2017 and Beyond: Strategic Planning for Affordable Care Act ... - … · What were your biggest challenges in completing the IRS reports? •Starting too late •Difficulty understanding

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2017 and Beyond: Strategic Planning for Affordable Care Act Compliance

Copyright 2016 American Fidelity Administrative Services, LLC

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Learning Objectives

• “Next level” ACA planning: discuss how to move beyond the basics of the law toward more strategic decision-making on offers of coverage, affordability calculations, contributions and plan design.

• IRS reporting retrospective: review of lessons learned from 2015 reporting. What worked, what didn’t work and best practices to take into 2016.

• Understand upcoming ACA requirements, such as Excise Tax on High Cost Plans (“Cadillac Tax”), and how your district can prepare now.

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Agenda

Review the essentials of the law• Getting beyond the basics requires understanding the fundamentals

Create YOUR Hit List: • Making offers of coverage• Assessing affordability• Setting contribution levels• Focusing on plan design• Looking toward the future

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What are YOUR biggest challenges?

Labor and employee relations issues

Budgetary and cost constraints

Understaffing

Technological challenges

Need for interdepartmental collaboration

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IRS Reporting – Forms 1094 and 1095

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•Reporting is for entire calendar year, regardless of plan year

•Due to covered individuals by March 2nd 2017

•Due to the IRS by February 29th, if filed on paper, or March 31stif filed electronically

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• Paper filing allowed for fewer than 250 returns• Returns = each individual employee statement (Form 1095-C) plus cover sheet ( Form 1094-C)

• Over 250 returns requires electronic filing via IRS’ Affordable Care Act Information Returns (AIR) Program

• Electronic filing process highly complex• Required to obtain transmitter code, register at least two contacts with the IRS, and complete

data testing process

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What were your biggest challenges in completing the IRS reports?

• Starting too late

• Difficulty understanding IRS codes

• Challenges collecting data

• Lack of resources/support

• Complexity of IRS’ AIR system

• All of the above?

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Information needed on month by month basis to code Form 1095-C

1. Was the employee full-time, part-time, variable hour or seasonal?

2. Was coverage offered?

3. Did the employee enroll in the coverage offered?

4. Did the coverage offered meet the minimum value standard?

5. What tier of coverage (family, employee only, employee+spouse, etc.) was offered?

6. How much did the coverage cost?

7. Was the employee in a waiting or initial measurement period?

8. Dependent enrollment (if self-funded)?

9. Dependent names and SSNs (if self-funded)?

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“Sticky” 1095-C coding issues

• Full-time new hire vs. ongoing employee• Measure monthly until complete standard measurement period

• COBRA• Initial rule, interim rule, later rules

• Retirees

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Information needed on month by month basis to code Form 1094-C

1. Are you reporting via a designated governmental entity (DGE)?

2. Are you part of an aggregated group?

3. How many full-time employees each calendar month?

4. How many total employees each calendar month?

5. Did you hit the 95% each calendar month?

6. Did you make a qualifying offer to any employee for any month?

7. Are you using a simplified reporting method?

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Lifecycle – Employer Penalty Assessment

1. FTE not offered coverage

2. Applies for Public

Exchange coverage

3. Awarded Advance Premium

Tax Credit

4. Subsidy notice to employer

5. Employer responds to

subsidy notice

6. 1094-C reports “no” in column A, part

III

7. IRS penalty assessment

8. Opportunity to appeal

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Section 6055/56 Reporting

• Purpose: to enforce employer and individual mandates and premium tax subsidies

• 4 forms:

• 2 forms to provide to employees (1095-B & C)

• 2 transmittal forms to submit to the IRS with copies of the employee forms (1094-B & C)

• Due dates for 2016 calendar year data

• Due to employees by February 2, 2017

• Due to the IRS by February 28, 2017 (or March 31 if filing electronically)

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Who Files What?

• Section 6055 (B forms):

• Apply to every entity providing Minimum Essential Coverage

• Filed by insurers for fully-insured plans, employers for self-funded plans

• Section 6056 (C forms):

• Apply to Applicable Large Employers (50+ full-time equivalent employees)

• Filed by the employer; the B and C information may be combined on the C forms for self-funded plans

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Indicator Codes for Employee Offer and Coverage (Form 1095-C, Line 14)

• 1A. Qualifying Offer: Minimum essential coverage providing minimum value offered to full-time employee with employee contribution for self-only coverage equal to or less than 9.5% mainland single federal poverty line and at least minimum essential coverage offered to spouse and dependent(s).

• 1B. Minimum essential coverage providing minimum value offered to employee only.

• 1C. Minimum essential coverage providing minimum value offered to employee and at least minimum essential coverage offered to dependent(s) (not spouse).

• 1D. Minimum essential coverage providing minimum value offered to employee and at least minimum essential coverage offered to spouse (not dependent(s)).

• 1E. Minimum essential coverage providing minimum value offered to employee and at least minimum essential coverage offered to dependent(s) and spouse.

• 1F. Minimum essential coverage NOT providing minimum value offered to employee; employee and spouse or dependent(s); or employee, spouse and dependents.

• 1G. Offer of coverage to employee who was not a full-time employee for any month of the calendar year (which may include one or more months in which the individual was not an employee) and who enrolled in self-insured coverage for one or more months of the calendar year.

• 1H. No offer of coverage (employee not offered any health coverage or employee offered coverage that is not minimum

• 1I. Qualifying Offer Transition Relief 2015: Employee (and spouse or dependents) received no offer of coverage; received an offer that is not a qualifying offer; or received a qualifying offer for less than 12 month

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Specific Instructions for Form 1095-C Line 14

• An employer offers health coverage for a month only if it offers health coverage that would provide coverage for every day of that calendar month.

• Thus, if an employee terminates coverage before the last day of the month, the employee does not actually have an offer of coverage for that month. See line 16, code 2B later for how the employer may complete line 16 in the event an employee terminates coverage before the last day of the month.

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Specific Instructions for Form 1095-C Line 14

• A code must be entered for each calendar month January through December, even if the employee was not a full-time employee for one or more of the calendar months.

• Enter the code identifying the type of health coverage actually offered by the employer (or on behalf of the employer) to the employee, if any.

• Do not enter a code for any other type of health coverage the employer is treated as having offered (but the employee was not actually offered coverage). For example, do not enter a code for health coverage the employer is treated as having offered (but did not actually offer) under the dependent coverage transition relief, or non-calendar year transition relief, even if the employee is included in the count of full-time employees offered minimum essential coverage for purposes of Form 1094-C, Part III, column (a). If the employee was not actually offered coverage, enter Code 1H (no offer of coverage) on line 14.

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• Complete line 15 only if code 1B, 1C, 1D, or 1E is entered on line 14 either in the “All 12 Months” box or in any of the monthly boxes.

• Enter the amount of the employee share of the lowest-cost monthly premium for self-only minimum essential coverage providing minimum value that is offered to the employee.

• Enter the amount including any cents. For purposes of determining the monthly employee contribution, an employer may divide the total employee share of the premium for the plan year by the number of months in the plan year to determine the monthly employee contribution for the plan year.

• This monthly employee contribution would then be reported for any months of that plan year that fall in the 2015 calendar year. For example, if the plan year begins January 1, the employer may determine the amount to report for each month by taking the total annual employee contribution for all 12 months and dividing by 12.

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• If the plan year begins April 1, the employer may determine the amount to report for January through March, 2015 by taking the total annual employee contribution for the plan year ending March 31, 2015, and dividing by 12, and may determine the amount to report for April through December, 2015 by taking the total annual employee contribution for the plan year ending March 31, 2016, and dividing by 12.

• If the employee is offered coverage but is not required to contribute any amount towards the premium, enter “0.00” (do not leave blank).

• If the employee share of the lowest-cost monthly premium amount was the same amount for all 12 calendar months, enter that monthly amount in each monthly box or enter that monthly amount in the “All 12 Months” box and do not complete the monthly boxes.

• If the employee share of the lowest-cost monthly amount was not the same for all 12 months, enter the amount in each calendar month for which the employee was offered minimum value coverage.

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Line 16.

• For each calendar month, enter the applicable code, if any, from Code Series 2.

• You may enter only one code from Code Series 2 per calendar month. The instructions below address which code to use for a month if more than one code from Series 2 could apply.

• If the same code applies for all 12 calendar months, enter the applicable code in each monthly box or enter the code in the “All 12 Months” box.

• If none of the codes apply for a calendar month, leave the line blank for that month.

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Need Assistance with the ACA Employer Reporting?

• The Patient Protection and Affordable Care Act (ACA) requires large employers and employers that sponsor self-funded medical plans to report extensive and detailed data for the calendar year that began January 1, 2016. A large employer for this purpose must have 50 or more full time equivalent employees across the control group.

• If you have not already done so, now is the time to make a plan for how to complete the IRS Forms 1094/1095 that must be distributed to employees by January 31st each year, but due to IRS extension due March 2, 2017 for 2016 information.

• Customers who signed up for our AFcomply reporting service do not need to participate in this webinar. The webinar would be helpful for customers who use the AFcomply tracking, but not reporting, service.

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Webinar Explaining How to Complete the Forms

• If you have not yet secured a resource to complete the forms on your behalf, it may be too late to do so for this year. The good news is that it is possible to manually complete the forms. General information about the employer reporting obligation is available on our website HCReducation.com.

• In addition, you may join American Fidelity Administrative Services (AFAS) for a webinar that will provide line by line instructions on how to complete the forms, and give you an opportunity to ask questions. We will offer this webinar on the following dates:

http://www.hcreducation.com/?utm_campaign=WGM-email&utm_medium=email&utm_source=HCR-Webinar-Email&utm_content=main&utm_term=website-link

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• December 14, 2016

• Noon-2 p.m., CST

• January 5, 2017


• January 17, 2017


• February 2, 2017


• The registration fee is $100. Space is limited so register early.

• Looking for an Easier Long-Term Solution?

• AFAS offers a service to help customers with their ACA reporting obligation. Unfortunately the deadline has already passed to sign up for assistance completing the reports due in early 2017. However, if you sign up for the service for next year, we will provide a $100 credit for any customers who participate in the webinar.

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• About the presenter: Jessica Frier, J.D. is a Senior Health and Welfare Plan Consultant for AFAS. She is a member of the AFAS team who has helped hundreds of clients prepare to comply with the 1094/1095 reporting requirements. Previously, Jessica was a labor and employment attorney with the law firm of Liebert Cassidy Whitmore in Los Angeles, California where her practice focused on education and public sector clients. Jessica has extensive experience advising clients on the ACA, as well as other employee benefits issues. Her goal is to help employers adjust to the ever-changing landscape of health care reform and make informed decisions as they seek to comply with the law. She is a graduate of Pepperdine University School of Law, and is a member of the California bar.

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What if we missed the IRS deadline?

• Distribute Form 1095-C employee statements as quickly as possible and file Form 1094-C with the IRS

• Penalties reflect timing of employer efforts to meet deadlines

• If within 30 days of due date, penalty is $50 per statement

• If by August 1, 2016, penalty is $100 per statement

• Max penalty is $250 per return, and can be assessed twice – for failure to issue statements to individuals and AGAIN for failure to file copies of statement with the IRS – penalties are capped at a maximum of $3,000,000

• Intentional disregard of the filing requirement is $500 per return with no cap

• Penalties may be abated for reasonable cause

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What is “reasonable cause?”

Reasonable Cause Waiver

• No penalty for a failure due to reasonable cause and not willful neglect

• Filers must show they acted responsibly both before and after the failure

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• Considerations for “reasonable cause” per IRS Notice 2016-4 include whether:

• Employer furnished and filed forms

• Employer made reasonable efforts to prepare

• Examples:

• Gathering and transmitting the necessary data to a third party service provider to prepare the data for IRS filing

• Taking steps to ensure compliance with 2016 reporting requirements

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• Electronic filing process highly complex• Required to obtain transmitter code, register at least two contacts with the IRS, and complete

data testing process

• For 2015, electronic filers given extra latitude

• IRS announcement on June 29, 2016:• Employers that miss the June 30, 2016, due date will not generally be assessed late filing

penalties under Section 6721 if the reporting entity has made legitimate efforts to register with the AIR system and to file its information returns, and it continues to make such efforts and completes the process as soon as possible

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We filed on time with the IRS, so now what?

• Information returns must be filed timely and accurately or penalties may apply

• No penalties for incorrect or incomplete information where good faith efforts to comply were made

• Error correction is part of the good faith effort to file accurate and complete information returns

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What qualifies as “good faith”?

• No penalties for 2015 if an employer did not file or furnish accurate returns but can show a good faith effort to comply with the requirements

• NOT GOOD FAITH:• Examples from IRS:

• Late filings

• If a filer transmits a batch of returns with no health coverage information but just names and addresses, then the good faith relief would not be available for the failure to file accurate and complete returns.

• A “reasonable cause” waiver may still be available to this employer depending on the circumstances

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We filed on time with the IRS, so now what?

• Both paper and electronic filers might find that corrections are necessary

• Errors discovered in a number of ways:• Employers may receive error messages from the IRS during the electronic submission process

• Employers may determine that information previously submitted was incorrect

• The covered individual or employee may report an error to you

• Corrections should be filed as soon as possible

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Subsidy Notices and Employer Appeals

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Background

• Penalty trigger under ACA = a full-time employee qualifies for and received financial assistance (a subsidy) to purchase Exchange (Marketplace) coverage

• ACA subsidies also referred to as “Advance Premium Tax Credit”

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How will we know if an employee receives an ACA subsidy?

• In 2016, employers will receive a notice from the Federal Marketplace if:• An employee received an advance premium tax credit for at least one month in 2016 and

• The federally facilitated marketplace has a complete address for the employer

• A copy of the sample subsidy notice is available here: https://www.cms.gov/CCIIO/Programs-and-Initiatives/Employer-Initiatives/Downloads/Final-Notice-for-Posting-05_10_2016.pdf

• State-based Marketplace procedures may vary by state

https://www.cms.gov/CCIIO/Programs-and-Initiatives/Employer-Initiatives/Downloads/Final-Notice-for-Posting-05_10_2016.pdf

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Background

• States using healthcare.gov (Federal Marketplace) to offer coverage automatically use Department of Health and Human Services (HHS) subsidy notification and appeals process

• State Marketplaces opting in to federally facilitated appeals process include:• California, Maryland, Colorado, Massachusetts, District of Columbia, New York, Kentucky, and

Vermont have announced that they will utilize the federal appeals process.

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Sample Subsidy Notice

Available at https://www.cms.gov/CCIIO/Programs-and-

Initiatives/Employer-Initiatives/Downloads/Final-Notice-for-

Posting-05_10_2016.pdf

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Sample Subsidy Notice

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How should employers respond to a subsidy notice?

Answer: It depends!

• If the notice is accurate, there is no need to take any action

• If the notice is inaccurate, consider a response• Employers that get a notice from the Marketplace can file an appeal if they believe they offered

coverage to an employee that both:

• Is affordable and

• Meets minimum value standards

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What will happen if we don’t appeal?

• The subsidy notice is not a penalty notice

• The Marketplace may still request corroboration from the employee, but will likely proceed under the assumption that the information reported is correct

• The IRS will independently determine any liability for the Employer Mandate Penalty

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What will happen if we do appeal?

• HHS will determine whether employee was offered affordable health coverage that met the minimum value standard

• Appeal will NOT determine whether you owe an Employer Mandate Penalty to the IRS

• Successful appeal may avoid notification to the IRS of a potential Employer Mandate Penalty

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How long do employers have to appeal a subsidy notice?

• Employers have 90 days from the date of the notice to request an appeal.

• More details about the employer appeal process and a download of the employer appeal request form is available at https://www.healthcare.gov/marketplace-appeals/employer-appeals/.

https://www.healthcare.gov/marketplace-appeals/employer-appeals/

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How does an employer file an appeal?

• Two methods:

1. Fill out the Employer Appeal Request Form available at https://www.healthcare.gov/downloads/marketplace-employer-appeal-form.pdf

https://www.healthcare.gov/downloads/marketplace-employer-appeal-form.pdf

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How does an employer file an appeal?

• Two methods:

2. Submit a letter to the Department of Health and Human Services detailing:• Business name

• Employer ID Number (EIN)

• Employer’s primary contact name, phone number and address

• The reason for the appeal

• Information from the Marketplace notice received, including date and employee information

• Mail your appeal request form or letter and a copy of the Marketplace notice to this address:

• Department of Health and Human Services Health Insurance Marketplace 465 Industrial Blvd. London, KY 40750-0061

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After an appeal is filed …

• Employer will receive • a confirmation letter

• description of appeals process and

• instructions for submitting further information if required.

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After an appeal is filed …

• Employee will receive • a notice explaining the appeals process,

• rights as an employee,

• instructions for how to submit documents for consideration in the appeal

• How the appeal may affect eligibility for advance payments of the premium tax credit and cost-sharing reductions (if applicable) for the coverage year.

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Questions?

• Learn more at:• HCReducation.com

• AmericanFidelityConsulting.com

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Thank you!

American Fidelity Administrative Services

2017 and Beyond: Strategic Planning for Affordable Care Act ... - … · What were your biggest challenges in completing the IRS reports? •Starting too late •Difficulty understanding

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