Employer Reporting Obligations Under ACAEmployer Reporting Obligations Under ACA Diane V. Dygert...

EmployerReportingObligations UnderACADiane V. Dygert

James Napoli

June 4, 2015

Legal Disclaimer

The contents of this presentation should not be construed as legal adviceor a legal opinion on any specific facts or circumstances. These materialsare intended for general information purposes only, and you are urged toconsult a lawyer concerning your own situation and any specific legalquestions you may have.

Background

Why? When? Who? What?

ACA Reporting Obligations

• Why?• Mechanism to collect offer and coverage information, to enforce:

• Individual Mandate

• Employer Mandate

• Marketplace Tax Credits

• When?• 2015 – first year reporting required

• Due Date

• To individual:

• February 1, 2016

• To IRS:

• February 29, 2016 (if filing by paper)

• March 31, 2016 (if filing electronically)

• Who?

►Providers of minimum essential coverage

• Insurers and sponsors of self-funded plans (including sponsors ofmulti-employer plans)

• IRC Section 6055 (individual mandate)

►Applicable large employers (ALEs)

• Regardless of whether fully or self-insured, union or non-union

• IRC Section 6056 (employer mandate)

• What?

►Forms 1094 and 1095 B series

• Insurance providers of minimum essential coverage

• Multi-employer plans

►Forms 1094 and 1095 C series

• ALEs

• Final forms and instructions released: February 9, 2015

Focus Today

The Forms

IRC Form 1094-C

Form 1094-C

• Transmittal form for each ALE member►Analogous to Form W-3

►Each ALE controlled group member files own 1094-C

►Must list other ALE members in descending order by number ofemployees

• Authoritative Transmittal►ALE members may file multiple 1094-Cs (e.g. for separate

divisions)

►However, each ALE member must designate one 1094-C as theAuthoritative Transmittal with combined information

Form 1094-C

• Aggregates ALE member’s information as to►Who was offered coverage, and

►Who accepted the coverage

• Dual Employees--if employee worked for:►More than one ALE member during a month,

• Report employee on 1094-C of employer for whom worked most

►Different ALE members in different months

• Divide employee up by month

• Non-Employees►If coverage is offered to non-employees (e.g., directors or

retirees), ALE has an option to use the B Series to report thecoverage offered and provided to those individuals

Form 1094-C (Parts I and II)

• Parts I and II Information Requested:

►Employer name, TIN and contact information

►Controlled group status

►Simplified reporting methods

• Offers simplified reporting on the 1094-C or 1095-C

Form 1094-C (Part II)

• Simplified Reporting Methods - Options include:►Qualifying Offer Method

►Qualifying Offer Method Transition Relief

►Section 4980H Transition Relief• Not yet subject to Employer Mandate

►98% Offer Method

Form 1094-C (Part III)

• Part III Information Requested:

►Months for which Minimum Essential Coverage (MEC) is offered

►Number of full-time employees in each month

►Total number of employees in each month

• Section 4980H Transition Relief►If between 50-99 full-time equivalent employees,

• Enter A in Part III, Column (e) to indicate not subject to employermandate

►If >99 full-time equivalent employees, but non-calendar yearplan

• Enter B in Part III, Column (e) for applicable months prior to thestart of plan year

• 98% Offer Method

►If offer of

• Minimum value, affordable coverage (using any of the affordabilitysafe harbors)

• To 98% of employees for whom it is filing a 1095-C

• Plus, MEC to dependents

►Then

• Need not complete full-time employee count in Part III, Column (b)

• Do not need to track hours, unless want to debate a potentialpenalty for someone in the 2% later

Note: Coverage offered by a multi-employer plan, or a staffing agency, thatprovides ALE “relief” would count toward 98% threshold

Form 1094-C (Part IV)

• Controlled groups

►Each member files own 1094-C (or multiple forms)

►Must list other ALE members in descending order by number ofemployees in Part IV

►Limited to 30 controlled group members, as the reduction by 30employees for the penalty is allocated among these controlledgroup members

The Forms

IRC Form 1095-C

Form 1095-C

• Delivered to the employee (with a copy to the IRS)►One form for each full-time employee of an ALE member

• Whether or not coverage was offered

►Plus, form for each non-full-time employee enrolled in self-funded coverage (if not using 1095-B)

• Retirees

• COBRA beneficiaries

• Non-employee directors

►Separate forms if work for different ALE members

• By month

Form 1095-C

• Due Date:►To IRS: same as above

►To employee: January 31st (February 1, 2016 because January31st is a Sunday)

• Analogous to Form W-2

Form 1095-C

Form 1095-C (Part I)

• Information Requested:

►Employee name, SSN and address

►Employer name, TIN, address and telephone number

• Contact here must be someone employee can call with questions

• Could be a third party vendor

• Line 14: Offer of Coverage

►Each month displays applicable code (Series 1 codes) for typeof coverage offered

• If same code for the year, just “All 12 Months” box

►Coverage is considered offered for a month, only if offered onevery day of the month

• Includes new hires and terminated employees

►All months must be filled in, even if not a full-time employee fora given month

Note: Coverage from a multi-employer plan or staffing agency wouldreflect the code supplied by that “plan” to the ALE

• Line 14 Codes for types of coverage offers►1A – Qualifying Offer

►1B – MEC with MV to employee

►1C – MEC with MV to employee and MEC to dependent

►1D – MEC with MV to employee and MEC to spouse

►1E – MEC with MV to employee and MEC to spouse and dep

►1F – MEC without MV to employee, spouse and dependents

►1G – Offer to non-full-time employee

►1H – No offer of coverage to non-full-time employee

►1I – Qualifying Offer Transition Relief: No offer of coverage

Form 1095-C Simplified Reporting

• Qualifying Offer Method►Applies employee-by-employee

►Offer of MEC with minimum value

►To one or more full-time employees for all months of the year

►Plus spouse and dependents (if any)

►At a cost not exceeding 9.5% of federal poverty line (foremployee-only coverage)

• Qualifying Offer Method Transition Relief►Applies population-wide

►If “qualifying offer” as defined above,

►To 95% of full-time employees for each month of year

• Qualifying Offer:►Don’t report cost of coverage on line 15

►Don’t need to give 1095-C to employee if employee did notaccept coverage

• May give “simplified statement” in lieu thereof that for all 12months received a “qualifying offer” and therefore are not eligiblefor premium tax credit

►Still need to give 1095-C to IRS anyway

►If employee enrolled in self-insured coverage, simplifiedstatement is not available.

• Qualifying Offer Transition Relief►Don’t report cost of coverage on line 15

►Don’t need to give 1095-C to employee (unless using for self-funded reporting)

• May give “simplified statement” in lieu thereof that may be eligiblefor premium tax credit for one or more months in 2015

►If employee enrolled in self-insured must give anyway

►Must give to IRS anyway

• Line 15: Affordability of Coverage

►Complete only if Codes 1B, 1C, 1D, or 1E are used

►Enter employee-only premium for lowest cost plan providingMEC with MV

• Each month displays applicable dollar amount

• Or, if same for the year, just in “All 12 Months” box

• Enter 0.00 if no cost for employee-only level of coverage

►Note: This may not be the amount the employee is actuallypaying for coverage under the employer’s plan

• Line 16: Section 4980H Safe Harbor Codes and OtherRelief

►Each month displays applicable code (Series 2 codes) for relieffrom employer mandate

• If same code for the year, just in “All 12 Months” box

• If no code applies for a month, leave blank

• Line 16 Codes for safe harbors and other relief►2A – Employee not employed on any day during the month

►2B – Employee not a full-time employee and did not enroll inMEC, or is a full-time employee but terminated during month

►2C – Employee enrolled in coverage offered

►2D – Employee is in a Section 4980H Limited Non-assessmentPeriod (e.g., initial measurement period)

►2E – Multiemployer plan transition relief applies

►2F – W-2 safe harbor for affordability used

►2G – Federal poverty line safe harbor for affordability used

►2H – Rate of pay safe harbor for affordability used

►2I – Non-calendar year transition relief applies

• Complete if employee enrolls in employer-sponsoredself-funded coverage►Does not include multiemployer plan coverage

• Complete for every individual who enrolled in coverage►Employee, whether or not full-time

►Spouse and dependents

►For individual mandate compliance

• Where covered participant and spouse (or otherdependent) are each employed by employer►Report only on 1095-C of the covered participant

• If reporting individual who was a non-employee all 12months (COBRA participant or director), use Code 1Gon Line 14

• Must solicit dependent SSN three times►Initial solicitation at the time the relationship with individual is

established.

►Second solicitation required by December 31 of the year inwhich the relationship with the individual begins (or January 31of the following year if the relationship begins in December).

►Final solicitation required by the December 31 of the followingyear.

• If unsuccessful, can use date of birth

The Forms

Common Reporting Examples

1094-C Reporting Examples

• ABC Company►Offers MEC to its full-time employees

►Plan year starting April 1

►Subsidiaries:

• XYZ, LLC

• JKL, Inc.

• OPQ, Co.

►Employs full-time employees:

• ABC Company = 152

• XYZ, LLC = 42

• JKL, Inc. = 75

• OPQ, Co. = 310

ABC Company

• ABC Company employs (among others)

►Virginia Jones

• Employee-only through May when added new spouse, Vic

Virginia Jones

►Bob Robertson

• Employee plus children, including son Tyler who is also anemployee

►Tyler Robertson

• Covered under his father, Bob’s, coverage

Bob Robertson

Tyler Robertson

• None,►as reported on father’s 1095-C.

►John Smith

• Hired full-time in February, enrolled following waiting period inMay, terminated employment mid-November and lost coveragethat month, did not elect COBRA

John Smith

• Widget Co►Offers MEC with MV, affordable to all of its full-time non-union

employees, plus spouses and dependents

►Offers retiree coverage to some former employees

►Treated as offering multi-employer plan to its full-time unionemployees

►Employs employees:

• Non-Union = 25 full-time; 5 part-time

• Union = 300 full-time; 75 part-time

Widget Co

• Widget Co employs (among others):

►Alice Agnew

• Union member offered coverage under multi-employer plan

• Full-time employee as of June

• Employer makes contribution all 12 months

• Plan has represented it offers MEC with MV that is affordable(FPL safe harbor), plus MEC to spouse and dependents.

• Union confirms coverage offered from June – December but doesnot provide enrollment information

Alice Agnew

►Eduardo Garcia

• Terminated in December 2014; elected COBRA coverage inFebruary 2015; paid retroactive premiums to January 2015 forcoverage, which remained in place all year

• Covered adult son, Duane

Eduardo Garcia

►Penelope Pratt

• Offered and enrolls in minimum value, FPL affordable coveragefor 2015

• She terminates employment on June 15, 2015, and enrolls inCOBRA effective June 15th through the end of the year

• The COBRA premium for self-only coverage is $400/month

Penelope Pratt

Enforcement

Compliance Penalties

• $100 for each return/statement►Maximum $1.5 million per year

• Waiver►Good Faith efforts for 2015 reporting

►Reasonable cause

• Increased penalties►Intentional disregard

Questions?

Employer Reporting Obligations Under ACAEmployer Reporting Obligations Under ACA Diane V. Dygert...

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