ACA Reporting for Large Employers - WordPress.com · RULE 1: Get the large employer headcount right. Status as an Applicable Large Employer for a given year is based on FT/FTE headcount

TOP 10 RULES FOR SUCCESS

C H R I S T I N E P . R O B E R T S

M U L L E N & H E N Z E L L L . L . P .

S A N T A B A R B A R A , C A L I F O R N I A

F E B R U A R Y 2 6 , 2 0 1 6

ACA Reporting for Large Employers

TOP 10 RULES FOR SUCCESS

1. Get the large employer headcount right.

2. Understand who must receive a Form 1095-C.

3. Calendar extended deadlines (paper vs. electronic).

4. Know the streamlined reporting options and what they offer.

5. Know the types of transition relief and when they apply.

6. Get the Form 1095-C Series 1 and Series 2 codes down cold.

7. Understand the interaction of lines 14, 15 and 16 on 1095-C.

8. Know when 1094-B/1095-B reporting might apply to an employer plan.

9. Know how to report for self-insured plans, when applicable.

10. Understand your options for penalty relief.

(c) 2016 Christine P. Roberts, all rights reserved.

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RULE 1:

Get the large employer headcount right. Status as an Applicable Large Employer for a given year is based on

FT/FTE headcount in prior calendar year.

Average over all 12 months (transition relief for 2014-2015 only).

Credit no more than 120 hours for a FTE.

Remember to count fractional FTEs, but round down in counting combined FT/FTE total.

Don’t forget to consider companies related in ownership – “Aggregated ALE Group.”

For more assistance:

https://www.irs.gov/Affordable-Care-Act/Employers/Determining-if-an-Employer-is-an-Applicable-Large-Employer

© 2016 Christine P. Roberts, all rights reserved.

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RULE 2:

Understand who must receive a Form 1095-C.

You must provide one to each employee who worked Full-Time hours for at least one month in a calendar year, whether or not you offered coverage.

Self-insured plans – provide to covered part-time employees.

One single Form 1095-C per employee even if work performed across divisions that report separately.

Multiple Forms 1095-C for employees that work for different businesses within an Aggregated ALE Group.

Consult the Form 1094-C/1095-C instructions re: special situations such as work performed within same month for different businesses, etc.


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RULE 3:

Calendar extended deadlines (paper vs. electronic).

These are hard & final deadlines!


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IRS Form Action Old Deadline New Deadline Form 1095-C Employee Statement

Furnish to Employee

February 1, 2016 March 31, 2016

Form 1094-C Transmittal (and accompanying Forms 1095-C)

File with IRS

E-File: March 31, 2016 E-File: June 30, 2016

Paper: February 29, 2016 Paper: May 31, 2016

RULE 4:

Know the streamlined reporting options and what they offer. These appear in Form 1094-C, Lines 22, “Certifications of

Eligibility”:

A: Qualifying Offer Method

B: Qualifying Offer Method Transition Relief

C: Section 4980H Transition Relief

D: 98% Offer Method

“Qualifying Offer”:

MEC providing minimum value and costing employee no more than $93.17 for individual coverage was offered along with dependent and spousal coverage.

Generally will make sense only for the largest employers.

Options B and C are only available for 2015 reporting.


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RULE 4, cont’d.


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Streamlined Method What it Gets You

Qualifying Offer Method:

Written statement instead of Form 1095-C to employee if Qualifying Offer extended all 12 months of the year (Insured Plans only; Still Must File 1095-C).

Qualifying Offer Method Transition Relief for 2015:

Same as above so long as Qualifying Offer extended for all months employee was FT.

98% Offer Method: Do not need to complete FT employee/Total employee headcount on Form 1094-C Part III.

RULE 5:


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Know the types of transition relief from ACA penalties, and when they apply.

“50-99” Transition Relief for ALEs with Fewer than 100 FT/FTEs

100 or More FT/FTE Transition Relief

4980H(a) Transition Relief

Offer of Dependent Coverage Relief

Non-Calendar Plan Year Relief

Relief from 4980H(a) Penalties

Relief from 4980H(b) Penalties

January 2015 Transition Relief

RULE 6:


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Get the Form 1095-C Series 1 and Series 2 codes down cold.

Series 1 Codes go in Line 14.

Series 2 Codes go in Line 16.

Line 14: Series 1 Codes

© 2015 Christine P. Roberts

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Series 1 Code

Minimum Coverage Offered FT Employee Cost

1A: “Qualifying Offer” No more than $93.17

1B: MV MEC offered to FT Employee Only Complete Line 15

1C: MV MEC to FT Employee; MEC to Dependent Complete Line 15

1D: MV MEC to FT Employee; MEC to Spouse Complete Line 15

1E: MV MEC to FT Employee, MEC to Spouse & Dependent

Complete Line 15

1F: Non-MV MEC to Any Combination of FT Employee, Spouse and Dependent

N/A

1G: Self-Insured Only: MEC to Non-FT Employee N/A

1H: No Offer of Coverage N/A

1I: Qualifying Offer Transition Relief 2015 No more than $93.17

Line 16: Series 2 Codes

© 2015 Christine P. Roberts

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Series 2 Code Use When:

2A: Employee not employed during the month (any day of month).

2B: Employee not a FT employee (and did not enroll in offered coverage). • Also use when FT employee loses coverage through termination > end

of month.

2C: Employee enrolled in offered coverage (every day of month).*

2D: Limited Non-Assessment Period Applies

2E: Multiemployer Interim Rule Relief.

2F: Offer of Coverage Meeting Form W-2 Affordability Safe Harbor.

2G: Offer of Coverage Meeting Federal Poverty Limit Safe Harbor.

2H: Offer of Coverage Meeting Rate of Pay Safe Harbor.

2I: Non-Calendar Year Transition Relief Applies

*Where 2C applies, use it instead of any other Series 2 code, e.g. affordability codes.

RULE 7:

Understand the interaction of lines 14, 15 and 16 on 1095-C. Line 14 – generally, you should NOT leave blanks.

Line 15

Complete unless Line 14 shows 1A, 1F, 1G, or 1H.

No more than 9.5% of 1/12th of Federal Poverty Level if Line 14 shows 1A or 1I. Affordability Percentage for 2015 = 9.56% ($93.76)

May divide total employee share of premium for Plan Year by the number of months in the Plan year.

Note: rates for January – June will differ from those that apply from July – December.

Line 16 can be blank in some instances…generally will mean 4980H(b) penalty exposure.


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RULE 8:

Know when Form 1094-B/1095-B reporting might apply: Basic concept – providers of “minimum essential coverage” or “MEC”

must file/furnish these forms to individuals with coverage.

Generally applicable to insurance carriers, Medicare, etc.

Self-insured employers that are Applicable Large Employers do MEC reporting on Part III of Form 1094-C.

Self-insured employers that are not ALEs are very rare (unicorn).

Employers will have MEC reporting duties with respect to non-integrated HRAs.

“Integrated” means enrolled in employer’s own ACA- compliant plan or that of another employer.

HRA that reimburses expenses of family members not covered by the sponsoring employer’s ACA-compliant plan will be treated as non-integrated for plan years beginning on or after January 1, 2017.


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RULE 9:

Know how to report for self-insured plans, when applicable.

Must complete Part III of Form 1095-C .

Report as “covered” for a month if individual was covered for at least one day of that month, including part-time employees.

SSNs for each covered individual required to be reported in Part III:

First solicitation at time covered individual enrolls.

If SSN not provided then, second solicitation by December 31 of the same year.

If SSN still unavailable, third solicitation required by December 31 of the following year. If SSN not provided, use DOB instead.


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RULE 10:

Understand your options for penalty relief. Important: No relief from not meeting extended

filing/furnishing deadlines in early 2016.

IRS will not impose penalties if timely-filed and furnished forms have inaccurate or incomplete information despite the employer’s good faith effort to comply.

For subsequent years, information reporting penalties may apply absent demonstration that reporting failure was due to reasonable cause.

Penalties are $250 for each failure to file/failure to furnish ($500 per each Form 1095-C), up to $3 million/year.


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Bonus Rule


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Understand how opt-out payments affect affordability (Form 1095-C, Line 15) There are two types of opt-out payments – restricted and

unrestricted; restricted payments require proof of other coverage.

IRS views unconditional opt-out payments as equivalent to salary deferrals used to pay premiums, for affordability purposes (i.e. increases employee’s share).

Unofficially, IRS views conditional opt-out payments as not impacting affordability.

IRS has proposed that unconditional opt-out payments adopted after December 16, 2015 will be ADDED to the employee’s share of individual premiums for affordability purposes in 2016. Regulations will follow.

Bonus Chart


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The IRS adjusts the affordability safe harbor percentage for cost of living.

The 4980H(a) and (b) excise tax amounts also are adjusted.

Year Affordability % 4980H(a) Tax 4980H(b) Tax

2015 9.56% $173.33/mo.; $2,080/year

$260/mo.; $3,120/year

2016 9.66% $180/mo.; $2,160/year

$270/mo.; $3,240/year

QUESTIONS AND ANSWERS


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CONTACT INFORMATION

Christine P. Roberts, Esq.

Mullen & Henzell L.L.P.

112 E. Victoria St.

Santa Barbara, CA 93101

p. (805) 966-1501

c. (805) 687-8995

f. (805) 966-9204

[email protected]

www.eforerisa.com

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mailto:[email protected]

http://www.eforerisa.com/

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ACA Reporting for Large Employers - WordPress.com · RULE 1: Get the large employer headcount right. Status as an Applicable Large Employer for a given year is based on FT/FTE headcount