Common 1095-C Scenarios Sentric

Introduction

Mike Petrasek

Customer Success Marketing Manager

Before We Begin – A Disclaimer

If you’re unsure then talk to your accountant or benefits broker.

Agenda

Resources Page Reminder

The Forms

Line 14

Line15

Line 16

Common Scenarios

Appendix

ACA Resources Reminder

After This Training

…You should:

• Know the Difference Between the Form 1094-C & 1095-C

• Understand Series 1 and 2 Code Groups

• Better understand a few of the most common uses of those codes

THE FORMS ACA Training

The Forms: Filing Deadlines

January 31, 2017

1095-C due to EE. If mailed, must be postmarked to that date.

February 28, 2017

1094-C and 1095-C are due to the IRS if filing by paper.

March 31, 2017

1094-C and 1095-C are due to the IRS if filing electronically.

The Forms

The Forms: 1094-C Part 1

The Forms: 1094-C Part 2

The Forms: 1094-C Part 4

The Forms: 1095-C

The Forms: 1095-C

It’s All About the Offer

The Forms: 1095-C Line 15

Only complete if line 14 code is: 1B, 1C, 1D, 1E, 1J or 1K.

The Forms: 1095-C Line 14

The Forms: 1095-C Line 14

According to the IRS: “…Series 1 indicator codes specify the type of coverage, if any, offered to an employee, the employee’s spouse, and the employee’s dependents.”

There are 11 types of Series 1 indicator codes…

The Forms: 1095-C Line 14 Series 1 Codes

1A 1E 1C 1G 1K

1B 1D 1F 1H 1J

Company Made A Qualifying Offer

Company Didn’t Make A Qualifying Offer

*Code 1I is no longer used.

• 1A MEC providing MV offered to full-time EE with contrib. equal to or less than 9.66% of mainland single federal poverty line and at least MEC offered to spouse and dependents. • 1C MEC providing MV offered to EE and at least MEC offered to dependents (not spouse). • 1E MEC providing MV offered to EE and at least MEC offered to dependents and spouse. Do not use 1E if offer to spouse was conditionally (1K). • 1G Offer of coverage to EE who was not full-time for any months and who enrolled in self-insured coverage for one or more months. • 1K MEC providing MV offered to employee; at least MEC offered to dependents; and at least MEC conditionally offered to spouse.

1095-C Line 14: The Company Made A Qualifying Offer

• 1B MEC providing MV offered to EE only. • 1D MEC providing MV offered to EE and at least MEC offered to spouse but not dependents. Do not use 1D if the coverage for the spouse was offered conditionally (1J). • 1F MEC not providing MV was made to EE; EE and spouse or dependents, or EE, spouse and dependents. • 1H No offer of coverage to the EE or the offer was not MEC. • 1J MEC providing MV offered to employee and at least MEC conditionally offered to spouse; MEC not offered to dependent(s).

1095-C Line 14: No Qualifying Offer

• If the employee was not employed during that month • If the employee was still in their limited non- assessment period

• If the employee was not full time every month of the year

Acceptable reasons why these codes may be used include:

1095-C Line 14: No Qualifying Offer

The Forms: 1095-C Line 16

What Does Safe Harbor Actually Mean?

Offered Affordable Coverage

…But Goes to the Marketplace Anyhow

IRS Acceptable Safe Harbor Reasons

• The EE was not employed or was not full time; • The EE enrolled in the MEC coverage offered; • The EE was in a limited non-assessment period with respect to

section 4980H; • The ALE member met one of the section 4980H affordability safe harbors with respect to his employee; or • The ALE member was eligible for multiemployer interim rule relief for this EE. There are 9 types of Series 2 indicator codes…

Clarify when an employee enrolled

in coverage

2C

Provide valid reasons why your company did not

offer coverage

2A 2B 2D

Show that your offer was

affordable – if employee declined coverage

2F 2G 2H

Indicate that the employee is part

of a multi-employer

agreement

2E

The Forms: 1095-C Line 16 Series 2 Codes

*Code 2I is no longer used.

1095-C Line 16: Code 2C

One code to rule them all…sort of.

• 2A Employee was not employed during the month. • 2B Employee is not a full-time employee. *Should be used for the month of termination. • 2D Employee is in a limited non-assessment period.

Provide valid reasons why your company did not offer coverage.

1095-C Line 16

1095-C Line 16

• 2F Section 4980H affordability Form W-2 safe harbor. • 2G Section 4980H affordability mainland federal poverty line (9.66% or $94.75) safe harbor. • 2H Section 4980H affordability rate of pay safe harbor.

Show that your offer was affordable – if employee declined coverage.

Line 16 Codes Explained: Group 4

Indicate that the employee is part of a multi-employer agreement.

• 2E Multi-employer interim rule relief and should always be paired with code 1H from Line 14.

A Few Red Flags

Top 3 Red Flag Scenarios

• Anything other than a code 1A and 1E on line 14.

• Roughly 80% of your employees should have a 1A or 1E but if you see some other codes, you should probably check your data.

• Blank line 16.

• Errors when generating forms.

• Good data is key. The bulk of your work with the ACA is going to be fixing bad data. Hire dates, term dates, plan start and end dates, enrollment dates, etc.

Let’s Look At a Few Examples

Example 1: Antonio – Accepted Coverage

Offered Plans:

• Plan A - $50/month

• Plan B - $150/month

• Plan C - $500/month

Line 14

• 1A

Line 15

• Blank

Line 16

• 2C

Example 2: Britney – Declined Coverage

Offered Plans:

• Plan A - $50/month

• Plan B - $150/month

• Plan C - $500/month

Line 14

• 1A

Line 15

• Blank

Line 16

• 2F – W2

• 2G – Federal Poverty Line

• 2H – Rate of Pay

Example 3: Ron – Started Mid-Year

Offered Plans:

• Plan A - $100/month

• Plan B - $150/month

Line 14

• Jan. – April = 1H

• May – Dec. = 1E

Line 15

• Jan. – April = Blank

• May – Dec. = $100

Line 16

• Jan. – April = 2A

• May – Dec. = 2C

Example 4: Jan – Terminated Mid-Year

Offered Plans:

• Plan B - $150/month

• Plan C - $250/month

Line 14

• Jan. – June = 1E • July – Dec. = 1H

Line 15 • Jan. – June = $150 • July – Dec. = Blank

Line 16 • Jan. – June = 2C

• July = 2B

• August – Dec. = 2A

Example 5: Doug – Union Employee

Offered Plans:

• Plan A - $75/month

• Plan B - $250/month

• Plan C - $750/month

Line 14

• 1H

Line 15

• Blank

Line 16

• 2E

APPENDIX ACA Training

Does offer provide Minimum Essential

Coverage (MEC)?

1F

Line 14 Codes: No Offer or Not Minimum Value

Does offer provide Minimum Value

(MV)?

YES

NO

No Offer of Minimum Essential

Coverage (MEC)

NO 1H

NO

START

FINISH

Is the offer considered

Affordable: ≤ 9.5% of mainland FPL?

Offered to EE only?

Offered to EE and dependents (not

spouse)?

Offered to spouse and dependents?

Line 14 Codes: Assumes Offer Provides MEC and MV

1A

1B

1C

1D

1E

Offered to EE and spouse (not

dependents)?

YES YES

The offer is not

considered Affordable: ≤ 9.5% of mainland FPL?

NO YES YES

YES

YES

YES

Offered to EE, spouse

and dependents?

NO

NO

NO

NO

FINISH

ST

AR

T

Offered to EE, dependents and at least conditionally offered to spouse?

Line 14 Codes: New Codes for 2016

1K

1J

Offered to EE and conditionally

offered to spouse but not

dependents?

The offer is not

considered Affordable: ≤ 9.5% of mainland FPL?

YES YES

YES

NO

FINISH

ST

AR

T

EE is enrolled but was NOT full time (FT) for any

month.

Offer to EE not FT & enrolled in self-insured coverage for 1 or more

months 1G

YES YES

Line 14 Codes: Self-Insured Employer with Non-FT EE

A few notes regarding self-insured coverage: • All employees who enroll in self-insured coverage must receive a Form 1095-C.

This includes non-full-time employees per the below scenario.

• Employers are required to complete all three parts of the Form 1095-C only for those employees who enrolled in self-insured coverage.

START FINISH

Was the EE employed on ANY day of the month?

2A

Line 16 Codes: Not Employed or Not Full-Time

NO

Was the EE full-time for the month? 2B

2D

YES

START

FINISH

NOT YET

Was the EE in a limited non-

assessment period*?

NO

YES

*A limited non-assessment period may include: an EEs initial measurement or associated administrative period, the first calendar month of employment or the period following a status change, among others. For a full list, review the IRS’s Form 1095-C instructions.

Is the EE enrolled in minimum

essential coverage offered?

2C

Is EE eligible for multi-employer interim relief rule?

Line 16 Codes: Assumes Full-Time Employee for the month

YES

NO

FINISH

ST

AR

T

Was the W-2 safe harbor method used?

2E

2F

2G

2H

Leave blank

YES

YES NO

NO

Was the federal poverty line safe harbor method used?

NO

Was the rate of pay safe harbor method used?

NO

No codes apply YES

YES

YES