6056 reporting workshop 10 2015

Healthcare Reform Update: 6056 Reporting OCTOBER, 2015

ARTHUR J. GALLAGHER & CO. | BUSINESS WITHOUT BARRIERS™

Today’s Agenda • Overview of Requirements • Form 1094-C • Form 1095-C • Refresher: Full Time Employee • Examples • Next Steps • Gallagher Resources

Caveat: The information in this presentation is

based on our understanding at this time and is intended as a general overview.

This is a new and developing requirement. It is highly recommended

that you consult the instructions, IRS website, and other current sources for information when actually completing

these forms.

© 2015 GALLAGHER BENEFIT SERVICES, INC. 1

Overview of Requirement


Why Do You Care? • Reporting used to enforce PPACA Penalties • Sledgehammer Penalty - 4980H(a)

– $167/month for all employees less 30 (80 for 2015) • Tack hammer Penalty – 4980H(b)

– $250/month for each employee who receives a tax subsidy on the public exchange

• At least 100 EEs: effective 2015 • 50-100 EEs: effective 2016 • Proper documentation is your shield • $100/return penalty failure to file



Reporting Overview 6055 Reporting 6056 Reporting

Purpose INDIVIDUAL mandate EMPLOYER mandate & INDIVIDUAL tax credit

IRS Cover Sheet 1094-B* 1094-C

Individual Statement** 1095-B* Enrolled at least 1 day

1095-C Full time at least 1 month

Responsible Party Carrier Employer

Deadline (Employee) January 31 January 31 Deadline (IRS) February 28

(Electronic: March 31) February 28

(Electronic: March 31)


** Each Statement also provided to IRS with Cover Sheet

Focus on 1094-C & 1095-C


Key: Documentation • Right answer not enough: have to show your work • Must be able to document BY MONTH:

– Which employees are full time (Monthly or lookback)? – Which employees/dependents are offered coverage? – Which employees/dependents accepted coverage? – Which coverages are Minimum Essential Coverage? – Which coverages are Minimum Value? – Which coverages are Affordable?


Form 1094-C (IRS Cover Sheet)


6056 Reporting • Employer completes this reporting • For purposes of satisfying EMPLOYER mandate • Also: INDIVIDUAL tax credit eligibility • Indicates MEC, MV and Affordability offer and

acceptance on a month-by-month basis • Paper distribution required unless EE elects to receive

electronically (same rules as W-2) • Electronic filing required if 250 EEs



Form 1094-C • IRS Cover Sheet • Part I: Basic Contact Information

– Identify Designated Governmental Reporting Entity • Part II: Other Information

– Identify if Authoritative Transmittal – Controlled Group? – Indicate simplified reporting if any

• Part III: MEC and EE Counts monthly • Part IV: Other controlled group members



Form 1094-C Page 1


Part III Column (b) Blank

1095-C Line 14

Code 1A At least 1 Employee

1095-C Line 14 Code 1A or 1I At least 1 Employee

Part III Column (e)

Part III Column

(d) & Part IV


Form 1094-C Page 2


70% for

2015

Sledgehammer Penalty Shield

Does Not Tie to Anything?

Blank if Check Line 22 Box D

Does Not Tie to

Anything?

Include ALL Employees

Blank Unless Line 21 is Yes

Blank Unless Line 22 Box C

50-99: Code A (No Penalty

2015)

100+: Code B (Reduce

Sledgeham-mer by 80

rather than 30 for 2015)


Form 1094-C Page 3


Blank Unless Line 21 is Yes


Section 4980H Transition Relief • Form 1094-C Line 22: Check Box C if any of the

following apply: 1. 50-99 EEs & FTEs exempt 2015 penalties (and into 2016 for

non-calendar year plans) – See instructions page 15 2. 100+ EEs & FTEs reduce penalty count by 80 rather than 30 3. Lower Sledgehammer exemption from 95% to 70% 4. Ignore lack of offer to dependents during 2015 5. Non-calendar plan year 12/27/2012: extend 2014 relief into

2015 and 2016 – see instructions page 16 6. First pay period January, 2015 relief – see instructions page 16

• Items 1 or 2 and 3 will be common



Form 1095-C (Individual Statement)


Form 1095-C • Part I: Employee and Employer information • Part II: MEC, MV & Affordability month by month

– ANY employee who was full time during ANY month – Complex series of codes

• Part III: Covered Individuals month by month – Only complete if self-funded plan with no over-lapping fully

insured coverage – ANY employee with coverage (whether or not full time) – Used instead of 1095-B for INDIVIDUAL Mandate – Spouses, children, etc.



Form 1095-C


1094-C Line 22 Box A: 1A for at least 1 EE

Blank Unless Self-Funded

1094-C Line 22 Box B: 1A or 1I for at least 1 EE

Blank if Line 14 is 1A, 1F, 1G, 1H or 1I

May Be Blank. 2D Override 2B. 2E Override 2D, 2F, 2G, 2H. 2C Override All

Refresher: Full Time Employees


Reporting vs. Eligibility • Final Regulations ONLY specify Full Time status for

reporting purposes • There is no legal REQUIREMENT that all employees

who are considered full time for reporting purposes must be offered coverage

• It may be cheaper to pay the tackhammer penalty on some employees than to open up eligibility to all employees considered full time for reporting purposes

• Cost/Benefit analysis may be appropriate • Key: develop strategy for protecting against

sledgehammer penalty



Who is Full Time? Method Pro Con Monthly Method 1. Simpler to Determine

2. Status not locked in for months at a time

1. Don’t know status until too late to offer coverage

2. Could result in moving in and out of FT status during year

Lookback Method 1. FT status stable and known ahead of time

2. Able to offer coverage proactively

1. Complex determination rules

2. Status locked in for entire Stability Period


May use different methods/periods for certain groups of employees: • Union vs Non-Union • Different CBAs • Locations in different states • Salaried vs Hourly


Look-Back Method New Variable Hour EE

19

Initial Stability Period

Initial Measurement Period

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Standard Measurement Period

Standard Stability Period

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© 2015 GALLAGHER BENEFIT SERVICES, INC.

Hired During April, 2013


Look-Back Method On-Going Employees

Stability Period (Coverage)

Measurement Period (Eligibility)

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2012 2013 2014

Measurement Period (Eligibility)

Stability Period (Coverage)

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2015

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Examples


Sample Corporation Company Information • 2014: Average Full Time and FTE count 175 • No Controlled Group • Measurement Period: 11/1/2013 – 10/31/2014 • Stability Period: 1/1/2015 – 12/31/2015

Plan Design (Plan Year = Calendar Year) • Fully-insured Bronze plan offered to all employees, spouses and

dependents (regardless full time status) • Salaried employees may begin medical coverage 1st day of the month after

hire and pay $50/month for single coverage • Hourly employees may begin medical coverage 1st day of the 2nd month

after hire and pay $1/hour for single coverage





Jane Doe • Salaried employee • Hire Date: 5/12/2000 • Termination Date: N/A • 2013-2104 Measurement Period Monthly Hours: 173 • 2015 Monthly Salary: $2,000 • Elected family coverage in November, 2014 for 2015




Richard Roe • Hourly employee • Hire Date: 3/18/2005 • Termination Date: N/A • 2013-2104 Measurement Period Monthly Hours: 140 • 2015 Hourly Salary: $25.00 • Elected family coverage in November, 2014 for 2015 • Hours 2015:


Jan Feb Mar Apr May Jun 125 135 140 140 135 135

Jul Aug Sep Oct Nov Dec 125 135 140 140 135 135



Mary Smith • Salaried employee • Hire Date: 4/2/2015 • Termination Date: N/A • Initial presumed weekly hours: 40 • 2015 Monthly Salary: $5,000 • Elected family coverage upon hire




Joe Hardworker • Hourly employee • Hire Date: 3/18/2005 • Termination Date: 8/25/2015 (coverage ends) • 2013-2104 Measurement Period Monthly Hours: 135 • 2015 Hourly Salary: $30.00 • Elected family coverage in November, 2014 for 2015 • Hours 2015:


Jan Feb Mar Apr May Jun 125 135 140 140 135 135 Jul Aug Sep Oct Nov Dec 125 55 0 0 0 0



Sam Jones • Salaried employee (non-variable hour employee) • Hire Date: 7/1/2015 • Termination Date: N/A • Initial presumed weekly hours: 40 • 2015 Monthly Salary: $3,000 • Waived medical coverage for 2015 upon hire




Leslie Loyal • Hourly employee (variable hour employee) • Hire Date: 2/20/2015 • Termination Date: N/A • Initial Measurement Period: 3/1/2015 – 2/28/2016 • 2015 Hourly Salary: $20.00 • Elected family coverage when hired • Hours 2015:


Jan Feb Mar Apr May Jun 0 30 140 140 135 135 Jul Aug Sep Oct Nov Dec 125 135 140 140 135 135


Not required to file until considered full time

Next Steps


What Should You be Doing? • Determine controlled group status/members • Coordinate data collection/filing within controlled group • Designated Government Entity for consolidated filing? • Finalize outsourcing arrangements (if any) • Finalized sledgehammer penalty protection strategy • Collect 2014/2015 data by month (Payroll vendor?)

– Who is full time (Variable Hour Employees)? – Who is offered coverage? Elected coverage? – Was coverage Minimum Value? Affordable?

• Request dependent SSN – Initial request, following 12/31 & 1 more time



GALLAGHER RESOURCES



Resources: ajghealthcarereform.com



Resources • Forms Matrix: https://ajg.adobeconnect.com/_a815130238/s6055-6056-reporting-form-matrix/ • Decision Tree: https://ajg.adobeconnect.com/_a815130238/s6055-6056-reporting-flowchart/ • Flowchart: https://ajg.adobeconnect.com/_a815130238/s6055-6056-simplifiedreporting-flowchart/ • Reporting FAQs: https://ajg.adobeconnect.com/_a815130238/hcr_032014b/ • Counting Hours FAQs: http://www.ajg.com/knowledge-center/articles/employer-faqs-counting-hours/ • Checklist Insured: https://ajg.adobeconnect.com/_a815130238/hcr_032014d/ • Checklist Self-Funded: https://ajg.adobeconnect.com/_a815130238/hcr_032014e/ • Transition Relief: https://ajg.adobeconnect.com/_a815130238/s6056-transitionreliefreporting/ • Simplified Reporting: https://ajg.adobeconnect.com/_a815130238/s6056-6056-availability-

simplifiedreporting/ • Action Items Insured: https://ajg.adobeconnect.com/_a815130238/p6g80xg27q6/ • Action Items Self-Funded: https://ajg.adobeconnect.com/_a815130238/p63te5atmw9/ • Sample Employee Communications: https://ajg.adobeconnect.com/_a815130238/hcr_032014c/


https://ajg.adobeconnect.com/_a815130238/s6055-6056-reporting-form-matrix/

https://ajg.adobeconnect.com/_a815130238/s6055-6056-reporting-flowchart/

https://ajg.adobeconnect.com/_a815130238/s6055-6056-simplifiedreporting-flowchart/

https://ajg.adobeconnect.com/_a815130238/hcr_032014b/

https://ajg.adobeconnect.com/_a815130238/hcr_032014d/

https://ajg.adobeconnect.com/_a815130238/hcr_032014e/

https://ajg.adobeconnect.com/_a815130238/s6056-transitionreliefreporting/

https://ajg.adobeconnect.com/_a815130238/s6056-6056-availability-simplifiedreporting/

https://ajg.adobeconnect.com/_a815130238/s6056-6056-availability-simplifiedreporting/

https://ajg.adobeconnect.com/_a815130238/p6g80xg27q6/

https://ajg.adobeconnect.com/_a815130238/p63te5atmw9/