Employer Reporting Obligations Under ACA Diane V. Dygert James Napoli June 4, 2015
EmployerReportingObligations UnderACADiane V. Dygert
James Napoli
June 4, 2015
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Legal Disclaimer
The contents of this presentation should not be construed as legal adviceor a legal opinion on any specific facts or circumstances. These materialsare intended for general information purposes only, and you are urged toconsult a lawyer concerning your own situation and any specific legalquestions you may have.
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Background
Why? When? Who? What?
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ACA Reporting Obligations
• Why?• Mechanism to collect offer and coverage information, to enforce:
• Individual Mandate
• Employer Mandate
• Marketplace Tax Credits
• When?• 2015 – first year reporting required
• Due Date
• To individual:
• February 1, 2016
• To IRS:
• February 29, 2016 (if filing by paper)
• March 31, 2016 (if filing electronically)
ACA Reporting Obligations
• Who?
►Providers of minimum essential coverage
• Insurers and sponsors of self-funded plans (including sponsors ofmulti-employer plans)
• IRC Section 6055 (individual mandate)
►Applicable large employers (ALEs)
• Regardless of whether fully or self-insured, union or non-union
• IRC Section 6056 (employer mandate)
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ACA Reporting Obligations
• What?
►Forms 1094 and 1095 B series
• Insurance providers of minimum essential coverage
• Multi-employer plans
►Forms 1094 and 1095 C series
• ALEs
• Final forms and instructions released: February 9, 2015
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Focus Today
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The Forms
IRC Form 1094-C
Form 1094-C
• Transmittal form for each ALE member►Analogous to Form W-3
►Each ALE controlled group member files own 1094-C
►Must list other ALE members in descending order by number ofemployees
• Authoritative Transmittal►ALE members may file multiple 1094-Cs (e.g. for separate
divisions)
►However, each ALE member must designate one 1094-C as theAuthoritative Transmittal with combined information
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Form 1094-C
• Aggregates ALE member’s information as to►Who was offered coverage, and
►Who accepted the coverage
• Dual Employees--if employee worked for:►More than one ALE member during a month,
• Report employee on 1094-C of employer for whom worked most
►Different ALE members in different months
• Divide employee up by month
• Non-Employees►If coverage is offered to non-employees (e.g., directors or
retirees), ALE has an option to use the B Series to report thecoverage offered and provided to those individuals
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Form 1094-C (Parts I and II)
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Form 1094-C (Parts I and II)
• Parts I and II Information Requested:
►Employer name, TIN and contact information
►Controlled group status
►Simplified reporting methods
• Offers simplified reporting on the 1094-C or 1095-C
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Form 1094-C (Part II)
• Simplified Reporting Methods - Options include:►Qualifying Offer Method
►Qualifying Offer Method Transition Relief
►Section 4980H Transition Relief• Not yet subject to Employer Mandate
►98% Offer Method
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Form 1094-C (Part III)
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Form 1094-C (Part III)
• Part III Information Requested:
►Months for which Minimum Essential Coverage (MEC) is offered
►Number of full-time employees in each month
►Total number of employees in each month
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Form 1094-C (Part III)
• Section 4980H Transition Relief►If between 50-99 full-time equivalent employees,
• Enter A in Part III, Column (e) to indicate not subject to employermandate
►If >99 full-time equivalent employees, but non-calendar yearplan
• Enter B in Part III, Column (e) for applicable months prior to thestart of plan year
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Form 1094-C (Part III)
• 98% Offer Method
►If offer of
• Minimum value, affordable coverage (using any of the affordabilitysafe harbors)
• To 98% of employees for whom it is filing a 1095-C
• Plus, MEC to dependents
►Then
• Need not complete full-time employee count in Part III, Column (b)
• Do not need to track hours, unless want to debate a potentialpenalty for someone in the 2% later
Note: Coverage offered by a multi-employer plan, or a staffing agency, thatprovides ALE “relief” would count toward 98% threshold
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Form 1094-C (Part IV)
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Form 1094-C (Part IV)
• Controlled groups
►Each member files own 1094-C (or multiple forms)
►Must list other ALE members in descending order by number ofemployees in Part IV
►Limited to 30 controlled group members, as the reduction by 30employees for the penalty is allocated among these controlledgroup members
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The Forms
IRC Form 1095-C
Form 1095-C
• Delivered to the employee (with a copy to the IRS)►One form for each full-time employee of an ALE member
• Whether or not coverage was offered
►Plus, form for each non-full-time employee enrolled in self-funded coverage (if not using 1095-B)
• Retirees
• COBRA beneficiaries
• Non-employee directors
►Separate forms if work for different ALE members
• By month
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Form 1095-C
• Due Date:►To IRS: same as above
►To employee: January 31st (February 1, 2016 because January31st is a Sunday)
• Analogous to Form W-2
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Form 1095-C
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Form 1095-C (Part I)
• Information Requested:
►Employee name, SSN and address
►Employer name, TIN, address and telephone number
• Contact here must be someone employee can call with questions
• Could be a third party vendor
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Form 1095-C (Part II)
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Form 1095-C (Part II)
• Line 14: Offer of Coverage
►Each month displays applicable code (Series 1 codes) for typeof coverage offered
• If same code for the year, just “All 12 Months” box
►Coverage is considered offered for a month, only if offered onevery day of the month
• Includes new hires and terminated employees
►All months must be filled in, even if not a full-time employee fora given month
Note: Coverage from a multi-employer plan or staffing agency wouldreflect the code supplied by that “plan” to the ALE
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Form 1095-C (Part II)
• Line 14 Codes for types of coverage offers►1A – Qualifying Offer
►1B – MEC with MV to employee
►1C – MEC with MV to employee and MEC to dependent
►1D – MEC with MV to employee and MEC to spouse
►1E – MEC with MV to employee and MEC to spouse and dep
►1F – MEC without MV to employee, spouse and dependents
►1G – Offer to non-full-time employee
►1H – No offer of coverage to non-full-time employee
►1I – Qualifying Offer Transition Relief: No offer of coverage
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Form 1095-C Simplified Reporting
• Qualifying Offer Method►Applies employee-by-employee
►Offer of MEC with minimum value
►To one or more full-time employees for all months of the year
►Plus spouse and dependents (if any)
►At a cost not exceeding 9.5% of federal poverty line (foremployee-only coverage)
• Qualifying Offer Method Transition Relief►Applies population-wide
►If “qualifying offer” as defined above,
►To 95% of full-time employees for each month of year
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Form 1095-C Simplified Reporting
• Qualifying Offer:►Don’t report cost of coverage on line 15
►Don’t need to give 1095-C to employee if employee did notaccept coverage
• May give “simplified statement” in lieu thereof that for all 12months received a “qualifying offer” and therefore are not eligiblefor premium tax credit
►Still need to give 1095-C to IRS anyway
►If employee enrolled in self-insured coverage, simplifiedstatement is not available.
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Form 1095-C Simplified Reporting
• Qualifying Offer Transition Relief►Don’t report cost of coverage on line 15
►Don’t need to give 1095-C to employee (unless using for self-funded reporting)
• May give “simplified statement” in lieu thereof that may be eligiblefor premium tax credit for one or more months in 2015
►If employee enrolled in self-insured must give anyway
►Must give to IRS anyway
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Form 1095-C (Part II)
• Line 15: Affordability of Coverage
►Complete only if Codes 1B, 1C, 1D, or 1E are used
►Enter employee-only premium for lowest cost plan providingMEC with MV
• Each month displays applicable dollar amount
• Or, if same for the year, just in “All 12 Months” box
• Enter 0.00 if no cost for employee-only level of coverage
►Note: This may not be the amount the employee is actuallypaying for coverage under the employer’s plan
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Form 1095-C (Part II)
• Line 16: Section 4980H Safe Harbor Codes and OtherRelief
►Each month displays applicable code (Series 2 codes) for relieffrom employer mandate
• If same code for the year, just in “All 12 Months” box
• If no code applies for a month, leave blank
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Form 1095-C (Part II)
• Line 16 Codes for safe harbors and other relief►2A – Employee not employed on any day during the month
►2B – Employee not a full-time employee and did not enroll inMEC, or is a full-time employee but terminated during month
►2C – Employee enrolled in coverage offered
►2D – Employee is in a Section 4980H Limited Non-assessmentPeriod (e.g., initial measurement period)
►2E – Multiemployer plan transition relief applies
►2F – W-2 safe harbor for affordability used
►2G – Federal poverty line safe harbor for affordability used
►2H – Rate of pay safe harbor for affordability used
►2I – Non-calendar year transition relief applies
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Form 1095-C (Part III)
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Form 1095-C (Part III)
• Complete if employee enrolls in employer-sponsoredself-funded coverage►Does not include multiemployer plan coverage
• Complete for every individual who enrolled in coverage►Employee, whether or not full-time
►Spouse and dependents
►For individual mandate compliance
• Where covered participant and spouse (or otherdependent) are each employed by employer►Report only on 1095-C of the covered participant
• If reporting individual who was a non-employee all 12months (COBRA participant or director), use Code 1Gon Line 14
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Form 1095-C (Part III)
• Must solicit dependent SSN three times►Initial solicitation at the time the relationship with individual is
established.
►Second solicitation required by December 31 of the year inwhich the relationship with the individual begins (or January 31of the following year if the relationship begins in December).
►Final solicitation required by the December 31 of the followingyear.
• If unsuccessful, can use date of birth
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The Forms
Common Reporting Examples
1094-C Reporting Examples
• ABC Company►Offers MEC to its full-time employees
►Plan year starting April 1
►Subsidiaries:
• XYZ, LLC
• JKL, Inc.
• OPQ, Co.
►Employs full-time employees:
• ABC Company = 152
• XYZ, LLC = 42
• JKL, Inc. = 75
• OPQ, Co. = 310
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ABC Company
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ABC Company
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ABC Company
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1095-C Reporting Examples
• ABC Company employs (among others)
►Virginia Jones
• Employee-only through May when added new spouse, Vic
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Virginia Jones
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1095-C Reporting Examples
• ABC Company employs (among others)
►Bob Robertson
• Employee plus children, including son Tyler who is also anemployee
►Tyler Robertson
• Covered under his father, Bob’s, coverage
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Bob Robertson
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Tyler Robertson
• None,►as reported on father’s 1095-C.
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1095-C Reporting Examples
• ABC Company employs (among others)
►John Smith
• Hired full-time in February, enrolled following waiting period inMay, terminated employment mid-November and lost coveragethat month, did not elect COBRA
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John Smith
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1094-C Reporting Examples
• Widget Co►Offers MEC with MV, affordable to all of its full-time non-union
employees, plus spouses and dependents
►Offers retiree coverage to some former employees
►Treated as offering multi-employer plan to its full-time unionemployees
►Employs employees:
• Non-Union = 25 full-time; 5 part-time
• Union = 300 full-time; 75 part-time
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Widget Co
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Widget Co
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1095-C Reporting Examples
• Widget Co employs (among others):
►Alice Agnew
• Union member offered coverage under multi-employer plan
• Full-time employee as of June
• Employer makes contribution all 12 months
• Plan has represented it offers MEC with MV that is affordable(FPL safe harbor), plus MEC to spouse and dependents.
• Union confirms coverage offered from June – December but doesnot provide enrollment information
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Alice Agnew
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1095-C Reporting Examples
• Widget Co employs (among others):
►Eduardo Garcia
• Terminated in December 2014; elected COBRA coverage inFebruary 2015; paid retroactive premiums to January 2015 forcoverage, which remained in place all year
• Covered adult son, Duane
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Eduardo Garcia
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1095-C Reporting Examples
• Widget Co employs (among others):
►Penelope Pratt
• Offered and enrolls in minimum value, FPL affordable coveragefor 2015
• She terminates employment on June 15, 2015, and enrolls inCOBRA effective June 15th through the end of the year
• The COBRA premium for self-only coverage is $400/month
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Penelope Pratt
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Enforcement
Compliance Penalties
Compliance Penalties
• $100 for each return/statement►Maximum $1.5 million per year
• Waiver►Good Faith efforts for 2015 reporting
►Reasonable cause
• Increased penalties►Intentional disregard
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Questions?
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