ACA EMPLOYER REPORTINGnexgenhce.com/images/ACA_REPORTING_-_Step_by_Step...2015/11/09 · employer)...

ACA EMPLOYER REPORTING

Managing your 2015 reporting process

Presented by:

Next Generation Healthcare Economics

November, 2015

Sources of Rules Information

The authoritative sources of all information in this presentation are either summarized and/or referenced in the following publications:

• IRS Instructions for Forms 1094-B and 1095-B, published 9-16-2015

• IRS Instructions for Forms 1094-C and 1095-C, published 9-16-2015

In any cases where the interpretations in this presentation may differ from the above cited publications, the IRS Instructions and IRS interpretations of those instructions; made both now and in the future, will take precedence.

Please refer to the last presentation slide for references and disclaimers

2Next Generation Healthcare Economics

What does the IRS want to know?

1. Who has “minimum essential coverage”?

2. Who is eligible for premium tax credits?

3. Which employer plans exist, what kind of coverage do they provide and for whom:

a) For small group, who is covered under an MEC plan?

b) For large group, who is covered and who is eligible for an MEC, MV plan and is that coverage affordable?

c) Employer Share Responsibility rules impose penalties for “applicable large employers” who fail to offer full-time employees and their dependents coverage; affordability penalties apply to ALE plans that fail to meet earnings-contribution specifications for single employee MV coverage.


What, Where, How and When

Compliance policies from the ACA’s Employer Shared Responsibility rules:

1. Status as small or large (applicable large employer) determines reporting rules/process

2. Methods use to determine eligibility and affordability determine kind of reporting data

3. Policies established for making eligibility offers of coverage(ACA-compliant personnel policies)

4. Personnel and HR data resources

5. IRS reporting rules, distribution of forms and instructions for filing forms


Small or Large Group?

1. Self-insured small group (less than 50 full-time and full-time equivalent employees) must file with IRS using form 1094-B (employer transmittal form) and distribute 1095-B (employee return form) to employees covered under their health plan

2. Self-insured large groups (50 or more full-time and full-time equivalent employees) must file with IRS using form 1094-C (employer transmittal form) and distribute 1095-C (employee return form) to employees covered under their health plan


PART 1: SMALL GROUP


Purpose of the “B” forms

Filed by insurers, multiemployer plans, and small

employers (non-ALEs) with self-funded plans.

For Applicable Large Employers (ALEs) who are fully-

insured they must file 1095-C forms for their full-time

employees and all covered non-employees (Part 1 and II

only).

ALE insurance companies must file 1095-B forms providing

coverage information via 1095-B Part IV. The ALE must

distribute the 1095-B forms and file using the 1094-B

transmittal form.


Two key reporting tasks for small groups

1. Distributing separate 1095-B forms to each “responsible

individual” covered under the group health plan.

2. Filing your 1094-B transmittal and copies of all 1095-B

forms distributed to the IRS.

How will you prepare the 1095-B forms for distribution?

How will you file with the IRS (manual or electronically)?


Information required for 1095-B

1. Part I: “Responsible Individual” is the employee who is covered under the health plan.

2. Part II: Do not complete part II; this is only for insurance companies or SHOP exchange carriers.

3. Part III: Do complete Part III, entitled “issuer or other coverage provider”. This references employer sponsors of self insured plans.

4. Part IV: Health plan coverage details for the responsible individual listed in Part I and dependents also covered. Note requirement for dependent social security numbers. Part IV information is available from the group health plan administrator.


Social security numbers

Remember To Obtain the SSN of EVERYONE!

• The SSN is needed for the forms

• Section 6055 reporting requires SSN of all covered individuals (e.g., employee, spouse, dependent children)

• Section 6056 reporting requires full-time employee’s SSN

• If you are unable to obtain a SSN after making a reasonable effort to do so, the covered individual’s date of birth may be reported in lieu of a SSN



Reasonable effort is required

• Initial request for SSN at the time of enrollment

• If no SSN received, first annual solicitation is required by

December 31 of the year coverage begins

• If still no SSN received, second annual solicitation is

required by December 31 of the following year

• If still no SSN is received after the second solicitation, you

do not need not continue to solicit the SSN



When employers obtain social security numbers for

dependents, they should do so in a manner that protects

individual identities and privacy rights.

SSNs can be listed on the printed versions of the forms in

protected formats; e.g., xxx-xx-1234.

All such information should be passed on to the plan

administrator so they can update their year end reports with

complete data.

TIP: Lots of missing SSNs could trigger an IRS audit.


Integrating 1095-B data


Each employee and non-employee continuant, retiree, etc. covered

under the employer’s health plans must be reported in Part IV. This

information must be provided in a format that can be integrated with

the employer’s information provided in Part I and Part II data so that

all three data sets may be assembled into one form for each individual

recipient of the 1095-B form.

Note: Taft-Hartley and other multiple employer plans must provide

1095-B forms to responsible individuals covered under their plans.

The Taft-Hartley plan must also file the 1094-B transmittal for all such

individuals.

Multiple data submissions will be required for groups that have more

than one plan administrator. Split groups (having more than one

health plan administrator) must collate information for Part IV in time

for process and delivery to responsible individuals.

PART 2: LARGE GROUP


Small vs Large Group

1. Small group reporting basically serves the purpose of providing information for individual coverage verification only.

2. Small group does not have to comply with the Employer Shared Responsibility provisions of the ACA.

3. Note: Groups must be prepared to verify that they are either a small group or large group (aka Applicable Large Employer) following the rules for counting full-time and full-time equivalent employees specified in the ACA rules for Employer Shared Responsibility (subject of past seminars ).


Two key reporting tasks for large groups

1. Distributing separate 1095-C forms to each full-time

eligible employee and all other plan-covered individuals.

2. Filing your 1094-C and copies of all 1095-C forms

distributed to the IRS.

How will you prepare the 1095-C forms for distribution?

How will you file with the IRS (manual or electronically)?


How are you coordinating your resources to

ensure timely reporting?

1. Payroll

2. HRIS

3. Health plan administrator

4. Third party tax-filing service (?)

Which of these will file your reports with the IRS?


Collating information from different sources into

the 1095-C forms – and in a file-worthy format


Preparing the 1095-C forms


The most challenging ACA reporting task is the preparation,

coordination and integration of the information that must go into each

1095-C form. 1095-C must collate different kinds of information for

different purposes in different sections of the form:

1. It must identify employee and dependent plan eligibility and

coverage offer

2. It must identify the nature of the coverage offer (MEC/MV) and the

affordability of the offer for single coverage

3. It must verify coverage for each individual listed on the form

Individuals must attach their 1095 form to their 1040 form when filing

their 2015 taxes. The 1095 form stipulates compliance with the

individual mandate for all listed covered individuals.

The kind of information provided on the 1095-C form depends on how

the employer chooses to satisfy the ACA’s compliance rules for 2015;

specifically in regards to Transitional Relief.

How to Prepare Employer Data for 1095-C


Step 1: The employer selects their chosen method of certification of

eligibility for 2015 on Line 22 of the 1094-C transmittal form (see

instructions on slides 14-22).

The method(s) selected will determine the codes that will be required

when filling out Lines 14, 15 and 16 in Part II of 1095-C.

Groups using transitional relief for 2015 will use either method B or C

(see slide 22).

How to Prepare Employer Data for 1095-C


Step 2: Parts I and II data must be collated and produced for each

full-time employee and each health plan covered non-employee.

Part I data resides in payroll systems. Part II data sources will vary

depending upon how the employer produces and stores the

information – and where it is stored. HRIS systems may be used by

the employer to transfer the data to the 1095-C form.

Question for payroll/HRIS administrators: Can your system load 1095-

C Part II data from our records using a designated Certification of

Eligibility method?

If Part II data cannot be produced from HRIS in an automated fashion,

employers must manually load it into whatever system they are using

to produce the 1095 forms.

How to Prepare Individual Data for 1095-C


Step 3: Part III health plan coverage individual data must be provided

for all employees and non-employees covered under the employer’s

health plan. This section of 1095-C fulfills the verification of coverage

requirement stipulated in the individual mandate.

Part III data comes from the health plan administrator. It is

important for the employer to receive a completed report for Part II

coverage data for all plan-covered individuals no later than 1-15-2016.

Part III data should come from the plan administrator complete with

dependent social security numbers. (see slides 12-14 for detailed

instructions)

Integrating the 1095-C data


Each employee, continuants, retirees and all individuals

covered under the employer’s health plans must be

reported in Part III. This information must be provided in a

format that can be integrated with the employer’s Part I

and Part II data so that all three data sets may be

assembled into one form for each individual recipient of

the 1095-C form.

Multiple data submissions will be required for groups that

have more than one plan administrator. Split groups

(having more than one health plan administrator) must

collate information for Part III in time for process and

delivery to responsible individuals.

Filing the 1094-C and 1095-C Forms with the IRS


Once Part I, II and III data have been integrated into one

1095-C form per individual, the form must be:

(a) Distributed to each recipient, and

(b) Converted to an XML formatted form for bulk

transmission to IRS via the ACA Information Reporting

(AIR) system (accompanying form 1094-C).

Note that all 1095-C forms must be transmitted along with

the 1094-C Transmittal form (also prepared in XML

format) no later than 3-31-2016 (for 2015 calendar year

reporting).


Large group reporting:

step by step

Control Groups

The ACA’s reporting rules require all groups who are part of, or are

themselves applicable large employers to indicate their status as either

being a control group or an entity that must report up through a control

group, subject to the Employer Shared Responsibility (ESR) rules that

apply to ALEs.

• “ALE” members may be part of an “aggregated ALE (aka controlled)

group;

• An “aggregated ALE group” is a controlled group of employers which

together have 50 or more full-time and full-time equivalent employees.

• Each entity within a controlled group is subject to the ESRs. Groups

that are suspect ALE members may “play it safe” by following the

reporting rules for ALEs. Each group is individually responsible.

You may seek legal guidance to determine your status as an ALE

member group or aggregated ALE control group. You are required to

make a “reasonable determination” as to your status.


Designated Governmental Entities

ALEs may band together for reporting purposes, with one entity

designating itself as the control group, responsible for reporting all or

part of the others’ filing requirements.

For the first year of ACA reporting it is recommended that each group

submits its own reporting. Each group should follow the rules for ALEs,

regardless of their individual size.


1094-C Lines 18, 19, 20 and 21

Line 18 – Enter total number of 1095-C forms that will be filed with the

IRS with this 1094-C form.

Line 19 – Is this the authoritative transmittal for ALL members of the

control group? Or are some excluded (e.g., when DGE files for some,

but not all, members of the control group? Answer is normally “yes”.

Note: there must be only one Authoritative Transmittal submitted for

each group (see instructions for details).

Line 20 – Enter all 1095-C forms that are being filed not only with this

1094-C, but any forms that may be filed by some other entity (e.g.,

DGE) for some portion of the employer group. The number of forms

will normally be the same as shown on Line 18 (see instructions for

details).

Line 21 – Are you a part of a control group? Check “yes” for any

months which your group was part of a control group.


1094-C Select reporting methods – Line 22

The ACA’s reporting rules provide employers with general methods for

how they must report information to the IRS. These “certification of

eligibility” rules specify the type of information they must provide to full-

time employees (via 1095-C), depending on the methods chosen for all

or different groups of employees. Multiple methods may be used.

There is also a special method for employers who take advantage of

the one-time transitional relief rules that apply for 2015.

Some methods are designed to minimize the cost and complexity of the

administrative tasks associated with reporting. Therefore, it benefits

employers to seek the least complicated reporting methods wherever

possible.


Certification of Eligibility (1094-C line 22 A)

A. Qualifying Offer Method

This method applies if an employer made a qualifying offer to one or

more full-time employees for all 12 months of the calendar year. The

qualifying offer is an offer of Minimum Essential Coverage (MEC) at a

monthly cost for self-only coverage not exceeding 9.5% of the Federal

Poverty Level. MEC must also be offered to spouses and dependents.

The employer should enter Code 1A on form 1095-C, Part II line 14.

The employer does not report the dollar amount on 1095-C Part II line

15 for any month a qualifying offer is made, providing the FPL safe

harbor applies to all employees.


Certification of Eligibility (Qualifying Offer Method)


Certification of Eligibility (1094-C line 22 B)

B. Qualifying Offer Method Transitional Relief (for 2015)

This method applies if an employer made a qualifying offer for one or

more months during 2015 to at least 95% of its full-time employees.

For any month a qualifying offer was made, enter Code 1A on 1095-C

Part II line 14 for any months for which the employee received a

qualifying offer or enter Code 1I for any months for which the employee

did not receive a qualifying offer.

Leave Part II line 15 blank; be sure to fill out Line 16 with the applicable

safe harbor code that is being used (2F W-2 safe harbor, 2G FPL safe

harbor or 2H Rate of Pay safe harbor).


Certification of Eligibility (Qualifying Transitional Relief)


Certification of Eligibility (1094-C line 22 C)

C. 4980H Transitional Relief Method (for 2015)

This method applies if an employer is eligible for either the 2015

transitional relief for applicable large employers with fewer than 100

full-time employees or the 70% transitional relief for the no coverage

penalty (4980H (a)) for ALEs with 100 or more full-time employees.

The employer should complete 1094-C Part III, column e.

You must provide affordability cost data on Line 15 for all employees.


Certification of Eligibility (4980H Transitional Relief)


Certification of Eligibility (1094-C line 22)

D. 98% Offer Method

This method applies for employers who offered affordable, minimum

value coverage for all 12 months to at least 98% of its employees and

MEC to those employees’ dependents.

The employer does not have to complete the full-time employee count

on 1094-C Part III, column b. Nor does it have to provide cost

information on Line 15 (be sure to specify which safe harbors apply on

Line 16). This is the simplest reporting option.

However, while this method offers a simpler filing process, it does NOT

relieve the employer from tracking specific data for each employee and

covered individuals. Upon request, the employer would be expected to

provide that information (for an audit, e.g.).


Certification of Eligibility (98% Offer Method)


Transitional Relief Reporting (2015 ONLY)

4980H Transition Relief (2 types)

1. 50-99 full-time/full-time equivalent relief (not subject

to 4980H penalties for 2015)

• Must enter code A on 1094-C, Part III, Column (e)

2. 100 or > full-time/full-time equivalent relief (2015)

70% of eligibility offers required

• 4980H(a) penalty calculated with 80 employee reduction

rather than 30) for 2015 only

• Must also enter code B on 1094-C Part III, Column (e)

Note: Coverage offers for 2016 must be made for 95% of

all full-time employees for employers with 50 + full-time

and/or full-time equivalent employees.


1094-C Part III

Column (a) Minimum Essential Coverage Offer Indicator.

• If the employer offered minimum essential coverage to at least 95% of its full-

time employees and their dependents for the entire calendar year, enter “X” in

the “Yes” checkbox on line 23 for “All 12 Months” or for each of the 12

calendar months.

• If the employer offered minimum essential coverage to at least 95% of its full-

time employees and their dependents only for certain calendar months, enter

“X” in the “Yes” checkbox for each applicable month.

• For the months, if any, for which the employer did not offer minimum essential

coverage to at least 95% of its full-time employees and their dependents,

enter “X” in the “No” checkbox for each applicable month.

• If the employer did not offer minimum essential coverage to at least 95% of its

full-time employees and their dependents for any of the 12 months, enter “X”

in the “No” checkbox for “All 12 Months” for each of the 12 calendar months.

• However, an employer that did not offer minimum essential coverage to at

least 95% of its full-time employees and their dependents but is eligible for

certain transition relief described in the instructions later under Section 4980H

Transition Relief for 2015 should enter an “X” in the “Yes ”checkbox for Part

III, line 23, column (a), as applicable.


1094-C Part III

Column (b) Full-Time Employee Count for ALE Member.

Enter the number of full-time employees for each month, but do not

count any employee in a Limited Non-Assessment Period. (If the

number of full-time employees (excluding employees in a Limited Non-

Assessment Period) for a month is zero, enter “0”.)

Note. If the employer certified that it was eligible for the 98% Offer

Method by selecting box D, on line 22, it is not required to complete

column (b).

Column (c) Total Employee Count for ALE Member.

Enter the total number of all of your employees, including full-time

employees and non-full-time employees and employees in a Limited

Non-Assessment Period, for each calendar month.


1094-C Part III

Column (d) Aggregated Group Indicator.

An employer must complete this column if it checked “Yes” on line 21,

indicating that, during any month of the calendar year, it was a member

of an Aggregated ALE Group.

Column (e) Section 4980H Transition Relief Indicator.

• If the employer certifies by selecting box C on line 22, that it is eligible

for Section 4980H Transition Relief and is eligible for the 50 to 99

Relief, enter code A.

• If the employer certifies by selecting box C on line 22, that it is eligible

for Section 4980H Transition Relief and is eligible for the 100 or More

Relief (i.e.,70% eligibility offer), enter code B.

• An employer will not be eligible for both types of relief.



Employer’s health plan renewed 7-1-2015

Transitional relief code for 100

+ ees at 70% for the plan year

Full-time

employees

All employees

including part

time

Employer’s health plan renewed 7-1-2015

Full-time

employees

All employees

including part time

Transitional relief code for 100+ ees at 70% offer

1095 – C Part II: Line 14 Offer of Coverage Codes

The Code Series 1 indicator codes specify the type of coverage, if any, offered

to an employee, the employee’s spouse, and the employee’s dependents. This

information is required on Part II, Line 14.

1A. Qualifying Offer: Minimum essential coverage providing minimum value

offered to full-time employee with employee contribution for self-only coverage

equal to or less than 9.5% mainland single federal poverty line and at least

minimum essential coverage offered to spouse and dependent(s).

1B. Minimum essential coverage providing minimum value offered to employee

only. (non-compliant code; do not use)

1C. Minimum essential coverage providing minimum value offered to employee

and at least minimum essential coverage offered to dependent(s) (not spouse).

1D. Minimum essential coverage providing minimum value offered to employee

and at least minimum essential coverage offered to spouse (not dependent(s)).

1E. Minimum essential coverage providing minimum value offered to employee

and at least minimum essential coverage offered to dependent(s) and spouse.


1095 – C Part II: Line 14 Offer of Coverage Codes

1F. Minimum essential coverage NOT providing minimum value offered to

employee; employee and spouse or dependent(s); or employee, spouse and

dependents.

1G. Offer of coverage to employee who was not a full-time employee for any

month of the calendar year (which may include one or more months in which the

individual was not an employee) and who enrolled in self-insured coverage for

one or more months of the calendar year.

1H. No offer of coverage (employee not offered any health coverage or

employee offered coverage that is not minimum essential coverage, which may

include one or more months in which the individual was not an employee).

1I. Qualifying Offer Transition Relief 2015: Employee (and spouse or

dependents) received no offer of coverage; received an offer that is not a

qualifying offer; or received a qualifying offer for less than 12 months.


1095 – C Part II: Line 14 Coverage Code Tips

• Avoid red codes if possible; they are non-compliant with the ACA rules.

• An offer of COBRA continuation coverage that is made to a former employee

upon termination of employment should not be reported as an offer of coverage

on Line 14.

• An offer of COBRA continuation coverage that is made to an active employee

(for instance, an offer of COBRA continuation coverage that is made due to a

reduction in the employee’s hours that resulted in the employee no longer

being eligible for coverage under a plan) is reported in the same manner and

using the same code as an offer of that type of coverage to any other active

employee.

• For a terminated employee, code 1H (No offer of coverage) should be entered

for any month for which the offer of COBRA continuation coverage applies.

• If the type of coverage, if any, offered to an employee was the same for all 12

months in the calendar year, enter the Code Series 1 indicator code

corresponding to the type of coverage offered in the “All 12 Months” box or in

each of the 12 boxes for the calendar months.


Cost of Coverage Reporting (1095 - C Part II, Line 15)

• Complete Part II, Line 15 only if code 1B, 1C, 1D, or 1E is entered on Line 14 either in the “All 12 Months” box or in any of the monthly boxes.

• Enter the amount of the employee share of the lowest-cost monthly premium for self-only minimum essential coverage providing minimum value that is offered to the employee. Enter the amount including any cents.

• For purposes of determining the monthly employee contribution, an employer may divide the total employee share of the premium for the plan year by the number of months in the plan year to determine the monthly employee contribution for the plan year.

• This monthly employee contribution would then be reported for any months of that plan year that fall in the 2015 calendar year.



• If the employee is offered coverage but is not required to contribute any amount towards the premium, enter “$0.00” (do not leave blank).

• If the employee share of the lowest-cost monthly premium amount was the same amount for all 12 calendar months, enter that monthly amount in each monthly box or enter that monthly amount in the “All 12 Months” box and do not complete the monthly boxes.

• If the employee share of the lowest-cost monthly amount was not the same for all 12 months, enter the amount in each calendar month for which the employee was offered minimum value coverage.



Tip:

For line 15, enter the lowest-cost monthly premium for self-

only minimum essential coverage providing minimum value

that is offered to the employee. This amount may not be the

amount the employee is paying for the coverage, for

example, if the employee chose to enroll in a more expensive

coverage such as family coverage, or in a more expensive

plan option of higher value that the employer offers in

addition to the minimum value plan.


1095 – C Part II, Line 16 – 4980H Safe Harbor and other relief codes


An employer enters the applicable Code Series 2 indicator code, if any,

on Part II, Line 16 to report for one or more months of the calendar year

that one of the following situations applied to the employee:

1. The employee was not employed or was not a full-time employee;

2. The employee enrolled in the minimum essential coverage offered;

3. The employee was in a Limited Non-Assessment Period with respect

to section 4980H(b);

4. Non-calendar year transition relief applied to the employee;

5. The employer met one of the section 4980H affordability safe

harbors with respect to this employee;

6. The employer was eligible for multi-employer interim rule relief for

this employee.

In some circumstances more than one situation could apply to the same

employee in the same month. In that case, see the IRS instructions that

determine order of precedence as to what code should apply.



2A. Employee not employed during the month. Enter code 2A if the employee

was not employed on any day of the calendar month. Do not use code 2A for a

month if the individual was an employee of the employer on any day of the

calendar month. Do not use code 2A for the month during which an employee

terminates employment with the employer.

2B. Employee not a full-time employee. Enter code 2B if the employee is not a

full-time employee for the month and did not enroll in minimum essential

coverage, if offered for the month. Enter code 2B also if the employee is a full-

time employee for the month and whose offer of coverage (or coverage if the

employee was enrolled) ended before the last day of the month solely because

the employee terminated employment during the month (so that the offer of

coverage or coverage would have continued if the employee had not terminated

employment during the month). Also use this code for January 2015 if the

employee was offered health coverage no later than the first day of the first

payroll period that begins in January 2015 and the coverage offered was

affordable for purposes of the employer shared responsibility provisions under

section 4980H and provided minimum value.



2C. Employee enrolled in coverage offered. Enter code 2C for any month in

which the employee enrolled in health coverage offered by the employer for each

day of the month, regardless of whether any other code in Code Series 2 (other

than code 2E) might also apply (for example, the code for a section 4980H

affordability safe harbor). Do not enter 2C in line 16 if code 1G is entered in the All

12 Months Box in line 14 because the employee was not a full-time employee for

any months of the calendar year. Do not enter code 2C in line 16 for any month in

which a terminated employee is enrolled in COBRA continuation coverage (enter

code 2A).

2D. Employee in a section 4980H(b) Limited Non-Assessment Period. Enter

code 2D for any month during which an employee is in a Limited Non-Assessment

Period for section 4980H(b).

If an employee is in an initial measurement period, enter code 2D (employee in a

section 4980H(b) Limited Non-Assessment Period) for the month, and not code 2B

(employee not a full-time employee). For an employee in a section 4980H(b)

Limited Non-Assessment Period for whom the employer is also eligible for the

multiemployer interim rule relief for the month, enter code 2E (multiemployer interim

rule relief) and not code 2D (employee in a Limited Non-Assessment Period).



2E. Multiemployer interim rule relief. Enter code 2E for any month for which the

multiemployer arrangement interim guidance applies for that employee, regardless

of whether any other code in Code Series 2 (including code 2C) might also apply.

This relief is described under Offer of Health Coverage in the Definitions section of

these instructions.

2F. Section 4980H affordability Form W-2 safe harbor. Enter code 2F if the

employer used the section 4980H Form W-2 safe harbor to determine affordability

for purposes of section 4980H(b) for this employee for the year. If an employer uses

this safe harbor for an employee, it must be used for all months of the calendar year

for which the employee is offered health coverage.

2G. Section 4980H affordability federal poverty line safe harbor. Enter code 2G

if the employer used the section 4980H federal poverty line safe harbor to

determine affordability for purposes of section 4980H(b) for this employee for any

month(s).

2H. Section 4980H affordability rate of pay safe harbor. Enter code 2H if the

employer used the section 4980H rate of pay safe harbor to determine affordability

for purposes of section 4980H(b) for this employee for any month(s).



2I. Non-calendar year transition relief applies to this employee. Enter code 2I if

non-calendar year transition relief for section 4980H(b) applies to this employee for

the month. See the instructions later under Section 4980H Transition Relief for 2015

and 2015 Section 4980H(b) Transition Relief for Employers with Non-Calendar Year

Plans (Form 1095-C, line 16, code 2I), for a description of this relief.

Note. Codes 2F through 2H: Although employers may use the section 4980H

affordability safe harbors to determine affordability for purposes of the

multiemployer arrangement interim guidance, an employer eligible for the relief

provided in the multiemployer arrangement interim guidance for a month for an

employee should enter code 2E (multiemployer interim rule relief), and not a code

for the section 4980H affordability safe harbors (codes 2F, 2G, or 2H).

Reporting Covered Individuals

You must complete 1095-C, Part III ONLY if:

• Employees and non-employees are enrolled in an employer-

sponsored self-insured health coverage

• Must be completed for all employees enrolled in the self-insured

health coverage, regardless of whether or not they are FTEs

You must also report enrolled spouses and dependents

• Note that SSNs are required for both employee, spouses and

dependents. Use dates of births if SSNs are not available (e.g., for

newborns).

• SSNs are preferred and provide the employer protection against

potential penalty assessment error reconciliations.


MEC Reporting for Non-Employees

Reporting is also required for non-employees who are covered

under the employer’s health plan.

ALEs that offer employer-sponsored self-insured health coverage to

non-employees who enroll in the coverage should use form 1095-C,

Part III, to report MEC provided to those individuals and other family

members.

Who might be affected:

• non-employee directors

• an individual receiving retiree coverage who was not an employee

during the entire year

• a non-employee COBRA beneficiary (e.g., dependent)

• A terminated employee receiving COBRA coverage who terminated

employment during a previous year

• If part-time employees are eligible, their offer of coverage may be

reportable via 1095-C (rules are vague on this)


PART 3: SAMPLES/TIPS


Reporting tips

• A TIN may be used where an SSN is not available.

• The EIN on the employee’s 1095 form must match the

EIN on their W-2.

• Employers that cover non-employees that are on their

plan (e.g. COBRA, retirees) may, but are not required to,

use the B Forms instead of 1095-C Part III.

• The C Forms require employers to count their total

number of employees, in addition to just full-time

employees.


Reporting tips

• The two counting methods from the draft instructions (first

or last day of the calendar month) remain, plus now

employers may count on the first or last day of the payroll

period starting in the calendar month.

• An employee working for multiple employer members in a

calendar month is treated as an employee of only the

member for which she worked the most hours that month

(i.e. only that employer must file the 1095-C for her,

though the employee may also receive the form from

other members she worked for).


Reporting tips

• Applicable large employers may use transition relief under which they are deemed to offer coverage to certain employees, even if they don’t actually do it, in order to hit the 2015 70% threshold on 1094-C. However, only actual offers of coverage go on Form 1095-C Part II.

• With respect to actual offers of coverage:

• An employer may report offering coverage for a month only if it offers coverage for every day of that month.

• Offers to employee spouses, even if conditional, count so long as the condition is reasonable and objective (e.g. excluding spouses covered or offered coverage by their own employers).


Reporting tips

• While the draft instructions said that providing each

employee with a summary of the offered coverage was

acceptable, the final instructions require that a self-

insured employer give a copy of the 1095-C to each

covered employee.

• An employer with 50 to 99 full-time employees, though

exempt from the employer mandate for 2015, must still file

forms 1094-C and 1095-C.

• The final instructions do not offer further information on

using third parties to facilitate reporting by employers.


Reporting tips

Delivery methods of information to employees:

Two options:

• Mail paper forms to last known permanent address

• Electronic delivery; must get affirmative consent

Note: Hand delivery or intra-office mail may not satisfy

delivery requirements


Reporting due dates

• Employee 1095 returns are due to responsible

individuals (employees and non-employees covered

under the plan) by 2-1-2016

• Paper filing of employer transmittals (1094 forms) are

due IRS – along with copies of 1095 forms – by 2-29-

2016.

• Electronic filing of employer transmittals (1094 forms)

are due IRS – along with copies of 1095 forms – by 3-

31-2016. Note employers issuing 250 or more 1095

forms must file electronically via the IRS AIR system.


Extensions and exceptions applications

30 Day Filing Extension

• Groups may apply for a 30 day grace period for filing

their 1094-B and/or 1094-C Employer Transmittal to

the IRS by submitting form 8809 on or before the due

date of the forms.

• No explanation is required for the extension.

• The request is automatically granted unless filed for

after the date the forms are due.



Extensions of time to furnish statement to recipients. Employers

may request (not automatic) an extension of time to furnish 1095-B and

1095-C statements to recipients by sending a letter to:

Internal Revenue Service, Information Returns Branch

Attn: Extension of Time Coordinator

240 Murall Drive, Mail Stop 4360

Kearneysville, WV 25430.

The letter must include (a) filer name, (b) filer TIN, (c) filer address, (d)

type of return, (e) a statement that extension request is for providing

statements to recipients, (f) reason for delay, and (g) the signature of

the filer or authorized agent. The request must be postmarked by the

date on which the statements are due to the recipients. The maximum

extension granted will be no greater than 30 days; approval may be

granted for a lesser extension of time, depending on circumstances

related to the need for the extension.



Electronic filing exception (file instead on paper)

• If you are required to file 250 or more Forms 1095-C during a

calendar year, you must file the returns with the IRS

electronically. If you are unable to comply, you may apply for a

waiver from electronic filing

• To receive waiver from electronic filing, submit Form 8508 at

least 45 days before due date for filing the forms 1095-C. Once

the application of waiver is made, the group must submit its

1094-B and/or 1094-C transmittal forms according to the paper

filing deadline of 2-29-2016 (unless a filing extension is also

requested via Form 8809).

• If filing by paper, send the forms to the IRS by first class mail


Penalties for late/incorrect reporting

IRS has issued transitional relief for penalties for forms that are filed that

contain errors:

“There will be no penalties if employer has inadvertent errors or

incomplete data but can demonstrate that they have made a good

faith effort to comply. However there is no relief for late filing and

the penalties for late filing are severe:”

$250 per late filing up to a maximum annual fine of $3 million. Late filing

doubled ($500 per form) if late filing is intentional. Other penalty triggers:

• Incorrect media for transmission of filings

• Incorrect formatting of filings

• Incorrect employee TINs

(Note: Groups may apply for a 30 day grace period for filing their

employer transmittal to the IRS – see form 8809):


Data Requirements

The data employers need to satisfy their reporting requirements will come from three basic sources:

Payroll records and employer timesheets – Payroll systems and employer timesheets are two data sources employers will need to rely upon to track and report their hours of eligibility information and affordability data.

Employer HR eligibility offer records – Employer HR systems must also be prepared to track and provide records of coverage offers so that the employer may verify that it has offered coverage to all eligible employees.

Health plan administrator coverage records (census/list bills) - Each employer’s health plan is a source of coverage information necessary for filling out either IRS 1095-B Part IV (for small group) or IRS form 1095-C Part III (for ALEs). .


What to do NOW

Identify all of your data sources!

Make sure your payroll system is programmed to track and

record how you measure eligibility and affordability.

You must be able to produce the payroll data records that

substantiate every eligibility determination you make. If

you are audited by the IRS, that is the information they are

most likely to examine.


What to do NOW

Check the integrity and availability of personnel records that will:

1. Substantiate the issuance of eligibility offers; declinations and acceptance

for employee and dependent coverage for 2015. It is also a good idea to retain

documentation of notification of affordability status of the coverage offer that is

made to each full-time employee.

2. Have documented personnel policies that support your ACA-compliant

eligibility and contributions policies applicable to 2015.

3. Make sure similar processes are followed for your eligibility determinations

and offers of coverage made for 2016. (Note: This process must be in place for

open enrollment periods applicable to the upcoming 2016 policy year).


What to do NOW

4. Document and supplement payroll records with any hour equivalency

formulas you may use in lieu of actual hours tracked by payroll. These must be

recorded in your personnel policies along with substitute timesheets you must

maintain for these employees – unless payroll can do it for you.

5. (Large employers only) Keep personnel records for each employee (all W-2

employees) that will substantiate the coverage, transitional relief and

affordability coding needed for form 1095-C Part II.

6. Create a distribution plan for your employees’ 1095 returns. Hint: These

forms must be distributed to employees in the same timeframe as they receive

their W-2 forms. See IRS Section 530 for general rules and guidelines.


What to do NOW

7. Find out what health plan coverage information will be provided by

your health plan administrator.

a. Make sure plan information will be provided in a complete format

that can be automatically transferred to the IRS 1095 forms.

b. Make sure employee-specific plan information will be sent to you in

early January 2016, since you must complete and distribute the

1095 forms to your employees no later than 2-1-2016.

c. Make sure to obtain and record the social security numbers of all

employees, spouses and dependents.


QUESTIONS FOR PAYROLL/HRIS ADMINISTRATORS

Many payroll and HRIS systems have already adopted technologies that

will enable employers to automate most, if not all, of their ACA reporting

requirements – AND complete the electronic filing for them. Will yours?

Here are a few pertinent questions you should ask your payroll/HRIS and

health plan administrator(s):

1. When will we receive complete calendar year plan coverage (1095-B

Part IV and 1095-C Part III) information from Blue Cross and other

health plan administrators (e.g., other insurance companies, PEIP,

etc.?)

2. Will our payroll/HRIS system be able to transfer/integrate plan

coverage data from Blue Cross’ EXCEL file into our 1095 forms?

How about information from other insurance companies/PEIP, etc.?


QUESTIONS FOR PAYROLL/HRIS ADMINISTRATORS

3. 1095-C (Large employers only): Once we identify our Certification of

Eligibility Method(s) (Form 1094-C, Line 22), will our payroll/HRIS

system be able to “auto fill” the appropriate coding and MV single

coverage contributions for Lines 14, 15 and 16 on form 1095-C Part

II?

4. Will our payroll/HRIS system produce form 1095-B and 1095-C for

our employees in a format that can be filed with the IRS using the

new ACA Information Reporting (AIR) system? Ready for distribution

to our employees?

5. Will our payroll/HRIS service file our forms with the IRS for our group

electronically by the required dates?

6. Will our payroll/HRIS service distribute forms 1095-B and 1095-C to

our employees and non-employee plan members by the required

dates?


References

• The Internal Revenue Service IRS Health Care Tax Tip 2015-62

IRS Instructions and forms for 1094-B, 1095-B, 1094-C and 1095-C - 2015

IRS Section 4980 H (a) and (b)

IRC 6051

IRC 6055

IRC 6056

IRS Section 5000A

• ADP, LLC.

• Benefitslink.com

• Groom Law Group

• Dorsey & Whitney, LLP

• HR 360

DISCLAIMER

The information included in this presentation is intended for general information purposes only. It is not to be construed as legal or tax advice applicable to any employer or individual.

Any U.S. federal tax or other regulatory agency references made herein are not intended to be used, and cannot be used, by any person or business entity for the purpose of avoiding any penalties that may be imposed by the IRS or any other governing agency, state or federal. Under IRS rules governing tax advice, a taxpayer may rely on professional advice to avoid federal tax penalties only if that advice is provided in a tax opinion that conforms to federal

requirements.


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