Affordable Care Act Plan and Employer Reporting Requirements

Transcription

1 Affordable Care Act Plan and Employer Reporting Requirements Presented by: Brian J. Malynn, JD, CEBS October 22, 2015 Copyright 2015 by The Segal Group, Inc. All rights reserved.

2 IRS Health Coverage Reporting In this presentation we will review: IRC Section 6055: Plan Reporting IRC Section 6056 Applicable Large Employer Reporting A look at reporting on Forms 1095-B (plan) and 1095-C (employer) and their transmittal forms 1

3 Required Reporting to IRS & Employees Beginning in 2016 (for coverage offered in 2015) IRS reporting (per IRC sections 6055 & 6056) will help facilitate IRS enforcement of: The individual coverage mandate (via 6055 plan reporting); and The Employer Shared Responsibility Penalty (via 6056 employer reporting) Employers will have annual ongoing reporting obligations to both their employees and IRS, or pay penalties and interest Employee statements must be distributed by January 31 (For 2015 coverage reported in 2016, by February 1 because January 31, 2016 falls on a Sunday) IRS encourages electronic reporting Electronic reporting to IRS is mandatory if filing 250 or more returns/year First reports to IRS due on or before February 29, 2016 (or March 31 if filed electronically) For all employers, the first data collection period for reporting purposes starts January 1, 2015, even if the employer s benefits plan year begins at a later date (e.g., July 1) 2

4 ACA Reporting Obligations Plan Reporting (Section 6055) All plans that provide minimum essential coverage must: Submit annual report to IRS Provide annual statement to plan participants Applies to self-insured plans and insurers, as well as other providers of MEC Employer Reporting (Section 6056) Large employers (those with 50 or more full-time employees, including FTEs) must: Submit annual report to IRS Provide annual statement to full-time employees Insurers will report on behalf of insured plans First reports due in 2016 for 2015 calendar year. 3

5 ACA Reporting Obligations continued Plan Reporting by Insurers or Multiemployer Plans Use IRS Forms 1094-B (transmittal) and 1095-B (participant statement) File with IRS on or before February 28 (or March 31 if filed electronically) of the year following the calendar year in which the coverage was provided Statements to participants due by January 31 Large Employer Reporting Use IRS Forms 1094-C (transmittal) and 1095-C (employee statement) File with IRS on or before February 28 (or March 31 if filed electronically) of the year following the calendar year to which the return relates Statements to employees due by January 31 Employers that self-insure will file a single reporting form (Form 1095-C), completing two different sections to report information required under both sections 6055 & 6056 For employers with insured coverage, the insurer handles section 6055 reporting No exception is available for non-calendar year plans 4

6 Reporting by an Insured Health Plan

7 Form 1095-B This form is sent by an insured health plan to each plan participant. It tells them about their coverage, so they can tell the IRS that they are covered by a health plan. That way, they do not get penalized for not having health coverage. 6

8 Form 1094-B Insured health plans will send this transmittal form to the IRS, with copies of the Forms 1095-B sent to each plan participant. 7

9 Large Employer Reporting

10 Form 1095-C This form is completed by the large employer, and is sent to each full-time employee (with copy to IRS). 9

11 For Which Employees Must Employer Complete the Form 1095-C? Any employee who is a full-time employee for at least one month (the entire month) of the calendar year Report regardless of whether the employee is enrolled in the employer s plan Any part-time employee who is actually covered under an employer s self-insured plan for at least one day of any month Coverage for one day is considered coverage for the entire month Report only if the part-time employee is enrolled in the employer s plan Would not report on employees covered under an insured option or a multiemployer plan Employers can use either Form 1095-C or Form 1095-B (the plan reporting form) to report enrollment for non-employees, retirees with fullyear retiree coverage or individuals with full-year COBRA coverage who are covered under the employer s self-insured plan We recommend using Form 1095-C for consistency in administration 10

12 Data Needed to Complete 1095-C The months that the employee was a full-time employee The type of coverage offered and for which months Minimum value (i.e., meets the 60% test) or just minimum essential coverage (less than 60%) To whom the coverage was offered (employee only, children, spouse) The required premium for employee-only coverage under the lowest-cost plan that provides minimum value An explanation of why the employer is not subject to the employer penalty for a particular month e.g., the employee was in a waiting period, the employee was actually covered by the plan, or the coverage was affordable under a safe harbor (W-2, rate of pay, Federal Poverty Level) Each month that the employee and family members were covered under a selfinsured plan (with SSN for each person) 11

13 Form 1095-C, Part I: Employee and Applicable Large Employer Member Large employers complete this form to report offers of coverage Self-funded large employers also use this form to report actual enrollment in the plan s coverage For each FT employee, there must be only one Form 1095-C that reports information for all 12 months of the year Aggregated Group: If an employee works for multiple Applicable Large Employer (ALE) members in the same month, the ALE member for whom they worked the most hours will be responsible for completing Form 1095-C for that month; each ALE member for whom the employee worked full time completes a separate 1095-C under its EIN 12

14 Form 1095-C, Part II: Plan Start Month This field shows the month in which the employer s plan year begins; it is optional for

15 Form 1095-C, Part II: Employee Offer of Coverage (Line 14) Enter code for Offer of Coverage for any employee who is FT for at least one month. Also need to complete line 14 for non-full-time employee who enrolls in selfinsured plan (code 1G). Offer of Coverage Indicator Codes 1A Qualifying Offer Minimum value and affordable (based on 9.5% of FPL) coverage offered to FT employee and MEC offered to spouses and dependents 1B Minimum value coverage offered to employee only 1C Minimum value coverage offered to employee and MEC offered to dependent children, but not spouse 1D 1E 1F 1G 1H Minimum value coverage offered to employee and MEC offered to spouse, but not dependents Minimum value MEC offered to employee and MEC offered to spouse and dependents MEC offered to employee, or employee and spouse or dependents, or employee and spouse and dependents, but coverage is not minimum value Offer to employee who was not FT for any month and the employee enrolled in a self-insured health plan for one or more months No offer of coverage or no offer of MEC 1I Qualifying Offer Transition Relief

16 Form 1095-C Offer of Coverage (Line 14) Indicator Codes: Comments Protects employer from 4980H(b) penalty. 1B & 1D: 4980H(a) may apply because no offer to children. 1C & 1E: 4980H(b) may apply if coverage is not affordable. 4980H(b) penalty may apply because not minimum value. No 4980H(b) penalty because not FT employee. Offer of Coverage Indicator Codes 1A 1B 1C 1D 1E 1F 1G 1H Qualifying Offer Minimum value and affordable (based on 9.5% of FPL) coverage offered to FT employee and MEC offered to spouses and dependents Minimum value coverage offered to employee only Minimum value coverage offered to employee and MEC offered to dependent children, but not spouse Minimum value coverage offered to employee and MEC offered to spouse, but not dependents Minimum Value coverage offered to employee and MEC offered to spouse and dependents MEC offered to employee, or employee and spouse or dependents, or employee and spouse and dependents, but coverage is not minimum value Offer to employee who was not FT for any month and the employee enrolled in a self-insured health plan for one or more months No offer of coverage or no offer of MEC 1I Qualifying Offer Transition Relief 2015 No 4980H(a) penalty. 4980H(b) could apply if this FT employee did not receive offer. 4980H(a) or (b) penalty may apply. 15

17 Form 1095-C, Part II: Employee Offer of Coverage (Line 15) Employee Share of Lowest Cost Monthly Premium for Self-Only Minimum Value Coverage. Code needs to be entered ONLY if codes 1B, 1C, 1D, or 1E are entered in Line 14. 1B 1C 1D 1E Minimum value coverage offered to employee only Minimum value coverage offered to employee and MEC offered to dependent children, but not spouse Minimum value coverage offered to employee and MEC offered to spouse, but not dependents Minimum value coverage offered to employee and MEC offered to spouse and dependents 16

18 Form 1095-C 4980H Safe Harbor & Other Relief (Line 16) Indicator Codes 2C is a priority code use if it applies. If 2B and 2D apply, use 2D. If no Safe Harbor Indicator Code is applicable, leave blank. Section 4980H Safe Harbor Indicator Codes Use One 2A 2B 2C** 2D 2E 2F 2G 2H 2I Employee was not employed during the month Employee was not a full-time employee during the month and did not enroll. Also use if employee was a full-time employee whose offer ended before end of month because employee terminated employment but offer would have continued if employee had not terminated. Employee was enrolled in coverage offered for each day of the month Employee was in a limited non-assessment period (LNAP) during the month (use even if 2B also applies) Multiemployer interim rule relief applies (use even if 2C, 2D, 2F, 2G or 2H also apply) Form W-2 affordability safe harbor applies Federal Poverty Line affordability safe harbor applies Rate of pay affordability safe harbor applies Non-calendar year transition relief applies to the employee 17

19 Form 1095-C Section 4980H Safe Harbor & Other Relief (Line 16) Indicator Codes: Comments No 4980H(b) penalty in any month with these codes 4980H(b) penalty should not apply because coverage also provides minimum value Section 4980H Safe Harbor Indicator Codes 2A Employee was not employed during the month 2B Employee was not a full-time employee during the month and did not enroll, etc. 2C Employee was enrolled in coverage offered for each day of the month 2D Employee was in a limited non-assessment period (LNAP) during the month 2E Multiemployer interim rule relief applies 2F Form W-2 affordability safe harbor applies 2G Federal Poverty Line affordability safe harbor applies 2H Rate of pay affordability safe harbor applies 2I Non-Calendar Year transition relief applies to the employee If applicable, no 4980H(b) penalty for months before the start of the 2015 Plan Year 18

20 Limited Non-Assessment Periods (LNAP) Employees in a Limited Non-Assessment Period (LNAP): Do not count toward the 95% offer test (70% test in 2015) Are not counted as full-time employees if the employer must pay the 4980H(a) penalty Are not counted as full-time employees in the monthly count of full-time employees on the transmittal form (but are included monthly total employee count on transmittal) LNAPs include the following: 1. The calendar month during which a FT employee starts (if the start date is not the 1 st of the month) 2. The initial 3 full calendar months of employment when employer uses the monthly measurement method 3. The initial 3 full calendar months of employment for a new FT employee under the lookback measurement method 4. The initial measurement and administrative periods for new variable hour, seasonal, and part-time employees under the look-back measurement method 5. The period after a change to FT status during the initial measurement period, provided the employee is offered coverage by a certain deadline All but #1 are LNAPs only if employee is offered MEC by the 1 st day of the 1 st month following the end of the LNAP. Employer is protected from the 4980H(b) penalty during the LNAP only if the employee is offered minimum value coverage at the end of the LNAP. 19

21 Form 1095-C, Part III: Covered Individuals in Self-Insured Plan This serves as the 6055 report for an ALE regarding employees (FT or otherwise) who enroll in a self-insured health plan. Social security numbers are important to obtain! Follow the rules for reasonable efforts. Check this box if the employer provided selfinsured coverage Coverage for at least one day = coverage for the entire month for reporting purposes. (Note that for the purpose of Section 4980H penalties, coverage must be offered for the entire month.) 20

22 Form 1095-C, Part III: Insured Group Health Plan The employer leaves Part III blank. The health insurer will handle section 6055 report for employees enrolled in the plan. Do not check this box because the employee is enrolled in insured coverage 21

23 Employer Reporting and COBRA For terminating employees, do not report the offer of COBRA For active employees (offered COBRA due to reduction in hours), report as offer of coverage, whether employee elects COBRA or not See following slides for examples 22

24 Covered Employee Terminates Employment Employer offers minimum value coverage to employee, spouse and children (code 1E) Self-only premium for lowest-cost minimum value plan is $95 Employee terminates employment on June 15, but active coverage continues through June 30 Do not enter 2C in line 16 for July December even if employee elects COBRA Part II Employee Offer and Coverage Plan Start Month (Enter 2-digit number): All 12 Months Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 14 Offer of Coverage (enter required code) 15 Employee Share of Lowest Cost Monthly Premium, for Self- Only Minimum Value Coverage 1E 1E 1E 1E 1E 1E 1H 1H 1H 1H 1H 1H $ $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $ $ $ $ $ $ 16 Applicable Section 4980H Safe Harbor (enter code, if applicable) 2C 2C 2C 2C 2C 2C 2A 2A 2A 2A 2A 2A 23

25 Covered Employee with Reduction in Hours: No COBRA Election Employer offers minimum value coverage to employee, spouse and children (code 1E) Self-only premium for lowest-cost minimum value plan is $95 Employee reduces hours at end of October and loses coverage October 31; employee is not a full-time employee for November or December Employee does not elect COBRA effective November 1; self-only COBRA premium for lowest-cost minimum value plan is $500 Part II Employee Offer and Coverage Plan Start Month (Enter 2-digit number): All 12 Months Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 14 Offer of Coverage (enter required code) 15 Employee Share of Lowest Cost Monthly Premium, for Self- Only Minimum Value Coverage 1E 1E 1E 1E 1E 1E 1E 1E 1E 1E 1E 1E $ $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $ $ Applicable Section 4980H Safe Harbor (enter code, if applicable) 2C 2C 2C 2C 2C 2C 2C 2C 2C 2C 2B 2B 24

26 Covered Employee with Reduction in Hours: Elects COBRA Employer offers minimum value coverage to employee, spouse and children (code 1E) Self-only premium for lowest-cost minimum value plan is $95 Employee reduces hours at end of October and loses coverage October 31 Employee elects COBRA effective November 1; self-only COBRA premium for lowest-cost minimum value plan is $500 Part II Employee Offer and Coverage Plan Start Month (Enter 2-digit number): All 12 Months Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 14 Offer of Coverage (enter required code) 15 Employee Share of Lowest Cost Monthly Premium, for Self- Only Minimum Value Coverage 1E 1E 1E 1E 1E 1E 1E 1E 1E 1E 1E 1E $ $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $ $ Applicable Section 4980H Safe Harbor (enter code, if applicable) 2C 2C 2C 2C 2C 2C 2C 2C 2C 2C 2C 2C 25

27 Form 1094-C (Transmittal), Part I Designate who will be the person for the IRS to contact with questions Enter the total number of 1095-C reports that you submit with the transmittal 26

28 Form 1094-C (Transmittal), Part I Designated Government Entity option for certain government employers to designate another related government entity as reporting entity 27

29 Form 1094-C (Transmittal), Part II ALE = Applicable Large Employer Lines should be completed only on the Authoritative Transmittal for the employer. 28

30 Form 1094-C, Part II: ALE Member Information Enter the total number of 1095-C reports that were submitted for the year, even if filed with other 1094-C forms. 29

31 Form 1094-C, Part II: ALE Member Information Certifications of Eligibility: Employers using alternative reporting/furnishing would check A, B and/or D, as applicable For 2015, large employers will generally check box C: Section 4980H Transition Relief (at a minimum) 30

32 Form 1094-C, Part III: ALE Member Information Monthly If the information is the same for all 12 months, use first row; otherwise, enter separately for each month 31

33 Form 1094-C, Part III: ALE Member Information Monthly Was Minimum Essential Coverage (MEC) offered to at least 95% of fulltime employees and their dependents? If not, does any Transition Relief apply? Transition Relief Permitting Yes in 1094-C, Part III, column (a) 4980H(a) relief if MEC was offered to at least 70% of FT EEs and their dependents 4980H(a) relief for certain plans not offering coverage to dependents 4980H(a) relief for employers with non-calendar year plans Transition relief for January 2015 No separate codes are provided to reflect the transition relief above 32

34 Form 1094-C, Part III: ALE Member Information Monthly ALEs using the 98% Offer Method do not need to specify the number of FT employees. Enter count of ALL EMPLOYEES (not just FT); if count is the same for the entire year, enter in All 12 Months box. Count consistently on the first, 12 th, or last day of each month (or on specific dates related to payroll periods). 33

35 Form 1094-C, Part III: Aggregated Group If employer is part of an aggregated ALE group, check the box and list the other members (along with their EINs) in Part IV 34

36 Form 1094-C, Part III: ALE Member Information Monthly Depending on the indicator code used here, ALE may be eligible for Section 4980H(a) penalty transition relief. Indicator Code Who Can Use? 4980H(a) Penalty Implications A B ALEs with FT EEs (including FTEs) ALEs with 100+ FT EEs (including FTEs) No penalties for 2015 Plan Year Penalty formula relief allows reduction of first 80 FT EEs (instead of first 30 FT EEs) 35

37 Form 1094-C, Part IV: Aggregated Group If employer is part of an aggregated ALE group, list the other ALE members (along with their EINs). 36

38 Questions? 37