Topics to Discuss
• Which employers have to comply with the employer mandate?
• What must employers do to comply with the employer mandate?
• When do employers have to comply with the employer mandate?
• What changes to the insurance mandates apply in 2016?
• What reporting is required for 2015 filed in 2016?
What is a large employer?
There are different definitions under the Affordable Care Act:
• Employer Mandate:
100 or more in 2015, if certain transitional rules are met.
50 or more in 2016
• Insurance Mandate:
50 or more in 2015
100 or more in 2016 and after
• Small Employer Tax Credit:
26 or more employees
What is a large employer?
Large employer determination:
• Made in 2015 for 2016
• Average over calendar year 2015
• A Full-time employee is defined as working 120 hours or more in
a month
• For all other employees all hours are added together for a month
and divided by 120
• Special rules for seasonal workers
There are 2 employer mandate penalties:
• Failure to offer 95% of full-time employees and their dependent
children with least minimum essential coverage in 2016.
• Failure to offer full-time employees with affordable minimum value
individual coverage and dependent children with minimum
essential coverage.
What employers have to do to comply with the
employer mandate?
Failure to offer minimum essential coverage to 95% in 2016 of
full-time employees and their dependent children:
• Penalty of $2, 000 per employee – minus the first 30 employees
for 2016.
• Applied separately to each member of the controlled group.
• Applies only if one full-time employee receives credits or
subsidies.
• Applies to each full-time employee.
What employers have to do to comply with the
employer mandate?
Failure to offer affordable minimum value coverage to full-time
employee and minimum essential coverage to dependent
children:
• Lesser of:
$3,000 for each full-time employee who receives credits or subsidies
on the Marketplace, or
$2,000 penalty discussed above.
• Applies to full-time employees who go on the Marketplace and
obtain credits or subsidies.
• Assessed on a monthly basis.
What employers have to do to comply with the
employer mandate?
What is minimum value?
• 60% actuarial minimum value
What is affordable?
• 9.5% of employee’s:
Box 1 of Form W-2 Wage
Rate of pay or
Federal poverty line
What employers have to do to comply with the
employer mandate?
• Who is a full-time employee?
30 hours per week, 130 hours per month.
• Full-time employee must be offered coverage after completing a
waiting period (UP TO 90 DAYS).
• Special rules for variable hour employees
Offered coverage after completing a look back measurement period or
a monthly measurement period.
• Employment status must be determined when ALE is subject to
employer mandate.
What employers have to do to comply with the
employer mandate?
• When hired, must determine if an employee is:
Full-time
Part-time or
Variable hour employee
• If an employee is variable hour, must determine if full-time over:
a monthly measurement period, or
a look back measurement period
What employers have to do to comply with the
employer mandate?
Use Monthly Measurement Period:
• Must use if have not measured hours in the past.
• Must re-measure each month if employee has worked 130 hours.
• Must offer coverage by the beginning of the fourth month after
employee is determined to be full-time.
• Administrative nightmare because employees are going on and off
coverage during year.
What employers have to do to comply with the
employer mandate?
Use of look back measurement period:
• 3 to 12 months in length.
• One measurement period is for new employees and another is for
ongoing employees.
• Use administrative period to enroll any variable hour employee
that qualifies.
• For any variable hour employees who qualify, the coverage period
is called the stability period.
What employers have to do to comply with the
employer mandate?
If variable hour employee is determined to be full-time:
• Must offer coverage during the stability period.
• Generally the stability period is the same length as the
measurement period.
• Employer must continue to offer coverage during the stability
period even if employee is not working full time.
What employers have to do to comply with the
employer mandate?
Employers with 100 or more full-time & full time equivalent
employees:
• January 1, 2015 or renewal date in 2015
• To use renewal date, ALE must meet requirement of transitional
rule
It depends how many full- time or all employees covered in the past.
Employer with 50 to 99 full-time & full time equivalent
employees:
• Renewal date in 2016.
• Must meet the requirements of transitional rules.
When do employers have to comply with the
employer mandate?
For Employers with 50 to 99 full-time & full time equivalent
employees:
• Limited Workforce Size. The employer must employ on average
at least 50 full-time employees (including full-time equivalents) but
fewer than 100 full-time employees (including full-time
equivalents) on business days during 2014.
• Maintenance of Workforce and Aggregate Hours of Service.
During the period beginning on Feb. 9, 2014 and ending on Dec.
31, 2014, the employer may not reduce the size of its workforce or
the overall hours of service of its employees in order to qualify for
the transition relief.
When do employers have to comply with the
employer mandate?
For Employers with 50 to 99 full-time & full time equivalent
employees:
• Maintenance of Previously Offered Health Coverage. During
the period beginning on Feb. 9, 2014 and ending on Dec. 31,
2015 (or, for employers with non-calendar-year plans, ending on
the last day of the 2015 plan year) the employer does not
eliminate or materially reduce the health coverage, if any, it
offered as of Feb. 9, 2014.
• Certification of Eligibility for Transition Relief The ALE certifies
on a Form 1094-C that it meets the eligibility requirements set
forth above.
• Employer cannot change plan year after February 9, 2014.
When do employers have to comply with the
employer mandate?
• As of January 1, 2016, the Affordable Care Act definition of “small”
group employer (for purposes of insurance market size) increases
from 50 to 100 employees.
• One significant impact of this change is that the ACA’s small group
rating limitations (e.g., age-banded rates) will apply to employers
with 51-100 employees.
• These employers were previously considered “large” employers
so their rates were set using various factors such as claims
history, industry and location.
• In the small group market, carriers can set rates based only on
age, family size, geography and tobacco use (although California
has prohibited tobacco use as a rating factor).
What the changes to the insurance mandates
will occur in 2016?
• Under a special transitional rule, however, employers with 51-100
employees who will be re-defined as small employers as of
January 1, 2016, will have the option of delaying this impact by
renewing their current large group policies on or before October 1,
2016.
• Since the last date to renew in 2016 will be October 1, many
carriers are suggesting that such employers renew by October 1,
2015, so their 12-month renewal date will be October 1, 2016.
What the changes to the insurance mandates
will occur in 2016?
Should You Renew Early to Delay Small Group Rating?
• Renewing early to delay small group rating may be a good
strategy for many employers with 51-100 employees, but for
certain employers this will NOT be a good strategy.
• There are various factors an employer must consider.
The health risk and age of the group, for example, an employer in a
high-risk industry that has a young workforce may have lower rates as
a small employer than as a large employer.
The employer’s claims history and industry, for example, an employer
in a low-risk industry with good claims experience may have higher
rates under small group rating than it did in the past under large group
rating.
Whether an employer will lose its delayed effective date under the
Employer Mandate provisions of the ACA.
What the changes to the insurance mandates
will occur in 2016?
Why Renewing Early Might Cause Employer Mandate Penalties to
Apply Earlier
• Possibly losing the delayed effective date under the Employer Mandate is
critical to consider and requires some additional explanation.
• The definition of “small” employer varies under different provisions of the
ACA.
• For purposes of the Employer Mandate, employers with 50 or more
employees (including “full time equivalents”) are “large” employers.
• The effective date of these provisions generally is 2015; however, many
employers with 50-99 employees qualified for a one-year delay to 2016
because they met certain requirements.
• One of the requirements is that the employer cannot change its plan year
after February 9, 2014.
What the changes to the insurance mandates
will occur in 2016?
• Signed By President on October 7, 2015.
• It amends the “small employer” definition for purposes of health
care reform’s insurance market and Exchange provisions.
• It repeals the mandatory expansion of the small group market to
employees with up to 100 employees and reverts to the prior
definition of up to 50 employees.
• States maintain flexibility to define the small market as up to 100
employee.
Protecting Affordable Coverage for Employees
Act
What reporting is required for 2015?
• Employers who have 50 or more full-time and full-equivalent full-
time employees in 2014 must report what coverage was offered to
full-time employees during calendar year 2015.
• Forms serve three purposes:
Report coverage for individual mandate purposes.
Report compliance for employer mandate purposes.
Report who offered coverage for eligibility for credits and subsidies.
• Each full-time employee will receive a form.
• If medical coverage is self-funded, each individual covered by
medical plan must receive a form, including those on COBRA and
retired.
• If under 50 employees and insured, the insurer will report on Form
1095-B.
• If under 50 employees and self-insured, the employer must report.
Employers Subject to the Reporting
Requirement
Forms Used for Filing
• The forms operationalize the information reporting requirements.
• The forms issued include:
1095-B - Health Coverage. Insurers and self-insured plans will provide one
to each enrollee. The form provides information on the coverage provided.
1094-B -Transmittal of Health Coverage Information Returns.
Transmittal form insurers and self-insured plans will file with IRS along with all
the Forms 1095-B.
1095-C - Employer-Provided Health Insurance Offer and Coverage. Large
employers will provide one to each enrollee. The form provides information on
the coverage provided, and on to whom and when the coverage was offered.
1094-C - Transmittal of Employer-Provided Health Insurance Offer and
Coverage Information Returns. Transmittal form insurers and self-insured
plans will file with IRS along with all the Forms 1095-C.
1095-A Health Insurance Marketplace Statement. Exchanges will provide to
their enrollees.
• The timelines track the Form W-2 rules.
• For example, the form is generally filed with the IRS by Feb. 28
(May 31) (March 31 for electronic filing), (June 30) and furnished
to full-time employees or responsible individuals by February 1,
2016. (March 31)
• The information on the form pertains to the prior calendar year
and the first forms are due in 2016 (reporting information for
2015).
When do the forms need to be provided and
filed?
• The Employer is responsible for providing form 1095-C to union
employees.
• Can complete by inserting code 1H in line 14 and Code 2E in line
16.
• Employer must determine if coverage is affordable minimum value
coverage.
What reporting is necessary for union
employees?
What Information is needed to be Collected?
For each employee:
• Employment date of each employee who became full time during 2015.
• Months during 2015 in which the employee was full -time or part-time.
• Months during 2015 in which employee was subject to a waiting or measurement period.
• Months during 2015 in which the employee was offered minimum essential coverage with
minimum value in 2015.
• Months during 2015 in which the employee was covered by minimum essential coverage with
minimum value in 2015.
• Months in 2015 in which minimum essential coverage offered to spouse and dependent
children.
• If the employee waived coverage , which affordability safe harbor applies.
• For each month . the amount of the employee contribution for the lowest-cost monthly
premium for self-only minimum essential coverage that provides minimum value.
• For self-insured plan, the names and social security numbers for each member of the
employee’s family and for what months they were covered.
What Information is needed to be Collected?
For each employer:
• Were they members of a controlled group?
• If yes, the names of each member.
• The total number of full-time employees for each month in 2015.
• The total number of all employees for each month in 2015.
• Does any transitional rules apply for any month during 2015?
• For what months during 2015 were at least 70% of full-time
employees offered minimum essential coverage?
• Which certifications of eligibility apply?
Penalties for Noncompliance
• A reporting entity that fails to comply with the Code § 6055 or
6056 reporting requirements may be subject to the general
reporting penalties for failure to file correct information returns and
failure to furnish correct payee statements.
• Two different sections of the Internal Revenue Code discuss the
penalties for not complying with Code §§ 6055 and 6056
reporting:
Code § 6721 discusses failing to send correct returns to the IRS.
• The basic penalty is $250 for each incorrect return.
• The total fine during any calendar year will not exceed $3,000,000.
Code § 6722 discusses failing to provide employee statements.
• The penalty is the same as above but applies for not providing individual
statements.
Penalties for Noncompliance
• However, penalties may be waived if the failure is due to reasonable
cause and not to willful neglect.
• The final regulations also include short term relief from penalties to allow
additional time to develop appropriate procedures for data collection and
compliance with these new reporting requirements.
• For returns and statements filed and furnished in 2016 to report offers of
coverage in 2015, the IRS will not impose penalties on reporting entities
that can show they make good faith efforts to comply with the information
reporting requirements.
• This relief is provided only for incorrect or incomplete information
reported on the return or statement, including social security numbers,
TINs or dates of birth.
• No relief is provided for reporting entities that do not make a good faith
effort to comply with these regulations or that fail to timely file an
information return or statement.
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