The Affordable Care Act Update on Employer Impact. OSCPA Fall Industry Conference September 25, 2015

Transcription

1 The Affordable Care Act Update on Employer Impact OSCPA Fall Industry Conference September 25, 2015

2 Presenters: Gary C. Crouch, CPA.CITP, CGMA President (918)

3 Presenters: Mary Anne Giezentanner, SPHR, SHRM-SCP Senior Consultant (918)

4 The Patient Protection and Affordable Care Act The Patient Protection and Affordable Care Act was signed into law in Requirements of the law are phasing in between 2014 and The employer reporting requirements take effect January 2016.

5 Terms and Acronyms ACA Affordable Care Act ALE Applicable Large Employer Affordable Coverage Coverage offered is considered to be affordable if the lowest cost self-only health plan is 9.5% or less of your full-time employee s household income.

6 Terms and Acronyms Sections 6055 and 6056 Employer reporting requirements; section 6055 individual mandate reporting; section 6056 pay or play reporting. Section 4980(h) Employer shared responsibility provisions of the ACA.

7 Terms and Acronyms 1094-C and 1095C Employer forms for filing reports required under sections 6055 and Minimum Essential Coverage and Minimum Value Coverage An employer sponsored plan must cover at least 60% of the total allowed cost of benefits that are expected to be incurred under the plan.

8 Final Reporting Regulations March 2014 Final regulations issued regarding employer reporting requirements under the ACA. Elaborate on Sections 6055 and 6056 of IRC. January 2015 Required reporting period begins. Reporting for coverage provided during calendar year 2015 will be due in early June 2015 Trade Preferences Extension Act became law, including a provision which doubled per employee penalties for ALE s who fail to file ACA returns or furnish employee statements. IRS released draft instructions and reporting forms 1094-C and 1095-C for 2015.

9 Effective Date The reporting requirements are first effective for coverage provided during the 2015 calendar year. Employers will be required to file returns to the IRS and provide statements to individuals in 2016 to report information regarding coverage offered during the 2015 calendar year.

10 Reporting Requirements Section 6055 Requires annual reporting to the IRS by employers with a self-insured group health plan. Used by the IRS to administer individual shared responsibility provisions (5000A) Section 6056 Requires annual reporting to the IRS by ALE s about health insurance coverage the employer offered. Used by the IRS to administer employer shared responsibility provisions (4890H)

11 Reporting Requirements Section 6055 Name, Address, EIN for Reporting Entity Plan Sponsor/Employer Name, Address, TIN Covered Employee Others covered (Spouse, dependents, etc.) Section 6055 (cont.) Offered through SHOP Exchange Plan? Dates of Coverage for each individual Months with at least one day of coverage by individual

12 Reporting Requirements Section 6056 For each Full-Time Employee Employer Information Name, Address, EIN, Contact Telephone number Covered Employee Information Section 6056 (cont.) Certification that Minimum Essential Coverage offered (MEC) by month Specific Months MEC was available Full-Time Employee s share of cost for lowest cost MEC by month

13 Which Employers? Applicable Large Employers Any employers offering coverage under a self-insured health plan

14 Applicable Large Employer Employed during the previous calendar year: at least 50 full-time employees, or a combination of full-time and part-time employees that equals at least 50. Determination is made based on the number of employees during the previous calendar year. Transition relief is available to employers for the 2015 determination.

15 Full-Time Employee A full-time employee works an average of at least 30 hours of service per week, or a minimum of 130 hours of service in a calendar month.

16 Hours of Service An hour of service is an hour for which an employee is paid or entitled to payment for the performance of duties for the employer, or a period of time during which no duties are performed due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty, or leave of absence.

17 Determining Full-Time Status Monthly Measurement Counts an employee s hours of service for each month. Look-Back Assesses the hours in a prior period (measurement period) to determine an employees full-time status during a future period (stability period).

18 Full-Time Equivalent A full-time equivalent employee is not an individual employee. is a combination of parttime employees whose combined hours of service are equivalent to those of a full-time employee.

19 Calculating Full-Time Equivalents To calculate the number of full-time equivalent employees: Count the total hours worked by all part-time employees in any given month. Divide that total by 120. The quotient is the number of full-time equivalent employees, of FTEs. The number of FTEs must be added to the number of full-time employees. The total number of full-time employees should be averaged across the months in the year, then measured against the large employer threshold.

20 Non-hourly Employees Three methods to determine whether a non-hourly employee qualifies as a fulltime employee. Counting the actual hours of service. Using a days-worked equivalency, in which a day worked counts as eight hours of service. Using a weeks-worked equivalency, in which a week worked counts as 40 hours of service.

21 Reporting Forms Form 1095-C, Employer-Provided Health Insurance Offer and Coverage Reports information to the IRS about health insurance coverage offered and any safe harbors or other relief available to the employer, or reports that no offer of coverage was made.

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23 Reporting Forms Form 1094-C, Transmittal of Employer- Provided Health Insurance Offer and Coverage Information Returns Provides a summary to the IRS of aggregate employer-level data.

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25 Filing Deadline Forms 1094-C and 1095-C must be filed with the IRS annually, no later than February 28 (March 31 if filed electronically) of the year immediately following the calendar year to which the return relates. A Form1095-C statement must be provided to each full-time employee by January 31 of the calendar year following the calendar year for which the information relates.

26 Electronic Filing Requirements Large employers should be aware that regulations require electronic filing with the IRS for employers filing 250 forms or more. This requirement applies to Forms 1094-B, 1094-C, 1095-B, or 1095-C

27 AIR Program Electronic filing of ACA required forms will be done through the AIR Program. Any employer who plans to file their Forms C and 1095-C directly with the IRS must complete the ACA Information Return Transmitter Control Code (TCC) Application and receive a TCC in the mail prior to electronically filing their ACA returns. The AIR Program is scheduled to begin assurance testing in July 2015, and is expected to be in full production in the fall of 2015.

28 Sage My Workforce Analyzer

36 Other Health Care Changes Health Reimbursement Accounts limited Notice defines all Employer Payment Plans (EPPs) as health plans subject to PPACA reforms Rev. Rul eliminates stand alone EPPs due to limits on benefits Notice extended relief through June 30, 2015, now expired Plans affected under Sec. 105, Sec. 106 and Sec 125

37 Other Health Care Changes Health Reimbursement Accounts limited HRAs or EPPs may be integrated with employer sponsored health plans that otherwise meet the market reform provisions. HRAs or EPPs may NOT be integrated with individual health plans In essence, HRAs may reimburse for nonessential health benefits (deductibles, copays, etc.) in tandem with a group health plan that does cover the essential health benefits Subject to $100/day/employee excise tax

38 Other Health Care Changes Exceptions to HRA limitations Notice provides for S Corp >2% Shareholder health insurance reimbursement plans (more guidance to come) Sec excepts single employee plans (may also include spouse and dependents) Retired employee only plans

39 Other Requirements Do not forget W-2 reporting Health Insurance reporting Box 12 Cost of Employer and Employee major medical and prescription drug premiums

40 IRS Fees and Penalties Employer Shared Responsibility Provisions Payment type #1 may be due if ALE Does NOT offer Affordable Minimum Essential coverage to 95% of full-time employees and dependents, Dependents blood or adopted children under the age of 26 Does not include spouse nor stepchildren or foster children And, if at least one full-time employee receives the premium tax credit for receiving insurance through the Health Insurance Marketplace.

41 IRS Fees and Penalties Employer Shared Responsibility Provision Payment type #2 may be due if ALE Does offer Affordable Minimum Essential Coverage to > 95% as above, For each full-time employee receiving the premium tax credit (with HIM coverage) where Minimum Essential Coverage is not affordable, or MEC offered does not provide minimum value, Or, the FT employee was not one of the 95% of employees offered the coverage

42 IRS Fees and Penalties Payment type #1 if coverage Not offered and at least one employee receives credits Penalty is $2,000 annually (indexed in future years), For ALL FT employees except the first 30 employees, and Even if the employee has the employer s coverage. Transition relief available for 2015

43 IRS Fees and Penalties Payment type #2 if coverage is offered, but at least one employee receives credits Penalty is $3,000 annually (indexed in future years), For each FT employee receiving the premium tax credit Total payment may not exceed payment due if the ALE had NOT offered MEC to >95%

44 IRS Fees and Penalties For either employer shared responsibility payment type to be assessable, At least one full time employee must receive the premium tax credit for purchasing Marketplace coverage. Both payment types are pro-rated for actual number of months rules are not met. So, $3,000 or $2,000 amounts would only apply if rules were not met for all 12 months.

45 IRS Fees and Penalties The Trade Preferences Extension Act of Sec Failure to file penalties increased for all information returns file late or not filed From $100 to $250 per return Maximum increased from $1.5m to $3m Failures corrected within 30 days is $50 from $30 Failures corrected by Aug. 1 is $100 from $60 Intentional disregard $500 from $250 and max of $3m from $1.5m

46 IRS Fees and Penalties Patient-Centered Outcomes Research Institute fee (PCORI fee) Paid by Self-Insured plan sponsors and by Health Plan insurers In effect for plan years ending after 09/30/2012 through 9/30/2019 $2 time average number of lives covered

47 IRS Fees and Penalties Cadillac Plan tax Begins in % excise tax on excess coverage value Paid on a monthly calculation of aggregate cost over 1/12 of the annual threshold amount For 2018 threshold amounts are For Individuals - $10,200 For other than Individual coverage - $27,500 Adjusted for inflation health costs between 2010 and 2018

48 Recent Changes The Trade Preferences Extension Act of 2015 Health coverage tax credit equal to 72.5% of the amount paid by a taxpayer who is an eligible trade adjustment assistance or PBGC pension recipient for qualified health insurance coverage of the taxpayer and qualifying family members for eligible coverage months. The provision expired at the end of 2013, but the act retroactively extends the credit through 2020.

49 Recent Changes The Trade Preferences Extension Act of 2015 Coordinates the Sec. 35 credit with the Sec. 36B premium tax credit Any month in which taxpayer elects Sec. 35 treatment, Sec. 36B will not be treated as a coverage month. Tax increase by excess of advanced Sec. 35 credits over Sec 36B credit.

50 Resources from the IRS ACA Information Center for Applicable Large Employers (ALEs) new 9/23/15 Act/Employers/ACA-Information-Center-for- Applicable-Large-Employers-ALEs How to determine if you are an ALE Resources for Applicable Large Employers Outreach Materials

51 Resources from the IRS Questions and Answers on Information Reporting by Health Coverage Providers for Section Reporting-by-Health-Coverage-Providers-Section-6055 Questions and Answers on Reporting Offers of Health Insurance Coverage by Employers for Section Reporting-of-Offers-of-Health-Insurance-Coverage-by-Employers-Section-6056 Questions and Answers on Employer Shared Responsibility Provisions Under the Employer Shared Responsibility Provisions (4980H) Employer-Shared-Responsibility-Provisions-Under-the-Affordable-Care-Act

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