016 for 2015 tax year

• Must be able to show “good faith effort to comply”

• Only applies to incorrect or incomplete information

• Totally at the discretion of the IRS

• Not available for late filing or no showing of good faith effort to comply

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What do I have to file?

If you had more than 50 FTEs in 2014, you must:

• Complete Form 1094-C

• Complete Form 1095-C

• File Form 1094-C and 1095-C with the IRS

• Provide a 1095-C to full time employees

• All covered employees if self-funded

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1094-C

Form 1094-C, Transmittal of Employer-Provided Health Insurance

Offer and Coverage Information Returns

• 3 Pages

• Parts I, II, III, IV

• Provides Applicable Large Employer (ALE) information required by Section

6056

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1094-C

Part I: Applicable Large Employer Member, Lines 1-18

• Contact information for employer and the contact person

• Make sure to list number of Forms 1095-C being filed

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1094-C

Part II: Applicable Member Information, Lines 19-22

• Note if this is the “authoritative transmittal” on Line 19

• Give total number of Forms 1095-C being filed on Line 20

• Indicate whether or not part of Aggregated Group on Line 21, if Yes, then

must complete Part IV

• Select eligibility for relief on Line 22

• 50-99 FTEs use Box C

• 100+ Using first 80 FT “freebies” also uses Box C

• Non-calendar year plans can also use Box C

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1094-C

Part III: ALE Member Information - Monthly, Lines 23-35

• Column (a) MEC Offer- Y/N• Use Line 23 if same answer for all 12 months

• Column (b) Full Time Employee Count

• Column (c) Total Employee Count

• Column (d) Aggregated Group Indicator

• Column (e) Transitional Relief Indicator

• 50-99 FTEs use Code A

• 100+ Use Code B

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1094-C

Part III: ALE Member Information - Monthly, Cont’d

• Non-calendar year plans are entitled to transitional relief for the 2015

calendar year months prior to the start of their 2015 plan year

• Use Code B

• Treat them as having been offered coverage

• IRS rules state that an employer may treat the employee (and his or her

dependents) as having been offered coverage for the months in 2015 prior to

the 2015 plan year if the employee was offered health coverage no later than

the first day of the 2015 plan year.

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1094-C

Part III: ALE Member Information - Monthly, Cont’d

• Treatment of full-time employees eligible for the non-calendar year plan

• Mergers and Acquisitions

• Whether or not you count employees for months prior to transaction date will

depend on the nature of the sale and the terms of the sales agreement

• Asset sale- no, they were someone else’s employees

• Stock sale- yes, because no change in employer

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1094-C

Part IV: Other ALE Members of Aggregated ALE Group

• Report for other members of controlled group

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1095-C

Form 1095-C, Employer Provided Health Insurance Offer and

Coverage

• 1 Page

• Parts I, II, and III

• Provides Applicable Large Employer (ALE) information required by Section

6056 for all groups and 6055 Minimum Essential Coverage (MEC) for self-

funded groups in Part III

• Only self-funded groups complete Part III

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1095-C

Form 1095-C, Employer Provided Health Insurance Offer and Coverage

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1095-C

Part I: Employee and Applicable Large Employer, Lines 1-13

Employee Employer

•Name

•SSN

•Address

•Name

•EIN

•Address

•Contact Phone

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1095-C

Part II: Employee Offer and Coverage, Lines 14-16

• Enter the appropriate “1” Code for the Offer of Coverage on Line 14

• Enter using “All 12 months” box is all the same or each month if different

• Enter employee contribution for single coverage on lowest cost plan on Line

15 (if needed based on which “1” Code you use)

• Enter the appropriate “2” Code for the Applicable Section 4980H Safe

Harbor reason (tells the IRS why they shouldn’t fine you)

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1095-C

Offer of Coverage “1” Codes

• 1A. Qualifying Offer: Minimum essential coverage providing minimum value

offered to full-time employee with employee contribution for self-only

coverage equal to or less than 9.5% mainland single federal poverty line

and at least minimum essential coverage offered to spouse and

dependent(s)

• If Qualifying Offer was made for all 12 months, use the “All 12 Months” box

• If all months are not the same, list the appropriate “1” code

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1095-C

Offer of Coverage “1” Codes

• 1E. Minimum essential coverage providing minimum value offered to

employee and at least minimum essential coverage offered to dependent(s)

and spouse.

• Employers will use 1E if offering Employee, Spouse and Dependent

coverage AND using either the W-2, Box-1 or Rate of Pay affordability safe

harbors.

• Most employers will use 1E if offering coverage

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1095-C

Offer of Coverage “1” Codes, Cont’d

• 1B. Minimum essential coverage providing minimum value offered to

employee only.

• 1C. Minimum essential coverage providing minimum value offered to


(not spouse).

• 1D. Minimum essential coverage providing minimum value offered to

employee and at least minimum essential coverage offered to spouse (not

dependent(s)).



and spouse.

• 1F. Minimum essential coverage NOT providing minimum value offered to

employee, or employee and spouse or dependent(s), or employee, spouse

and dependents.

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1095-C

Offer of Coverage “1” Codes, Cont’d

• 1G. Offer of coverage to employee who was not a full-time employee for any

month of the calendar year and who enrolled in self-insured coverage for

one or more months of the calendar year.

• 1H. No offer of coverage (employee not offered any health coverage or

employee offered coverage that is not minimum essential coverage). • Will use 1H for months employee wasn’t an employee (before hired or after termination)

• Also used for health plan waiting period

• 1I. Qualifying Offer Transition Relief 2015: Employee (and spouse or

dependents) received no offer of coverage, received an offer that is not a

qualifying offer, or received a qualifying offer for less than 12 months.

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1095-C

When do I use which code?

• 1A Qualifying Offer: Offer MEC that is affordable and meets the 60%

minimum actuarial value test. Offer is made to full time employee, spouse

and dependents. Must use Federal Poverty Level affordability safe harbor.• Must make the Qualifying Offer for the entire year in which the employee was full time

• Report this on Line 14, using “All 12 Months” box or individual months if employee was not full time

for the whole year

• Non-calendar year plans can and should use 1A if offering coverage as of 1/1/2015

• Do not complete Line 15 if using 1A

• 1E. Minimum essential coverage providing minimum value offered to employee

and at least minimum essential coverage offered to dependent(s) and spouse.

• Use if using W-2, Box-1 or Rate of Pay safe harbors and offering coverage to employee, spouse and

dependents

• MUST complete Line 15!

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1095-C

When do I use which code?

• 1G Offer of coverage to employee who was not full time: self-funded plan

that provided coverage to a less than full time employee (less than 30 hours per week

or 130 hours per month)

• If self-funded plan covers part time employees must report or if full time employee

drops down to part time status

• 1H No offer of coverage: employee not offered coverage or not offered MEC

• For months prior to being hired or after termination

• Use during health plan waiting period

• Use if union employees not covered under employer plan, but you are contributing

to the union plan

• Do not complete Line 15 if using 1H

• 1I Qualifying Offer Transition Relief 2015: Employee (and spouse or

dependents) received no offer of coverage, received an offer that is not a qualifying

offer, or received a qualifying offer for less than 12 months

• Use for months you missed offering coverage but still made a Qualify Offer to at

least 80%/95% of full time employees

• Do not complete Line 15 if using 1I

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1095-C

Line 15, Employee Share of Lowest Cost Monthly Premium (Affordability)

• Only fill out Line 15 if your use Code 1B,1C, or 1E on Line 14

• If you do have to complete Line 15, you will use dollars and cents

• Most employers will likely use 1E, so Line 15 will have to be filled in

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1095-C

Line 16, Applicable Section 4980H Safe Harbor

• Enter the appropriate “2” Code on Line 16

• Use only one “2” Code per month even if multiple codes might apply

• 2 C trumps all others

• Enter using “All 12 months” box is all the same or each month if different

• Tells the IRS why they shouldn’t fine you

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1095-C

Line 16 “2” Codes

• 2A. Employee not employed during the month.

• 2B. Employee not a full-time employee.

• 2C. Employee enrolled in coverage offered.

• 2 C trumps all other codes

• 2D. Employee in a section 4980H(b) Limited Non-Assessment Period.

• Use for employees in their initial (new hire) measurement period

• Use for employees during health plan waiting period

• 2E. Multiemployer interim rule relief.

• If contributing to a union plan use 2 E for all months you contributed to the

multiemployer plan

• 2F. Section 4980H affordability Form W-2 safe harbor.

• 2G. Section 4980H affordability federal poverty line safe harbor.

• 2H. Section 4980H affordability rate of pay safe harbor.

• 2I. Non-calendar year transition relief applies to this employee.

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1095-C

Part III: Covered Individuals, Lines, 17-22

• Self-funded groups only, fully-insured leaves this blank

• Self-funded groups report all employees enroll in coverage even if they are

not full time

• Include spouses and dependents who are covered as well

• Employer-sponsored self-insured health coverage does not include coverage

under a multiemployer plan (unions report their own MEC)

• Report in Part III:

• Name of covered person

• SSN or DOB

• Whether covered all 12 months

• Months actually covered if less that 12

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1095-C

Individual Statement requirement

• Fully Insured plans must provide 1095-C or substitute to all full time

employees

• Self-funded plans must provide 1095-C including Part III to all employees

who were covered by the plan (even if not full time)

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1095-C

Fully Insured plans alternate method of furnishing 1095-C to employees:

• Can provide a copy of the 1095-C sent to the IRS, or

• If using Federal Poverty Level safe harbor, can provide a statement containing the

following information:

• Employer name, address, and EIN.

• Contact name and telephone number at which the employee may receive information

about the offer of coverage and the information on the Form 1095-C filed with the IRS for

that employee.

• A statement indicating that, for all 12 months of the calendar year, the employee and his

or her spouse and dependents, if any, received a Qualifying Offer and therefore are not

eligible for a premium tax credit.

• A statement directing the employee to see Pub. 974, Premium Tax Credit (PTC), for

more information on eligibility for the premium tax credit.

• Not available if using W-2, Box-1 or Rate of Pay safe harbors

• Not available to Self-Funded groups because they have to complete Part III of the

1095-C

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Examples

YOUR TURN!

Example #1

• Current Employee (Full time)

• Employed all year, on coverage all year

• Employee Single Contribution = $123.50/mo

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Examples

Current Employee (Full time)



and spouse

• $123.50 entered on Line 15

• 2C Enrolled in Coverage for All 12 Months

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Examples

Example #2

• New Hire

• Hired on April 12th (Full Time)

• Waiting period is 1st of the month following 60 days


• Employee takes coverage

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Examples

New Hire on April 12th

• No offer of coverage prior to employment

• 1H No offer of coverage since employee not employed during Jan, Feb, Mar

• 2A Employee not employed during the month

• When hired still no offer of coverage during waiting period

• 1H No offer of coverage

• 2D Employee in Limited Not-Assessment Period during waiting period

• Employee is offered coverage after waiting period

• 1E Coverage offered to employee, spouse, and dependent

• 2C Employee enrolled in coverage offered July -Dec

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Examples

Example #3

• Same as #2, but the new hire is Variable Hour

• Hired on April 12th

• Waiting period is 1st of the month following 60 days


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Examples

Example #3

New Hire in April (Variable Hour)

• No offer of coverage prior to employment

• 1H No offer of coverage (all 12 months)

• When hired, place in initial measurement period (still no offer of coverage)

• 2A Employee not employed during Jan, Feb, Mar

• 2D Employee in Limited Not-Assessment Period for remainder of year

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Examples

Example #4

• Current Full time Employee

• Employee on coverage


• Employee quits August 12th

• Employee takes COBRA coverage

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Examples

Example #4

Current Full time Employee quits in August

• Employee is on coverage while a full time employee

• 1E Coverage offered to employee, spouse, and dependent

• 2C Employee enrolled in coverage offered Jan - Aug

• No offer of coverage for any months when no longer a full time employee

• 1H No offer of coverage Sept – Dec (was a FT employee at least one day in Aug)

• 2A Employee not employed during the month

• Do not need to report offer of COBRA to former employees

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Adam P. Jensen

JD, MS-HRM, CEBS, GBA, FLMI

Vice President, Compliance and HR Consulting

Cottingham & Butler, Inc.

608.467.5030

[email protected]

Questions??

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