1 Affordable Care Act Compliance and IRS 1094/95 Filings: Are YOU Ready?? REQUIREMENTS UNDER IRC SECTIONS 6055 AND 6056 Presented by:
2 This Presentation Is Not Legal or tax advice The final word on ACA A political opinion Before taking any action on the information contained in this presentation, Employers and Plan Sponsors should consult with their counsel.
3 Featured Speakers: Greg Liposky, ChFC President Creative Benefit Solutions, LLC Todd Tigges, CPA UHY, LLP Nate Wine, HCM ADP
4 Overview Employer Shared Responsibility Rules "Play or Pay" Brief review of 2015 and 2016 compliance requirements and how to AVOID penalties and fines Measurement & Look Back Periods - Brief review on how to determine Full Time Benefit Eligible Employee's (FTE's) IRS 6055/6056 Requirements A thorough review of the significant Tracking/Reporting Requirements and Filing procedures for IRS forms 1094/95(c) due first quarter 2016 Q & A Please submit your questions via Webex
5 Employer Shared Responsibility Rules Employer Mandate Rules - Do I need to offer coverage to my employees? Key Definitions: Full Time Equivalent Employee s (FTE s): 30 hours/week or 130 hours/month Applicable Large Employers - (ALE s): Defined as those employers with >100 FTE s for Employer Mandate and > 50 FTE s for Code Section 6056 Filing 2016 Defined as those employers with > 50 FTE s for BOTH Employer Mandate and Code Section 6056 Filing
6 How to Determine Full-Time Equivalents: THINK MONTHLY All who work 30+ hours/week count as 1 each Add up monthly part-time/variable employee hours and divide by 120 FTEs (round to nearest whole number) Do this on a monthly basis then average for a year (or for measurement period). Example: 40 employees that work 30+ hours a week = employees that work part-time hours totaling 1,320 hours / 120 = = 51 Full-Time Equivalents (FTEs)
7 Employer Shared Responsibility Rules (Pay or Play) Small Employers (fewer than 50 FT/FTE employees) No requirement to offer coverage Can get tax credits for providing coverage but must purchase through the SHOP Exchange Large Employers ALE s (50+ FT/FTE employees) Must offer coverage to FT employees and dependents to avoid penalties Coverage must be affordable and provide minimum value Penalties delayed until 2015; additional one-year delay may apply for ERs with full-time EEs Employer penalties triggered if any full-time employee receives subsidized coverage in an Exchange
8 How to Qualify for the Mid-Sized One-Year Transition Delay All 3 must be met! 2. From 2/9/14-1/1/15, cannot reduce size/hours of workforce (unless bona fide business reason) in order to qualify for transition. 1. Must have at least 50 FTEs but fewer than 100 FTEs in Qualify for transition to 1/1/ From 2/9/14-1/1/15, must maintain and not materially reduce the coverage offered as of 2/9/14 in order to qualify for transition.
9 Potential Penalties Employer Shared Responsibility (ESR) Mandate also known own as Pay-or-Play Mandate. 4980H(a) Penalty $2,080 annually assessed per full-time employee (less 80 in 2015, less 30 in 2016 and beyond), prorated monthly Minimum essential coverage (MEC) was not offered to 70% in 2015 and 95% in 2016 and beyond of employees and dependents Triggered if only one full-time employee receives a subsidy on the Exchange. 4980H(b) Penalty $3,120 annually, prorated monthly MEC is offered to 70% in 2015 and 95% in 2016 and beyond but it does not meet minimum value and/or affordability Triggered only for each full-time employee that actually receives a subsidy on the Exchange Minimum Value: Plan must pay, on average, 60% of covered health expenses. Affordability: Employee-only contribution does not exceed 9.56% of income.
10 Avoiding Penalties Offer coverage to FT employees and dependents that: Affordable? Provides Minimum Value Employee s contribution for self-only coverage does not exceed 9.56% of income Safe harbors for what income and premium amount to use Plan covers at least 60% of costs on average MV calculator or design-based checklists
11 Employer Mandate Shared Responsibility Pay or Play and Potential Penalties 1 st CHECK Employer has, on average, 100 in 2015 (50 in 2016) ACA full-time employees plus full-time equivalent employees in the prior year? NO Penalties do not apply to small employers. 2 nd CHECK YES Does the employer offer minimum essential coverage (MEC) to at least 70% in 2015 (95% in 2016) of its ACA full-time employees? YES NO Did at least one employee receive a premium tax credit or cost-sharing subsidy in a Marketplace/Excha nge? YES The penalty (assessed monthly) for not offering coverage is the number of full-time employees (minus 80 in 2015; 30 in 2016) times $2,080 annually 3 rd CHECK 4 the CHECK Does the plan provide coverage of at least 60% minimum value? YES Would any full-time employees pay more than 9.56% of current year for lowest cost self only coverage Box 1 W-2 Wages, Rate of pay, or Federal Poverty Level NO NO YES Those employees can choose to buy coverage in a Marketplace and may receive a premium tax credit The penalty (assessed monthly) for failure to offer minimum value and/or affordable coverage is a $3,120 annual penalty that will be due for each full-time employee receiving a subsidy, up to a maximum of the total number of full-time employees (minus 80 in 2015; 30 in 2016) times $2,080 annually. No Penalty Payment Required 11
12 Who is a Full-Time Employee? Measurement Periods What are they? What do Employers have to Track?
13 Offering Coverage to FT Employees New employees expected to work full-time Reasonably expected at start date to work full-time (not seasonal) Offer coverage by end of first 3 full calendar months of employment Ongoing (current) employees New variable hour employees New seasonal employees Final regulations provide 2 methods for determining full-time status: Monthly measurement method Look-back measurement method
14 Monthly Measurement Used to identify full-time employees by employers who do not use the look-back measurement method Employees are identified based on the hours of service for each calendar month, not based on averaging over a prior look back measurement period. Employer must offer coverage to an employee by the end of three full calendar months beginning with the month the employee is otherwise eligible for coverage to avoid penalties Non Hourly paid employees have three permitted methods: 1. Counting actual hours of Service 2. Using a days worked equivalency method 3. Using a weeks worked equivalency method
15 Look-Back Measurement Look-Back Measurement Period can use 3-12 months for new, variable hour and seasonal employees if used for ongoing employees to determine if employee has averaged 30 hours of service per week. Look-Back Defined time periods. The look-back safe harbors allow employers to use these time periods to predict whether an employee will qualify as full-time for shared-responsibility purposes Employers may not use the look-back measurement method for variable hour/seasonal employees and use monthly measurement method for employees with predictable schedules
16 Look-Back Measurement Initial look back measurement and stability periods. The initial look back measurement and stability periods are unique to each new variable-hour or seasonal employee, reflecting the individual s actual start date or, alternatively, the start of the first calendar month after that date Many employers might want to have all look back initial measurement periods start on the first of a calendar month; otherwise, every day of the year potentially could start a new look back measurement period.
17 Look-back Measurement Measurement Period Counting hours of service (3-12 months) Administrative Period Time for enrollment/disenrollment (Up to 90 days) Stability Period Coverage provided (or not) length depends on type of employee and whether FT or not
18 Look-Back Measurement for Ongoing Employees 2013 Nov. 1 Dec 31 Measurement Period 2014 Jan 1 Nov. 1 Dec 31 Measurement Period cont. Admin Period 2015 Jan 1 Dec 31 Stability Period
19 6055/56 Reporting Requirements Tracking & Reporting 1094/95C What is it? What are the Steps for Employers to Comply?
20 The BUZZ Words!
21 Section 6055 Reporting Purpose to provide IRS and individuals information regarding minimum essential coverage and whether individuals satisfied the Individual Mandate Reporting requirements apply to: Employers who sponsor self-insured group health plans Insurers Size of the group does not matter
22 Section 6056 Reporting Applies to Applicable Large Employers (ALEs) with at least 50 full-time employees (including full-time equivalent employees) Information reported on health care coverage offered to full-time employees for: Administration of premium tax credit for Exchange/Marketplace coverage Employer mandate penalty tracking
23 Code 6055 & 6056 Reporting HOW DO I REPORT? On February 8 th, 2015 the IRS released FINAL versions of forms and instructions that reporting entities will use to meet the requirements under both Sections 6055 and Form B & C Transmittal Similar to Form W-3 Each ALE group member must submit Form B & C Provided to each employee or insured Similar to a W-2 Reports the costs of coverage as well as the months of health coverage for each employee Entities reporting under Section 6055 will generally use 1094-B & B while those reporting under Section 6056 will use the C versions of those forms.
24 MAJOR REPORTING REQUIREMENTS Fully Insured Fully Insured Self-Funded Self-Funded Marketplace < 50 FTEs 50 + FTEs < 50 FTEs 50 + FTEs Coverage Forms to employee 1095-B 1095-B / 1095-C (Parts I and II Only) 1095-B 1095-C (All parts) 1095-A Filed by Insurer Insurer / Employer Plan Sponsor (Generally the employer) Plan Sponsor (Generally the employer) Marketplace Forms to IRS 1094-B 1094-B (With copies of all 1095-Bs) / 1094-C (With copies of all 1095-Cs) 1094-B (with copies of all 1095-Bs) 1094-C (with copies of all 1095-Cs) 1094-A Filed by Insurer Insurer / Employer Plan Sponsor Plan Sponsor Marketplace CAUTION! Multiemployer plans of any size and employers in controlled groups have unique reporting requirements
25 Employer Reporting Deadlines 6055 & 6056: Reporting in 2016 for 2015 coverage Employee Statements due Jan 31st; can be timed and/or sent with W-2 statements IRS Returns due Feb 28th (paper) or Mar 31st (electronically) Final rules do not allow an alternative date for employers with noncalendar year plans ALL ALE s subject to 6056 reporting will have some sort of reporting form due in the first 2 months of Those mid-sized employers that qualified for the extra year of transition relief must also report under the 6056 Reporting requirement. Penalty for not filing - $100 per Form Maximum $1.5 million
26 What is W-2 Aggregate Cost Reporting? To comply, each calendar year, employers must: Determine the applicable employer-sponsored coverage (i.e. Medical and Dental/Vision integrated with Medical) that is provided to each employee; Calculate the total employer and employee cost of coverage; and Report that cost on each employee s Form W-2 (Box 12 DD) Under transition relief for 2013 and until further guidance is provided, an employer is not subject to the requirement if the employer filed fewer than 250 Forms W-2 for the preceding calendar year.
27 What to Do NOW? Solutions for ACA Compliance and Tracking & Reporting Section 6055/6056 What are Employers Options to comply? 1094/1095 B&C Filings
28 Employer Choices to Comply Current Payroll Vendor - May be the most logical, efficient and least costly solution. Not all vendors are ready. Ask the right questions and beware of deadlines. Current Benefits Broker or Consultant They should know all the options and can help navigate you to the best option based on needs and your current vendors. Third Party Administrator (TPA) Many potential options exist with current or alternate vendors. Your CPA or Tax Preparer Consult your advisor as to their desire and capabilities to perform this function. Do it Yourself - We can provide you Excel Workbooks and instruction video s to track and report these forms.
29 ADP Workforce Now Navigating the Complexities of ACA Presented by: HCM Consultant Nate Wine
30 ADP s Solution for ACA Compliance Copyright 2014 ADP, LLC
31 Overview With the ADP Workforce Now ACA reporting, we can issue notices to your employees as well as file with the IRS for you. ADP has a staff of 1,500 associates in Washington DC who are dedicated to understanding all of the nuances of these reports. This will allow you to focus on your business and not have to worry about the filing 1094/ 1095C requirements. As long as you have the data in ADP Workforce Now, we can file the reports on your behalf
32 ADP Workforce Now ACA Dashboard & Reporting
33 EE data from HR Benefits data from Offering
34 Ability to match Employer FEIN data to payroll tax filing data to reduce electronic rejections 2012 Automatic Data Processing, Inc.. 34
36 Play or Preparation Report
37 Copyright ADP, Inc. Proprietary and Confidential Information
38 Graphical Representation: ACA Dashboard HR, Benefits and Payroll (Hours evaluations) HR and Payroll (Employee Profile) Benefits, HR (Play or Pay Report) Time and Attendance, HR, Payroll, Benefits (Look Back and Applicable Large Employer Reports) 38
41 Tracking Waived Coverage
42 Communication & Acknowledgment of Required Policies
45 Have You Determined.. How your measurement period is calculated? If your coverage is Affordable and if you will AVOID Employer Mandate Penalties? If your coverage meets the Minimal Value Requirements? How your going to meet the IRS 6056 reporting requirements? That your current Benefit Broker, CPA Firm and Payroll Vendor are meeting all YOUR ACA, HR and Business Consulting needs? If you haven't checked all the boxes, let us know and we will be available to assist you!!
46 Questions Q & A Please use Q&A tab on your screen to type in your questions Copyright 2014 ADP, LLC
47 Speaker Contact Information Greg Liposky, President Creative Benefit Solutions, LLC Phone: Website: Todd Tigges, CPA UHY, LLP Phone: Website: Nate Wine, HCM Consultant ADP Phone: Website:
48 THANK YOU!!