ACA 101:THE BASICS
March 2017
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Applicable Large Employer (ALE) Status
table of contents
Basic Requirements
Reporting Requirements
Penalties
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Introduction
Thesweeping20,000-pagePatientProtectionandAffordableCareActcreatedacomplianceandreportingchallengeforalmosteveryemployer–thenlaterrevisionsfurthercomplicatedthepicture.
Does it apply to my company? How do I determine which employees might be eligible for coverage? What reporting requirements do I have? If I don’t do everything correctly, what penalties could there be?
You’renotaloneinwondering.That’swhyAGH’shumanresourceandpayrollprofessionalshaveputtogetherthisguidetogiveyousomeofthebasicsofACAreporting.
Questions? Contact AGH’s organizational development professionals at 316.291.4022.
Introduction
ALE Status
Basic Requirements
Reporting Requirements
Penalties
November2015
NOTE: Information in this document has been obtained by Allen, Gibbs & Houlik, L.C. from sources believed to be reliable. However, AGH does not guarantee the accuracy nor completeness of any information. This communication does not and is not intended to provide legal, accounting or other professional advice or opinions on specific facts or matters, and accordingly, AGH assumes no liability whatsoever in connection with its use. Nothing in this communication can be used to avoid penalties that may be imposed by a governmental taxing authority or agency.
Applicable Large Employer (ALE) Status
Introduction
ALE Status
Basic Requirements
Reporting Requirements
Penalties
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Are you an applicable large employer (ALE)?
OneofthemostimportantthingstounderstandiswhetheryouareclassifiedasanALE.
Ingeneral,anALEisanemployerwith50ormorefull-timeorfull-timeequivalentemployees.
Forhelpdeterminingwhetheryoufallundertheapplicablelargeemployerstatus,visitirs.gov/Affordable-Care-Act/Employers/Determining-if-an-Employer-is-an-Applicable-Large-Employer.
Please note: regardless of the number of employees, any organization that has a self-funded health care plan is required to complete ACA reporting.
ALEsandself-insuredcompaniesarecurrentlytheonlyorganizationswhoarerequiredtocompleteACAreporting,althoughthatrequirementcouldchangeinfutureyears.
Introduction
ALE Status
Basic Requirements
Reporting Requirements
Penalties
November2015
Basic Requirements
Introduction
ALE Status
Basic Requirements
Reporting Requirements
Penalties
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What are the basic ACA requirements?
IfyouhavedeterminedthatyouareanALE,youshouldbecomefamiliarwiththesefourareasofbasicrequirementsforACAcomplianceandreporting:
Employer Mandate
Plan Requirements*
Reporting Requirements
Required Notes
*Planrequirementsapplytoallemployerswithhealthplans,regardlessofsize.
Introduction
ALE Status
Basic Requirements
Reporting Requirements
Penalties
November2015
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Employer mandate & plan requirements
Applicablelargeemployersmustofferhealthcoveragetosubstantiallyalloftheirfull-timeemployeesanddependentsorpayapenaltyifanyfull-timeemployeereceivesagovernmentsubsidyforhealthcoveragethroughaninsuranceexchange.
Employee health plans must include the following (not all-inclusive):
•Freepreventivecare
•Expandedpreventivecareservicesforwomen
•Noannuallimitsforessentialhealthbenefits
•Waitingperiodscannotexceed90days
•Noexclusionforpre-existingconditions
•Coverageforclinicaltrialparticipants
•Limitsoncostsharing
Introduction
ALE Status
Basic Requirements
Reporting Requirements
Penalties
November2015
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Reporting requirements
The following reporting is required for ALEs and sponsors of self-insured plans effective 1/1/2015:
•CompliancewithIRCSections6055and6056
•Reportingforcalendaryearregardlessofplanyear
•ApplicableLargeEmployers(ALEs)mustfileForms1094-Cand1095-C
•Sponsorsofself-insuredplansofnon-ALEsmustfileForms1094-Band1095-C(Insurersalsofiletheseforms)
•Employeestatement(1095-Cor1094-B)mustbeprovidedtoemployeesbyJan.31
•IRSreturnsmustbefiledbyFeb.28(March31iffiledelectronically)
Introduction
ALE Status
Basic Requirements
Reporting Requirements
Penalties
November2015
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Required notices
Employers must issue the following notices to employees as applicable:
•Statementofgrandfatheredstatus
•Noticeofpatientprotectionsandselectionofproviders(annually)
•SummaryofBenefitsandCoverage(SBC)–annuallyandtonewenrollees
•Noticeofmarketplaceexchange(2013)andtonewhires
•60-daynoticeofplanchangesoutsideofregularopenenrollmentperiods
•Noticeofrescission
Introduction
ALE Status
Basic Requirements
Reporting Requirements
Penalties
November2015
Reporting Requirements
Introduction
ALE Status
Basic Requirements
Reporting Requirements
Penalties
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When does information need to be reported?
ReportingrequirementsforallApplicableLargeEmployers(ALEs)tookeffect1/1/15.All ALEs must report for the prior calendar year as outlined below:
•Employeestatement(1095-Cor1094-C)mustbeprovidedtoemployeebyJanuary31,unlessthatdatefallsonaSunday.
•IRSreturnsmustbefiledbyFebruary28(March31iffiledelectronically)
Introduction
ALE Status
Basic Requirements
Reporting Requirements
Penalties
November2015
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What is required for information reporting?
For Applicable Large Employers:
•Whowasafull-time(orfull-timeequivalent)employeeforeachmonth
•Totalemployeecountsforeachmonth
•Name,addressandotheridentifyinginformationforboththeemployerandeachemployee
•Whathealthcarecoveragewasofferedforeachmonth,ifany
•Theemployeeshareofthemonthlypremiumforlowest-costself-onlyminimumvaluecoverage
•Whichmonthseachemployeewasinenrolledinyourcoverage
•Whichmonthsyourorganizationmetaffordabilitysafeharborrequirements(seetheIRSwebsitehereformoreinformation:https://www.irs.gov/Affordable-Care-Act/Employers/Questions-and-Answers-on-Employer-Shared-Responsibility-Provisions-Under-the-Affordable-Care-Act-Question19)
•Ifyouofferaself-insuredplan,informationaboutthecoveredindividualsineachplan
•Whetheryourorganizationiseligiblefortransitionrelief(seetheIRSwebsitefororganizationswhichmayhavedifferentrequirementsforreportingandcoverage)
For non-ALE self-insured plan sponsors:
•Name,addressandotheridentifyinginformationforboththeemployerandeachemployee
•Name,SSNandmonthsofcoverageforeachcoveredindividual
Introduction
ALE Status
Basic Requirements
Reporting Requirements
Penalties
November2015
14|MEC = Minimum Essential Coverage MV = Minimum Value
Coverage Codes Usethistabletodeterminethepropercoveragecodetouseforline14ofform1095-C:
Code Explanation
1A Qualifyingoffer:MECprovidingMVofferedtofull-timeemployeewithemployeecontributionforself-onlycoverage=<9.5%ofsinglefederalpovertyline&atleastMECofferedtospouse&dependents
1B MECprovidingMVofferedtoemployeeonly
1C MECprovidingMVofferedtoemployeeandatleastMECofferedtodependent(s)(notspouse)
1D MECprovidingMVofferedemployeeandatleastMECofferedtospouse(notdependent(s)
1E MECprovidingMVofferedtoemployeeandatleastMECofferedtodependent(s)andspouse
1F MECNOTprovidingMVofferedtoemployee,oremployeeandspouseordependent(s)oremployee,spouseanddependent(s)
1G Offerofcoveragetoemployeewhowasnotafull-timeemployeeforanymonthofthecalendaryearandwhoenrolledinself-insuredcoverageforoneormoremonthsofthecalendaryear
1H Noofferofcoverage(employeenotofferedanyhealthcoverageoremployeeofferedcoveragethatisnotMEC)
1I Reserved
1J MECprovidingMVtoemployee,andconditionalofferofMECtospouse(butnotdependents)
1K MECprovidingMVtoemployee,anddependents,andconditionaloffertoMECtospouse.
Introduction
ALE Status
Basic Requirements
Reporting Requirements
Penalties
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Safe Harbor Codes Usethistabletodeterminethepropersafeharborcodetouseforline16ofform1095-C:
Introduction
ALE Status
Basic Requirements
Reporting Requirements
Penalties
Code Explanation
2A Employeenotemployedduringthemonth
2B EmployeenotaFTemployee
2C Employeeenrolledincoverageoffered
2D Employeeinalimitednon-assessmentperiod
2E Multiemployerinterimrulerelief
2F Section4980HaffordabilityFormW-2safeharbor
2G Section4980Haffordabilityfederalpovertylinesafeharbor
2H Section4980Haffordabilityrateofpaysafeharbor
2I Reserved
Penalties Introduction
ALE Status
Basic Requirements
Reporting Requirements
Penalties
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What is the risk for non-compliance?
Introduction
ALE Status
Basic Requirements
Reporting Requirements
Penalties
ComplianceArea: Penalty(adjustedannuallyforinflation):
ForApplicableLargeEmployers(ALEs)notprovidinghealthcarecoverageforemployees(triggeredbyanyemployeewhoreceivesapremiumtaxcreditthroughtheexchange)
$2,000peremployeeperyear(calculatedonamonthlybasis).Takethenumberoffull-timeemployees(minus80in2015;minus30insubsequentyears)times$166.67foreachmonth.
ForALEswhoprovidecoveragebutitisnotaffordableordoesnotmeetminimumvaluerequirements(triggeredbytheemployeewhoreceivesapremiumtaxcreditthroughtheexchange)
$3,000peremployeeperyearwhoobtainscoveragethroughtheexchange(calculatedonanmonthlybasis)
ForanyemployernotcomplyingwithgeneralACArequirements $100peremployeeperday
Foranyemployernotcomplyingwithinformationreportingrequirements
$250peremployeeperday;cappedat$3MDoublefornotreportingtoIRSandtoemployees
Penalties may be assessed for non-compliance in several areas:
November2015
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Questions? Contact us.
Carrie Cox, PHR, SHRM-CPSenior Organizational Development [email protected]
Sonia J. PhillipsPayroll Manager, Outsourcing [email protected]
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