Q&A on ACA Tracking and Reporting 12/29/2015

Transcription

1 Q&A on ACA Tracking and Reporting 12/29/2015

2 The IRS news we were waiting for 2

3 New ACA reporting deadlines March 31, 2016 Employees must have 1095-Cs May 31, 2016 Paper copies, with 1094-C transmittal, must be mailed to the IRS June 30, 2016 Electronic copies, with 1094-C transmittal, must be filed with the IRS Integrity Data All rights reserved

4 For Tax Year 2015, the percentage that employers should use to test affordability of their health plans Integrity Data All rights reserved

5 Fire away! What ACA reporting questions do you and your team members have? 5

6 Pages to bookmark 6

7 IRS answers to ACA questions Information Reporting by Employers on Form 1094-C and Form 1095-C Information Reporting of Offers of Health Insurance Coverage by Employers (Section 6056) Information Reporting by Health Coverage Providers (Section 6055) Employer Shared Responsibility Employer Health Care Arrangements Links from the Integrity Data site to ACA guidance from the IRS: ACA resources on the IRS website IRS tax tips to receive by IRS handles to follow on social media Employer Shared Responsibility Provision Information Reporting Requirements for ALEs Additional Information Reporting Requirements for Providers (Self-Insured ALEs) 7

8 Affordable Care Act reporting FAQs on Integrity Data s site: Go to Then click on ACA Reporting Requirements or ACA Compliance Solution 8

9 Find slide decks and recordings from past ACA User Group lessons on this page: 9

10 Questions frequently asked of us 10

11 How do you code employees whose benefits are extended through COBRA? From the employee standpoint on termination, nothing changes. You update their employee record as being terminated and the date they were terminated. Further tracking has to do with whether you had offered self-insured coverage. If the employer offers self-insured coverage, you will continue to have them as a record on the ACA Dependent Benefit Maintenance. The end date of coverage dictates when Part III of the 1095-C will have a checkbox on the month of coverage. In this case, Part II will show a terminated employee who had no hours associated with some months while Part III will have checkboxes selected for those months. 11

12 How should an employee be coded if they were offered coverage but refused it? There is no specific code for waivers. Records for an employee who refuses coverage would be handled the same as for anyone else: No additional coding needs to be done. We do have the ability to track waivers but this is optional, not required. 12

13 Our health insurance plan provides that full-time employees will be eligible for coverage on the first day of the next month after their start date. What s the difference between this waiting period and the ACA s non-assessment period? The non-assessment period refers to a limited period during which an employer will not be subject to an assessable payment under IRC Section 4980H(a)(b). This relief is automatic and applies: For the three full calendar month period beginning with the first full calendar month in which an employee is first otherwise eligible for an offer of coverage under the monthly measurement method; During the initial three full calendar months of employment for an employee reasonably expected to be a fulltime employee at the start date, under the look-back measurement method; During the initial measurement period for a new variable-hour employee, seasonal employee or part-time employee determined to be employed on average at least 30 hours of service per week, under the look-back measurement method. 13

14 We are self-insured and noticed that, in keeping information about dependents, you specifically designate whether the dependent being covered is a spouse. Why is that detail important? The final regulations define dependent to mean a child of an employee (excluding a stepson, stepdaughter or an eligible foster child) who has not attained age 26. For this purpose, a dependent does not include the spouse of an employee. There is no penalty for not offering coverage to a spouse. 14

15 Is dependent data required for all employees, or just eligible / enrolled employees? Dependent data is required only from employers with self-insured plans: If you are not self-insured, you do not need to collect data for dependents. If you are self-insured, then you must track dependent information on those dependents who are covered. 15

16 On IRS Form 1095-C, there is a section for dependent information (Part III). Do we need to track dependent information when the employee elects spouse and dependent coverage? You will complete this section ONLY if your company s policy is self-insured. If it is not, you do not need to put anything in Part III of Form 1095-C. Part III was added in order to track dependent coverage for self-insured plans so that an employer would not also have to produce and file IRS Forms 1094-B and 1095-B. The instructions for IRS Form 1095-C are specific: Complete Part III ONLY if the employer offers employer-sponsored self-insured health coverage in which the employee enrolled 16

17 We are a college that pays some professors based on the credit hours they teach. How do we account for these professors time in order to assure we accurately track their hours of service? Until further guidance is issued with respect to such employees, you re required to use what s called a reasonable method for crediting their hours of service. Here s the method deemed reasonable by the Treasury Department and the IRS for quantifying these hours. Credit an adjunct faculty member of an institution of higher education with: a) 2.25 hours of service (representing a combination of teaching or classroom time and time performing related tasks such as class preparation and grading of examinations or papers) per week, for each hour of teaching or classroom time and, separately; b) an hour of service per week for each additional hour outside of the classroom that the faculty member spends performing duties which he or she is required to perform (such as required office hours or required attendance at faculty meetings). 17

18 We were told that, in order to make sure we don t get a penalty for not providing affordable coverage, we should use our lowest paid hourly workers hourly rate of the state unemployment rate as the basis. Is this correct? All three safe harbors represent the maximum an employee can be expected to contribute for self-only coverage. Using the lowest paid hourly workers' rate, or the state unemployment rate, in the Rate of Pay safe harbor calculation will keep coverage within the affordability criteria of the ACA. The theory here is that no one would be paid under those rates, so you would have a shield from a penalty assessment. The Rate of Pay safe harbor is actually tied to an individual employee's hourly or salary wages. It is equal to 130 hours multiplied by the lower of the employee's hourly rate of pay as of the first day of the coverage period (generally the first day of the plan year) or the employee's lowest hourly rate of pay during the calendar month. 18

19 If a student is participating in a work-study program, do you count those hours toward their hours of service? The final regulations provide that hours of service do not include hours of service performed by students in positions subsidized through the federal work study program or a similar state or local program. However, the final regulations do not include a general exception for student employees: All hours of service for which a student employee of an educational organization (or of an outside employer) is paid or entitled to payment in a capacity other than through the federal work study program (or comparable state or local program) are required to be counted as hours of service. 19

20 We re worried that, if we determine eligibility through a look-back measurement period, we may be stuck with having to offer some employees coverage in their stability period when their hours drop below 30 a week. Should we still use the look-back measurement method? Or should we turn to the monthly measurement method for determining who s full-time? Don t sweat stability periods. What they really represent is a catch-up period, had an employer used the monthly measurement method. If you took this same employee and were under a monthly measurement method they would have been eligible for coverage from the first month their hours of service were at least 130 hours. Because they were eligible based on the look-back method, it s reasonable to assume that they would have been deemed fulltime from the beginning and, therefore, would have been offered coverage. The stability period is a deferral of the employee's eligibility for employer-sponsored health coverage. 20

21 We pay our salespeople on a commission-only basis. Do we still have to track their hours? You have to track their hours and you are required to use a reasonable method of crediting hours of service that is consistent with IRC Section 4980H. You also have to also take into account travel time for a salesperson compensated on a commission basis. 21

22 When can we change our look-back measurement periods? The IRS provided some flexibility in determining first-time eligibility starting in CY2015, knowing that employers would potentially change their look-back periods. Look-back measurement can be changed as long as the employer maintains the stability periods of the individual employees, whether that was determined from a standard or initial measurement period test. Employers have to be careful not to fall into a coverage gap. An example would be an employer going from a 6-month to a 12-month measurement period. If an employer had a 6- month measurement period and then switched to a 12-month period that started immediately after the initial 6-month period, there would be a 6-month period where employees in their stability period would continue to be offered coverage until the next test. The initial measurement period testing months that were in effect when the employee was hired must be used in determining their initial eligibility status. 22

23 Questions asked of the IRS 23

24 What happens if the employee waives the insurance offered by the employer? Section 4980H of the Internal Revenue Code Employer Shared Responsibility Provisions of the Affordable Care Act Section 6056 of the Internal Revenue Code Information Reporting Provisions of the Affordable Care Act IRS Form 1095-C Employee s Statement of Offer of Coverage IRS Form 1094-C Transmittal of Employer- Provider Health Insurance Offerage and Coverage Information Returns For purposes of 4980H and the reporting requirements here, whether they waive the insurance or whether they accept an offer made by the employer doesn't affect the employer shared responsibility payment. The key is that the employer offers the insurance. That's what 4980H is looking at. And that s what s reported on the 1094 and 1095-C. So the offer is the important part. Whether or not the employee is accepts the coverage or whether they accept it and then waive it doesn't impact the 4980H and the Section 6056 reporting requirements. Tim Berger Tax Law Specialist, Internal Revenue Service Exempt Organizations Office, Tax Exempt and Government Entities Division Washington, DC *In a group call on Friday, May 15,

25 When an employer counts employees to determine ALE status, how do you handle seasonal workers? The employer must look at all employees when counting heads for ALE status. However, the regulations provide an exception for seasonal workers employees who perform labor or services on a seasonal basis as defined by the Secretary of Labor, including retail workers employed exclusively during holiday seasons. If the employer had more than 50 full-time and full-time equivalent employees for 120 days or less, and the excess over 50 were seasonal workers, the seasonal workers can be excluded from the count and, as a result, the employer will not be an applicable large employer. Now this exception sounds a bit complicated, but the regulations include examples for counting seasonal workers, and here's another important rule to note: Under a longstanding provision that also applies for other tax and employee benefit purposes, companies with a common owner or that are otherwise related generally are combined and treated as a single employer for determining ALE status. (These rules are found in Section 414(b), (c), (n), and (o) of the Internal Revenue Code; they're called the 414 or Controlled Group Rules.) If the combined number of fulltime and full-time equivalent employees for the group is large enough to meet the ALE definition, then each company in the group called an applicable large employer member is considered to be an ALE, even if it separately would not be. Tim Berger Tax Law Specialist, Internal Revenue Service Exempt Organizations Office, Tax Exempt and Government Entities Division Washington, DC *In a group call on Friday, May 15,

26 Do the employer shared responsibility provisions apply to government entities or groups such as the Indian Tribal Governments? The employer shared responsibility provisions apply to government entities, including Indian Tribal Governments. There is no exclusion from the employer shared responsibility provisions for government entities. All employers that are applicable large employers are subject to those provisions, and that would include federal, state, local and Indian Tribal Government employers. Tim Berger Tax Law Specialist, Internal Revenue Service Exempt Organizations Office, Tax Exempt and Government Entities Division Washington, DC *In a group call on Friday, May 15,

27 If employer shared responsibility provisions do apply to Indian Tribal Governments, would the employer have to ever offer coverage when they may know that their employees have exemption status? Employer shared responsibility provisions apply to employers that are ALEs, even if employees are exempt from the individual shared responsibility provision which would include members of a federally recognized Indian tribe. For purposes of determining whether the employer is an applicable large employer, all employees are counted, subject to the seasonal work exception we talked about, and that's regardless of whether they are exempt from the individual shared responsibility provision. So all applicable large employers with fulltime employees who are exempt from the individual shared responsibility provision will be subject to the employer shared responsibility provisions if they are an ALE. Employees who are exempt from the individual shared responsibility provision may be eligible for a premium tax credit. And if no full-time employees receive the premium tax credit, the employer won't be subject to the employer shared responsibility payment. However, if an applicable large employer does not offer coverage to its full-time employees and their dependents, and a full-time employee receives the premium tax credit, they will be liable for the employer shared responsibility payment categorically based on the number of full-time employees. So the bottom line is the employer shared responsibility provisions still apply regardless of whether an employee may be exempt from the individual shared responsibility provision. Tim Berger Tax Law Specialist, Internal Revenue Service Exempt Organizations Office, Tax Exempt and Government Entities Division Washington, DC

28 Going forward 28

29 Must-read blog posts: 1095-C reporting: How to use affordability safe harbors IRS reporting FAQ: Which ACA eligibility measurement method should an employer use? clarity: Dependents SSNs are required from selfinsured employers Recommended way to get Support questions answered: So that we can track your concern and see that everyone who must weigh in on the answer does so,

30 E-filing is encouraged by the IRS, but uncertainty remains about the testing required for individual companies submissions. To get started on obtaining a Transmitter Control Code (TCC) for the AIR system, visit Returns/Affordable-Care-Act-Information-Returns-AIR-Program-Did-You- Know%3F Added guidance from Integrity Data on obtaining a TCC specific to the AIR system:

31 Upcoming lessons for our ACA User Group Wednesday, January 6, 2016 Q&A for Self-Insured Employers Tuesday, January 12, 2016 ACA Month-End Close Thursday, January 21, 2016 ACA Year-End Close Monday, January 25, 2016 ACA Year-End Close 2:30 p.m. Eastern 1:30 p.m. Central 12:30 p.m. Mountain 11:30 a.m. Pacific 9:30 a.m. Alaskan 8:30 a.m. Hawaiian-Aleutian

32 Thank you for joining us For clarifications on details presented and to suggest topics for future webinars: Helen Karakoudas Ernie Redfern To add team members to our webinar notification list: Lindy Belley

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