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

EmployerReportingObligations UnderACADiane V. Dygert

James Napoli

June 4, 2015

©2015 Seyfarth Shaw LLP2 |

Legal Disclaimer

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


Background

Why? When? Who? What?


ACA Reporting Obligations

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

• Individual Mandate

• Employer Mandate

• Marketplace Tax Credits

• When?• 2015 – first year reporting required

• Due Date

• To individual:

• February 1, 2016

• To IRS:

• February 29, 2016 (if filing by paper)

• March 31, 2016 (if filing electronically)


• Who?

►Providers of minimum essential coverage

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

• IRC Section 6055 (individual mandate)

►Applicable large employers (ALEs)

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

• IRC Section 6056 (employer mandate)



• What?

►Forms 1094 and 1095 B series

• Insurance providers of minimum essential coverage

• Multi-employer plans

►Forms 1094 and 1095 C series

• ALEs

• Final forms and instructions released: February 9, 2015


Focus Today


The Forms

IRC Form 1094-C

Form 1094-C

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

►Each ALE controlled group member files own 1094-C

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

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

divisions)

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


Form 1094-C

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

►Who accepted the coverage

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

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

►Different ALE members in different months

• Divide employee up by month

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

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


Form 1094-C (Parts I and II)


Form 1094-C (Parts I and II)

• Parts I and II Information Requested:

►Employer name, TIN and contact information

►Controlled group status

►Simplified reporting methods

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


Form 1094-C (Part II)

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

►Qualifying Offer Method Transition Relief

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

►98% Offer Method


Form 1094-C (Part III)



• Part III Information Requested:

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

►Number of full-time employees in each month

►Total number of employees in each month



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

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

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

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



• 98% Offer Method

►If offer of

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

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

• Plus, MEC to dependents

►Then

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

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

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


Form 1094-C (Part IV)


Form 1094-C (Part IV)

• Controlled groups

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

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

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



The Forms

IRC Form 1095-C

Form 1095-C

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

• Whether or not coverage was offered

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

• Retirees

• COBRA beneficiaries

• Non-employee directors

►Separate forms if work for different ALE members

• By month


Form 1095-C

• Due Date:►To IRS: same as above

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

• Analogous to Form W-2


Form 1095-C


Form 1095-C (Part I)

• Information Requested:

►Employee name, SSN and address

►Employer name, TIN, address and telephone number

• Contact here must be someone employee can call with questions

• Could be a third party vendor



• Line 14: Offer of Coverage

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

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

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

• Includes new hires and terminated employees

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

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



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

►1B – MEC with MV to employee

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

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

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

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

►1G – Offer to non-full-time employee

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

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


Form 1095-C Simplified Reporting

• Qualifying Offer Method►Applies employee-by-employee

►Offer of MEC with minimum value

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

►Plus spouse and dependents (if any)

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

• Qualifying Offer Method Transition Relief►Applies population-wide

►If “qualifying offer” as defined above,

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



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

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

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

►Still need to give 1095-C to IRS anyway

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



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

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

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

►If employee enrolled in self-insured must give anyway

►Must give to IRS anyway



• Line 15: Affordability of Coverage

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

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

• Each month displays applicable dollar amount

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

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

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



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

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

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

• If no code applies for a month, leave blank



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

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

►2C – Employee enrolled in coverage offered

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

►2E – Multiemployer plan transition relief applies

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

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

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

►2I – Non-calendar year transition relief applies



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

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

►Spouse and dependents

►For individual mandate compliance

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

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



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

established.

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

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

• If unsuccessful, can use date of birth



The Forms

Common Reporting Examples

1094-C Reporting Examples

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

►Plan year starting April 1

►Subsidiaries:

• XYZ, LLC

• JKL, Inc.

• OPQ, Co.

►Employs full-time employees:

• ABC Company = 152

• XYZ, LLC = 42

• JKL, Inc. = 75

• OPQ, Co. = 310


ABC Company



• ABC Company employs (among others)

►Virginia Jones

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


Virginia Jones




►Bob Robertson

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

►Tyler Robertson

• Covered under his father, Bob’s, coverage


Bob Robertson


Tyler Robertson

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




►John Smith

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


John Smith



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

employees, plus spouses and dependents

►Offers retiree coverage to some former employees

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

►Employs employees:

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

• Union = 300 full-time; 75 part-time


Widget Co



• Widget Co employs (among others):

►Alice Agnew

• Union member offered coverage under multi-employer plan

• Full-time employee as of June

• Employer makes contribution all 12 months

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

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


Alice Agnew




►Eduardo Garcia

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

• Covered adult son, Duane


Eduardo Garcia




►Penelope Pratt

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

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

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


Penelope Pratt



Enforcement

Compliance Penalties

Compliance Penalties

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

• Waiver►Good Faith efforts for 2015 reporting

►Reasonable cause

• Increased penalties►Intentional disregard


Questions?


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