Presented by

Elizabeth Vollmar, J.D. Mark Holloway, J.D. Compliance Services, Lockton Benefit Group

JoAnne Pettijohn HR Technology & Outsourcing Practice, Lockton Benefit Group

ACA Reporting Forms

Final IRS Instructions for Employer Reporting on Forms 1094-C and 1095-C

© 2015 Lockton Benefit Group Images © 2015 Thinkstock. All rights reserved.

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5

ACA Reporting Forms

Final IRS Instructions for Employer Reporting on Forms 1094-C and 1095-C

Presented by

Elizabeth Vollmar, J.D. Mark Holloway, J.D. Compliance Services, Lockton Benefit Group

JoAnne Pettijohn HR Technology & Outsourcing Practice, Lockton Benefit Group

© 2015 Lockton Benefit Group Images © 2015 Thinkstock. All rights reserved.

To View Webcast Click Here

Introduction, Acknowledgements, and Agenda

Introduction and Acknowledgments

Welcome to our Compliance Services webcast

Introductions and topic summary

Handouts and last minute changes

Questions and answers

Replay link

Acknowledgements

8

Agenda

Reasons for the employer reporting requirements

Employer reporting obligations—who, what, when, and how?

What information needs to be reported, exactly?

A closer look at Form 1095-C

A closer look at Form 1094-C

Delivery of Forms 1094-C and 1095-C

How the right technology can help

Questions

9

Reasons for the Employer Reporting Requirements

Reason #1 for Employer Reporting

The individual mandate

Individuals must have “minimum essential coverage” (MEC) or pay modest penalty for noncompliance

MEC includes almost any employer medical plan, if it’s not excepted benefits

Tax/penalty for “no coverage” throughout calendar year = greater of percentage amount or dollar amount

Reduced proportionately for months the individual complied with mandate

How does the IRS know whether an individual has MEC?

Each individual indicates on his or her tax return

Information reporting by employers and others

Percentage Amount Dollar Amount

Tax Year % of Income Per Adult Per Child Per Family

2014 1% $95 $47.50 $285

2015 2% (up to $2,484) $325 $162.50 $975

2016 2.5% (up to $TBA) $695 $347.50 $2,085

11

Reason #2 for Employer Reporting

The employer mandate

Employer may be penalized if a full-time employee gets a tax credit to buy coverage on a state insurance exchange

Applies if employer, together with controlled group and affiliated service group members, has 50 or more full-time employees (including full-time equivalent employees)

For 2015, a transition rule may delay compliance for such employer groups with 50-99 full-time employees (including full-time equivalent employees)

50-99 rule does not delay reporting!

If no full-time employee gets a tax credit, employer incurs no penalty

12

Reason #2 for Employer Reporting

The employer mandate

Several conditions must be met for a person to get tax credit, such as:

Family income under 4X federal poverty level

Not covered by MEC

No employer offer of minimum value (MV) and affordable coverage

Even if a full-time employee gets the tax credit:

No employer penalty if all full-time employees were offered:

MV and affordable self-only coverage

MEC for biological and adopted children

Greatly reduced penalty if at least 70% (95% after 2015) of full-time employees were offered MEC, with option to cover children

All Health Coverage

MEC

MV

MV & Affordable

13

Reason #2 for Employer Reporting

The employer mandate

How does the IRS know whether a person has MEC and whether an employer has offered MEC or MV and affordable coverage?

Employer tells them

Completes Forms 1094-C and 1095-C, reporting coverage offered to each full-time employee

Also includes information on individuals who have self-insured coverage that is at least MEC through the employer

Insurer tells them about individuals who have insured coverage that is at least MEC

Exchanges report through HHS data hub each month and IRS gets information that may include employment and employer coverage offers

14

Reason #3 for Employer Reporting

Policing the tax credit

Most individuals may buy coverage through a public health insurance exchange

Doesn’t matter whether/what coverage the person has, or was offered, unless applying for tax credit

Tax credit is NOT available to anyone who is:

Enrolled under employer-based MEC

Offered employer-based minimum value and affordable coverage

Eligible as a dependent under employer-based coverage if employee was offered MV and affordable self-only coverage

How does the IRS know what coverage a person had or was offered?

Same way it knows if employer owes a penalty

Also, individual must complete Form 8962 and file with tax return

15

Overview of Information Reporting to IRS

16

IRS

Exchange

Data Hub

HHS

Form 1094-B Transmittal of Forms 1095-B

Insurer

Form 1094-C Transmittal of Forms 1095-C

Employer

Form 8962

Employee Receiving Tax

Credit

Annual Filing (Form 1095-A?)

Form 1095-C

Form 1095-A

Form 1095-B

Monthly Report

For details on use of information, please replay our Feb. 19 webcast

Employer Reporting Obligations— Who, What, When, and How?

Overview of Information Reporting to IRS

18

IRS

Exchange

Data Hub

HHS

Form 1094-B Transmittal of Forms 1095-B

Insurer

Form 1094-C Transmittal of Forms 1095-C

Form 8962

Employee Receiving Tax

Credit

Annual Filing (Form 1095-A?)

Employer

Form 1095-C

Form 1095-A

Form 1095-B

Monthly Report

Focusing on reporting by employers subject to employer mandate

Employer Reporting Obligations—Who?

Which employers are required to report?

Employers providing self-insured coverage

Must report on anyone who had that coverage for even a single day

Employers subject to the employer mandate

Must report on coverage offers made to full-time employees

Also must report coverage offers to dependents of full-time employees

These offers can disqualify the dependents from receiving the tax credit

As a general rule, it’s the common law employer who has the reporting obligation

Not necessarily the plan sponsor

Plan sponsor can help, but common law employer is on the hook for reporting on its employees

Special rules for governmental employers

19

Common Law Employers Within a Controlled Group

If HoldCo, Inc. sponsors a plan for employees of all four companies:

HoldCo, SubCo 1 and SubCo 2 each must file separately, only on its own employees

Partnership is not subject to the employer mandate and need not file (unless providing self-insured coverage to its employees)

HoldCo, Inc. [EIN 12-3456789]

15 full-time employees

83%

SubCo 2, Inc. [EIN 34-5678912]

25 full-time employees

50%

Partnership [EIN 45-6789123]

10 full-time employees

100%

SubCo 1, Inc. [EIN 23-4567891]

35 full-time employees

20

Employer Reporting Obligations—What?

What reporting is required?

Very similar to W-2 reporting, and W-3 transmittals

Provide annual statement (Form 1095-C) with individualized information to:

Each full-time employee, even if not eligible or covered

Full-time employees are those identified as averaging 30+ hours of service per week using look-back measurement method (assuming employer is using that for play or pay purposes)

We’re referring to these individuals as “FTEs” (not to be confused with full-time equivalents)

Month-by-month summary of MEC and/or MV coverage offered to the FTE and family members

Generally, coverage is not considered offered for a month unless it would be in effect each day of the month if elected

Each “primary insured,” even if not full-time or an employee

Month-by-month summary of self-insured coverage provided to primary insured and each enrolled dependent (including spouse)

Indicate for each enrollee each month in which covered for at least one day

File those annual individual statements with the IRS along with a separate annual statement (Form 1094-C) regarding aggregate coverage offering

21

Employer Reporting Obligations—When?

When are employers required to report?

Reporting is required for each calendar year shortly after year-end

Individualized statements to FTEs and primary insureds for 2015 must be provided by Feb. 1, 2016

Employer-level report and transmittal of individual statements to the IRS is due Feb. 29, 2016 or, if electronic, March 31, 2016

22

Employer Reporting Obligations—How?

How do employers complete the required reporting?

Employers that are subject to employer mandate use Forms 1094-C and 1095-C for all reporting on employees

Such employers may use the “C Forms” to report on self-insured coverage provided to non-employees (e.g., outside directors, COBRA beneficiaries)

Or, they may use Forms 1094-B and 1095-B to report non-employees’ self-insured coverage

Employers not subject to the employer mandate (fewer than 50 FTEs and full-time equivalents) must use the “B Forms” to report self-insured coverage

Insurers use the B Forms to report insured coverage

An employer subject to the employer mandate and providing only insured coverage would report on coverage offered to FTEs on C Forms

Insurer providing coverage would report actual coverage on B Forms

Today, we are covering only how employers subject to the employer mandate would use the C Forms to report

23

Employer Reporting Obligations—How?

The final forms…for 2014

24

What Information Needs to be Reported, Exactly?

What you’ll need to complete Form 1095-C for 2015:

Identifying information for each separate employer within a controlled or affiliated service group

For each employer, name, address and SSN for each person who was its FTE for at least one month during 2015

For each such employee, full calendar months for which he or she was:

Offered MV coverage, and if so whether the offer included:

At least MEC for spouse

At least MEC for biological and adopted children

At least MEC for spouse and biological and adopted children

Offered MEC that was not MV (with or without option to cover spouse or children)

Offered no coverage (or only non-MEC coverage or a partial month)

For each month that an employee was offered MV coverage, the lowest monthly amount employee would pay for self-only MV coverage

Form 1095-C: Data Elements

26

Form 1095-C: Data Elements

What you’ll need to complete Form 1095-C for 2015:

Note for each FTE, for each month, the first situation that fits

Regardless of whether coverage was offered, whether the multiemployer plan rule applies for the employee

Regardless of coverage offered, whether the employee was enrolled in at least MEC on every day of the month

If offered MV for a full month, but not enrolled, which affordability safe harbor, if any, applied to the employee

If offered no coverage (or only partial month or non-MEC coverage), whether the employee was employed by the employer on any day that month

If none of these apply go to next slide

27

Form 1095-C: Data Elements

What you’ll need to complete Form 1095-C for 2015:

Note for each FTE, for each month, the first situation that fits (continued) If employed during the month, but offered no coverage (or only partial month or non-

MEC coverage), whether employee was, for that month:

In a “limited non-assessment period,” (LNAP) including:

Waiting period for a new employee expected on start date to average 30+ hours of service per week, if eligible by first day of 4th full calendar month of employment

For other new employees, initial measurement period and initial administration period, if:

Eligible when administration period ends

And that occurs no later than first day of 14th full calendar month of employment

Not an FTE (including last month of employment if not covered through end of month and January 2015, if using first payroll period transition rule)

Deemed offered coverage due to the non-calendar plan year transition rule

If none apply to an FTE for a month, note that no code will be entered on line 16

28

What you’ll need to complete Form 1095-C for 2015:

If the employer provided self-insured coverage, name, address and SSN for each primary insured who was covered for at least a day

Primary insured generally is the employee or other covered person who can enroll family members

If the primary insured was also an FTE whose coverage offer must be reported, combine information on a single Form 1095-C

Identifying information (including SSN or, if SSN unavailable, date of birth) for each of the individuals the primary insured enrolled

For the primary insured and each enrollee, the months the self-insured coverage was in effect for at least one day

Form 1095-C: Data Elements

29

Form 1094-C: Data Elements

What you’ll need to complete Form 1094-C for 2015:

Identifying information for each employer in a controlled or affiliated service group

Each employer files a separate Form 1094-C, but reports information re: other employer members

Identifying information for the filing employer, including name and phone number of person to contact for information on filing

Total number of Forms 1095-C the employer issued

For each month, whether at least 70% (95% after 2015) of employer’s FTEs were offered at least MEC, including option to cover children

For each month, the employer’s number of FTEs and total number of employees (of any type)

Whether employer is in a controlled or affiliated service group and, if so, each member’s EIN and average monthly number of FTEs

Whether “free 80” transition relief applies or “50-99” transition relief applies

Assuming that employers will not use the reporting “shortcuts”

30

A Closer Look at Form 1095-C

32

Three Parts to Form 1095-C

Part I—Basic employer and employee identifying information

Part II—Coverage offer information for FTEs (this is difficult)

Part III—Self-insured coverage enrollment information

33

First, Let’s Gather Information For a Hypothetical Employer

Completing the Form 1095-C is the easy part

Getting the information to do so is more difficult

Employers within controlled or affiliated service group (forms refer to each as an “applicable large employer member”) report separately

HoldCo, Inc.

[EIN 12-3456789]

15 FTEs

SubCo 1, Inc.

[EIN 23-4567891]

35 FTEs

SubCo 2, Inc.

[EIN 34-5678912]

25 FTEs

We’ll look at how HoldCo would complete Form 1095-C for some of its employees

34

HoldCo, Inc. [EIN 12-3456789]

15 full-time employees

83%

SubCo 2, Inc. [EIN 34-5678912]

25 full-time employees

50%

Partnership [EIN 45-6789123]

10 full-time employees

100%

SubCo 1, Inc. [EIN 23-4567891]

35 full-time employees

Gathering Information for HoldCo—Coverage Offered

HoldCo offers two plans—first plan

Fully insured MV coverage for its 40+ hours per week FTEs

MV coverage includes the option to cover both spouse and children

On line 14, HoldCo will enter code 1E for each full calendar month that this coverage was offered to an FTE and, if elected, would be in effect on every day of the month

Monthly employee cost for self-only MV coverage = $100.00 (line 15)

HoldCo enters this amount on line 15 each month that code 1E is entered on line 14

For the MV coverage, HoldCo uses two affordability safe harbors

Form W-2 safe harbor for its salaried FTEs

Rate of pay safe harbor for its hourly FTEs

35

Gathering Information for HoldCo—Coverage Offered

HoldCo offers two plans—second plan

Self-insured MEC plan that is not MV for its <40 hours per week FTEs and many non-FTEs

Includes option to cover children, but not spouse

HoldCo will enter code 1F on line 14 for each full calendar month that this coverage is offered to an FTE and, if elected, would be in effect on every day of the month

No amount is reported on line 15 for months of MEC plan offering

If HoldCo has employees that are offered both the MV plan and the MEC plan for a month, it will report the MV offer

36

All Health Coverage

MEC

MV

MV & Affordable

Gathering Information for HoldCo—Reporting Obligations

HoldCo made some decisions about reporting

HoldCo knows that it needs to prepare one Form 1095-C for each individual who was one of the following during 2015:

A primary insured who was covered under HoldCo’s self-insured MEC plan at least one day during the year

An employee who was an FTE of HoldCo for at least a month during the year

Both a primary insured and an FTE

If an FTE of HoldCo also had coverage under its self-insured MEC plan, information must be reported on a single 1095-C

It’s not going to attempt to use any of the reporting “shortcuts”

It’s using the C Forms for all reporting (including self-insured coverage provided to non-employees)

37

Gathering Information for HoldCo—FTEs

HoldCo knows who its 2015 FTEs are for play or pay purposes

It identified its FTEs using the look-back measurement method

12-month standard measurement period (SMP) Nov. 1 through Oct. 31

Calendar year standard stability period (SSP)

HoldCo identifies 15 of its common law employees who were FTEs for at least one calendar month in 2015

It creates a list of those employees with names, addresses, SSNs

For each one, HoldCo lists, by month, whether the employee was offered, for the full month, the MV plan (1E) or the MEC plan (1F) (otherwise it will use code 1H)

HoldCo also notes for each month whether employee enrolled in coverage that was at least MEC and if it was a partial month of enrollment

For full months of enrollment, it will enter code 2C on line 16

38

Gathering Information for HoldCo—Primary Insureds

HoldCo’s MEC plan is self-insured

HoldCo must provide a Form 1095-C for each primary insured

Anyone who had self-insured coverage in effect through HoldCo for at least one day during 2015 and could enroll dependents

For HoldCo, this means those with coverage under its self-insured MEC plan

HoldCo has identified 10 people who are primary insureds (e.g., an employee) covered under its MEC plan for at least one day in 2015

HoldCo creates a list of those primary insureds with names, addresses, SSNs

Two primary insureds are FTEs for whom Form 1095-C is already required

For them, both the coverage offer information (Part II) and the self-insured coverage information (Part III) must be combined on one Form 1095-C

For each primary insured, HoldCo lists the name and SSN (or date of birth if SSN unavailable) of anyone that the primary insured enrolled in MEC

For the primary insured and each enrolled dependent, the calendar months in which the individual had one or more days of coverage under the self-insured MEC plan

39

We Can Complete HoldCo’s First Form 1095-C

Ann Adams was an FTE, enrolled in HoldCo’s MV plan all year

How does HoldCo know that Ann was an FTE throughout 2015?

It used the look-back measurement method and measured her hours during the SMP that ended Oct. 31, 2014

Ann was employed throughout that SMP and HoldCo determined that Ann averaged 30+ hours of service per week during the SMP

Because HoldCo uses the calendar year as its SSP, it knows that, unless Ann terminates employment, she will be an FTE throughout 2015

Where does HoldCo state on Form 1095-C the months that Ann was an FTE?

It’s not stated anywhere on the Form 1095-C

The fact that HoldCo is completing a Form 1095-C for Ann indicates that she was an FTE for at least one month in 2015

If there were months that Ann had no offer of coverage, HoldCo might indicate that Ann was not an FTE for those months

40

We Can Complete HoldCo’s First 1095-C

41

Ann’s coverage is fully insured, so HoldCo does not complete Part III

Code 2C means Ann enrolled in the coverage offered

Code 1E means Ann was offered MV coverage for herself and at least MEC for her spouse and children

Ann was offered the same MV coverage at the same cost, and enrolled in it, for all 12 months of 2015, so HoldCo need not enter Part II information for each month

What About Bob?

Bob Bates was hired into a full-time job Feb. 10, 2015

Because HoldCo expected, on Bob’s start date, that he would average 30+ hours of service per week, Bob is an FTE from that date

Bob is in the group eligible for HoldCo’s MV plan, which has a 90-day waiting period

Bob enrolls and his fully insured coverage under HoldCo’s MV plan becomes effective May 10, 2015

42

What About Bob?

43

Bob has no self-insured coverage from HoldCo during 2015, so HoldCo does not complete Part III

Code 1E means Bob was offered MV coverage for himself and at least MEC for his spouse and children

Code 1H means Bob was offered no coverage or coverage that was not MEC; it’s used through May because coverage was not offered for all days of the month

What About Bob?

44

Code 2A means Bob was not employed by HoldCo on any day during January 2015 (Bob’s start date was Feb. 10, 2015)

Code 2C means Bob was enrolled in the coverage offered for each day of the month—this code does not apply to coverage during May (only a partial month of coverage)

Code 2D means Bob was in an LNAP: first month of employment (Feb.) and waiting period ending May 10, 2015

Carla Quits in March

Carla Cass was an FTE until she quit on Mar. 17, 2015

How does HoldCo know that Carla was an FTE?

It used the look-back measurement method and measured her hours during the SMP that ended Oct. 31, 2014

Carla was employed throughout that SMP and HoldCo determined that she averaged 30+ hours of service per week during the SMP

Because HoldCo uses the calendar year as its SSP, it offered Carla coverage that would have been effective for all of 2015 if she remained employed

Carla declined the coverage, so she had no coverage under any HoldCo plan during 2015

HoldCo’s plan provides for coverage to end on date employment ends

Coverage generally is considered offered for a month only if it would be effective on every day of the month

A special rule protects against employer penalties based on a plan provision that ends coverage mid-month upon termination

Note how this differs from month in which a child reaches age 26

45

Carla Quits in March

46

Carla has no coverage from HoldCo during 2015, so HoldCo does not complete Part III

Code 1E means Carla was offered MV coverage for herself and at least MEC for her spouse and children

Code 1H means Carla was offered no coverage or coverage that was not MEC; it is used for March because her coverage would have ended upon termination of employment if she had enrolled

Carla Quits in March

47

Code 2H means that HoldCo used the rate of pay affordability safe harbor for Carla’s coverage—she was an hourly employee who was offered MV coverage for each day of the month, but didn’t enroll

Code 2B is used for March because Carla quit mid-month and her coverage would have ended on that date if she had been enrolled

Code 2A means Carla was not employed by HoldCo on any day during the month

What Did Dan Doe Do?

Dan Doe was an FTE for all of 2015, and eligible for the MEC plan

How does HoldCo know that Dan was an FTE?

It used the look-back measurement method and measured his hours during the SMP that ended Oct. 31, 2014

Dan was employed throughout that SMP and HoldCo determined that he averaged 30+ hours of service per week during the SMP

Dan was an FTE, but wasn’t a 40 hours per week FTE, so he was offered MEC plan

Because HoldCo uses the calendar year as its SSP, it offered Dan coverage under its MEC plan that would have been effective for all of 2015

Dan initially declined the coverage, but lost another employer’s coverage in June 2015 and completed special enrollment for MEC effective June 15, 2015

48

What Did Dan Doe Do?

49

Code 1F means Dan was offered MEC for each day during the month

Because the coverage isn’t MV, no dollar amount is entered (doesn’t matter whether it’s affordable)

Blank because none of the codes applies—Dan was an FTE, waived coverage, wasn’t in an LNAP, no transition rule applies, and safe harbors are irrelevant

Code 2C indicates Dan enrolled in the MEC for all days of the month beginning July 1 (June was a partial month of coverage)

What Did Dan Doe Do?

50

Because Dan enrolled in the self-insured MEC plan, HoldCo must complete Part III for Dan, showing MEC in effect June - Dec

If Dan had also enrolled a spouse or child, identifying information for that enrollee would be needed

First step to complete Part III is to check the box

June is a month of coverage for Part III because Dan’s coverage was effective for at least one day

June is not a month of coverage for Part II because coverage was not effective on all days of the month

Edith Evans Enrolls In HoldCo’s Self-Insured MEC Plan

Edith was a non-FTE for all of 2015, and eligible for the MEC plan

How does HoldCo know that Edith was a non-FTE?

Same way it knew that Ann, Carla and Dan were FTEs—employed throughout the SMP ending Oct. 31, 2014 and HoldCo measured her hours

Because HoldCo uses the calendar year as its SSP, Edith is a non-FTE for all of 2015

HoldCo has no obligation to report its offer of coverage under its MEC plan to Edith because she was not an FTE for any month of 2015

If Edith doesn’t enroll in HoldCo’s self-insured MEC plan and has no coverage under it on any day during 2015, HoldCo would not issue a Form 1095-C for her

If she does enroll in the self-insured MEC plan, HoldCo must prepare, provide and file a Form 1095-C for Edith

Edith, of course, enrolls

51

Edith Evans Enrolls In HoldCo’s Self-Insured MEC Plan

52

If Edith had also enrolled a spouse or child, identifying information for that enrollee would be needed

Because Edith’s coverage is self-insured, HoldCo must report it by completing Part III, even though Edith was not an FTE for any month in 2015

Because Edith was enrolled throughout 2015, HoldCo checks the “all 12 months” box

Code 1G means Edith was offered coverage even though she was not an FTE for any month of 2015—if the coverage had been insured, HoldCo would not prepare a Form 1095-C for Edith

First step to complete Part III is to check the box

A Closer Look at Form 1094-C

A Closer Look at Form 1094-C

Four parts to the Form 1094-C

Part I—Basic identifying information for the employer

And, in the case of a governmental employer that designates another governmental entity as the filing entity, identifying information for that entity

Part II—If the 1094-C is the “Authoritative Transmittal” for the employer (there’s only one of these), it must complete the remaining Part II items:

Total Forms 1095-C submitted by the employer

Whether it is a member of a controlled or affiliated service group of companies

Whether using reporting “shortcuts” or one of two transition rules (more on transition rules in Part III)

Part III—Information demonstrating the employer’s compliance (or lack thereof) with the employer mandate, on an aggregate basis

This is the difficult part of Form 1094-C—we’ll come back to it

Part IV—Corporate family tree information (more on this in a moment)

54

Now HoldCo is Going to Complete Its Form 1094-C

Same EIN-by-EIN reporting applies to Form 1094-C

Employers within controlled or affiliated service group (forms refer to each as an “applicable large employer member”) report separately

HoldCo, Inc.

[EIN 12-3456789]

15 FTEs

SubCo 1, Inc.

[EIN 23-4567891]

35 FTEs

SubCo 2, Inc.

[EIN 34-5678912]

25 FTEs

We’ll look at how HoldCo would complete Form 1094-C

55

HoldCo, Inc. [EIN 12-3456789]

15 full-time employees

83%

SubCo 2, Inc. [EIN 34-5678912]

25 full-time employees

50%

Partnership [EIN 45-6789123]

10 full-time employees

100%

SubCo 1, Inc. [EIN 23-4567891]

35 full-time employees

56

Employer information, especially EIN, needs to match that on Forms 1095-C transmitted

If “Yes,” complete Part IV

HoldCo is filing only one Form 1094-C, so it’s the authoritative transmittal and lines 18 and 20 match

If “No,” do not check the box and do not continue

Skipping Over Part III for the Moment, Looking at Part IV

Four parts to the Form 1094-C

Part IV—Corporate family tree information (other members of the employer’s controlled group or affiliated service group)

Rank the other members of the controlled or affiliated service group by average monthly number of FTEs reported

Start with the group member with the highest average monthly number of FTEs, listing up to a total of 30 other group members, in descending order

HoldCo has two controlled group members to list: SubCo 1 and SubCo 2

Assuming that SubCo 1 has a higher average monthly FTE count than SubCo 2

Partnership is not listed because it is not in the same controlled group or affiliated service group as HoldCo

57

Now We Get to Part III – Here’s How HoldCo Completed It

58

Column (a) of Part III—Percentage of FTEs Offered MEC

Was at least MEC (including option to cover children) offered to ≥95% of FTEs

Determined separately for each month on an EIN-by-EIN basis

Here are some “giveaways” from the IRS…

Check “Yes” for any month in 2015 that ≥70% of FTEs were offered at least MEC (HoldCo met this all 12 months)

Check “Yes” if fall short of 70% because coverage had no option to cover children, but working on it

If an FTE is deemed to have a coverage offer under transition and other rules, it counts for purposes of this test

Includes:

Non-calendar plan year transition rule applies and FTE was offered coverage at start of 2015 plan year

Multiemployer plan relief applies

Last month of employment

Disregard those in an LNAP

59

Column (b) of Part III—Monthly Count of FTEs

FTE count by month

Employer will know the number due to play or pay rules—FTEs determined the same way for this report

Clarification:

Don’t count employees in an LNAP, including:

Initial measurement and administration period for variable hour employees

First three full calendar months of employment for new FTEs

NOTE: Employer MUST offer coverage by day after LNAP ends to take advantage of this rule

60

Column (c) of Part III—Monthly Count of All Employees

Total employee count for employer, including FTEs and non-FTEs, by month

Includes employees in an LNAP

Use one of four dates each month to count, but must use the same one for all 12 months

First day of the month

Last day of the month

First day of first payroll period starting during the month

Last day of first payroll period starting during the month, but only if that day is in the same month that payroll period started

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Columns (d) and (e) of Part III

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HoldCo checks the first box in column (d) because it is a controlled group member throughout 2015

HoldCo enters code “B” in the first box in column (e) to indicate that it qualifies for the “free 80” transition rule—an employer claiming the “50-99” transition relief would put code “A” in column (e)

Delivery of Forms 1095-C and 1094-C

Delivery of Reporting Forms

Distributing Form 1095-C

To the employee or primary insured

By Feb. 1, 2016

May be delivered by any means acceptable for a W-2

Clearly acceptable: By mail, or electronically with recipient’s affirmative consent

To the IRS, with Form 1094-C

By Feb. 29, 2016, if filing on paper

By March 31, 2016 if filing electronically

An employer filing 250 or more Forms 1095-C must submit them to the IRS electronically

Determined on an EIN-by-EIN basis

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How the Right Technology Can Help

How can my current HRIS Vendor help me with ACA compliance related to:

Aggregating data from my disparate HRIS systems (HR, Payroll, Benefit Administration and Leave Administration)?

Ensuring I am capturing required data?

Determination of eligibility? Monitor affordability?

Eligibility Alerts? Initial Notice of Exchange?

Populating the required IRS forms? Distributing IRS Forms?

Exchange/Subsidy Notification log and/or responses?

Storing aggregated data for 7 years? Audit reconciliation?

Analytics and Review • Data Aggregation

[Payroll/HR/Report Writing/ ACA Tool]

• Strategic options; Impacts and opportunities; Plan Affordability

[Employer/ACA Tool/ Service Vendor]

Workforce Management • Ensure compliance policy of

corporation and/or individual employee level/ Monitor against ACA required eligibility (130 hours a month) [Employer/ACA Tool]

Reporting & Communications • 1094-C & 1095-C & Notice of

Exchanges & Federal reporting and submissions [Employer/ACA Tool]

Auditing • Audit History

[Payroll/HR/Report Writing/ ACA Tool]

• Penalty assessment/reconciliation [Employer/ Service Vendor]

Compliance • Regulatory Management;

Notice of Coverage; Federal/ State Compliance [Employer/ACA Tool]

• Marketplace response [Employer/ ACA Tool/ Service Vendor]

Basics • Eligibility & Tracking

[Payroll/HR/Report Writing/ ACA Tool]

• Plan affordability & Minimum design requirements & benefit costs [Employer/Lockton]

Who will typically handle the process:

Data You May Not Be Capturing

Employee Offer of Coverage Code for each month in plan year (Part II, Row 14, 1095-C)

Employee share of the lowest monthly premium (minimum value where applicable) (Part II, Row 15, 1095-C)

Employee Applicable 4980H Safe Harbor Code by Month (Part II, Row 16, 1095-C)

Social Security Numbers for dependents enrolled on your medical benefits plan (Part III, 1095-C)

Name of person to contact and contact number at Applicable Large Employer Member (Part I, Rows 15-16, 1094-C)

Total count of 1095-C documents submitted with 1094-C transmittal (Part I, Row 18, 1094-C)

Full-time employee count by month (Part III, Rows 23-35, Column B, 1094-C)

Total employee count by month (Part III, Rows 23-35, Column C, 1094-C)

Aggregated group information when applicable (Part IV, 1094-C)

Place to document employee Notice of Subsidy form, with aggregated data for reconciliation or defense (when required)

COBRA Participant information

4 Levels of Vendor Support

Data Aggregation, Form Population,

History

Eligibility, Affordability, Dashboards, Strategic Tools

ACA Consulting Services, Strategic Analysis, Administration Services

*Vendors are updating their capabilities daily. Check with your HRIS vendors or with the HR Technology & Outsourcing Practice for current status and roadmaps.

Some HR Technology vendors provide multiple levels of

support, some may provide all levels.

ACA Support

Peek behind the curtain

• Service Vendors $2.00-$8.00 PEPM.

• Vendors to Create and Distribute IRS forms: typically $3.00-$5.00 PEPY.

• ACA Compliance Vendors typically priced between $0.35-$1.35 PEPM.

• Implementation costs can run from $750 - $15,000. Greater complexity can add additional costs.

• Implementation timelines run from 12-16 weeks depending upon vendor, how ‘clean’ the data is and services provided.

• Lockton Technology Outsourcing Practice has researched HRIS vendors capabilities. We have negotiated pricing with select ACA vendors and can provide estimates to Lockton Account Teams and Clients. Please let us know how we can be of assistance.

*estimates as of March 2015

Vendor Selection & Implementation Support

Lockton’s HR Technology and Outsourcing Practice

Objective Advisor

Solution Matchmaker

Technology Translator

Questions

You may submit questions using the Q&A box on your computer screen. Please wait until we near the end of the presentation—or leave the topic to which your question pertains—before submitting your question.

QUESTIONS?

Questions? Ask them on Twitter: #LocktonACA Follow us on Twitter @LocktonBenefits

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Our Mission

To be the worldwide value and service leader in insurance brokerage, employee benefits, and risk management

Our Goal

To be the best place to do business and to work

www.lockton.com

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