2016 ACA Reporting: A Closer Look at the Final Forms and Instructions

Transcription

1 2016 ACA Reporting: A Closer Look at the Final Forms and Instructions PRESENTED BY MATT STILES & MATTHEW CANNOVA MAYNARD COOPER & GALE, P.C. October 18, 2016 Copyright 2016 Maynard Cooper & Gale PC. All rights reserved. Reproduction or use of these materials, including for inhouse training, without authorization of the authors is prohibited.

2 Agenda Wrapping Up 2015 Reporting 2016 ACA Reporting Rules for Affordability Rules for Missing Social Security Numbers Lessons Learned & Avoiding Common Mistakes

3 ACA Reporting & Health Care Reform You Are Here.

4 ACA REPORTING UNDER CODE 6055 AND 6056 Reporting Entity The Forms Providers of Minimum Essential Coverage (Issuer or Employer with Self- Funded Plan) The B Forms (1094-B & 1095-B) Applicable Large Employers & Applicable Large Employer Members The C Forms (1094-C & 1095-C) Purpose Individual Mandate & Subsidies Employer Mandate (+ Individual Mandate & Subsidies)

5 2015 ACA Reporting Good Faith Standard Delinquent filings reasonable cause and not willful neglect Conversations with IRS representative indicate leniency File and/or correct ASAP

6 2016 ACA Reporting Reporting required for employers who are ALEs for ALE status based on the number of full-time employees (including FTEs) during the 2015 calendar year Reporting Penalties generally = $260 per return to IRS and $260 per Employee Statement (1095-C) Separate Maximum Penalty Caps of $3,193,000 No more good faith standard Penalties may be waived if employer shows the failure was due to reasonable cause and not willful neglect

7 2017 Deadlines for 2016 Reports To IRS Paper Filers To Employees February 28, 2017 Electronic Filers January 31, 2017 March 31, 2017 * Automatic 30-Day extension available

8 Changes for 2016 ACA Reporting Part II, Line 22: C (Transmittal) Changes Box B has changed to Reserved. In the 2015 form, Box B was for Qualifying Offer Method Transition Relief which no longer applies in Part III, Column (b): The IRS added Section 4980H to the column header before the words Full-Time Employee Count for ALE Member. The instructions clarify that the definition of full-time for this column should be based on the ACA's definition of full-time employee. No other definition of full-time can be used in this column.

9 Changes for 2016 ACA Reporting C Changes Part II Plan Start Month (enter 2-digit number) Will still be optional for Indications are that it will be mandatory for Line 14: Code 1I, Qualifying Offer Transition Relief 2015 no longer applies, so this code has been changed to Reserved. Line 16 Code 2I, Non-calendar Year Transition Relief, no longer applies in 2016, so this code has been changed to Reserved.

10 Changes for 2016 ACA Reporting C Changes Part II Line 14 Two New Codes: 1J and 1K 1J. Minimum essential coverage providing minimum value offered to employee and at least minimum essential coverage conditionally offered to spouse; minimum essential coverage not offered to dependent(s). (See Conditional offer of spousal coverage, above, for an additional description of conditional offers.) 1K. Minimum essential coverage providing minimum value offered to employee; at least minimum essential coverage offered to dependents; and at least minimum essential coverage conditionally offered to spouse. (See Conditional offer of spousal coverage, above, for an additional description of conditional offers.) Conditional Offers of Coverage A conditional offer is an offer of coverage that is subject to one or more reasonable, objective conditions Report a conditional offer as an offer of coverage, regardless of whether the person meets the reasonable, objective condition.

11 Changes for 2016 ACA Reporting C Changes Part II Line 16 Codes A Different Perspective The instructions break the possible codes into five categories: The employee was not employed or was not a full-time employee (codes 2A and 2B); The employee enrolled in MEC (code 2C); The employee was in a limited non-assessment period with respect to section 4980H(b) (code 2D); The employer met one of the affordability safe harbors with respect to the employee (2F, 2G, 2H); or The employer was eligible for multiemployer interim rule relief for this employee (2E)

12 Changes for 2016 ACA Reporting ALE Group Reporting Clarifications by IRS ALE Members Each employer with its own EIN should file a 1094-C form marked as the Authoritative Transmittal Divisions of an ALE Member Where an ALE Member has divisions (i.e., separate divisions all have the same EIN), each division MAY (but is not required to) file separate 1094-Cs Only ONE 1094-C should be marked as the Authoritative Transmittal and will include aggregate data for the ALE Member Non-Authoritative Transmittal 1094-Cs need not complete past Line 19

13 Changes for 2016 ACA Reporting Clarifications by IRS Line 15 New definition for Employee Required Contribution Includes reference to guidance regarding effects of wellness program incentives and opt-out payments Wellness Program Incentives Assume all employees FAIL wellness standard Except for tobacco cessation wellness programs assume all employees PASS

14 Changes for 2016 ACA Reporting Eligible Opt-Out Arrangements Generally must include value of opt-out incentives in the employee s required contribution Exception for Eligible Opt-Out Arrangements The proposed regulations define an eligible opt-out arrangement as an arrangement under which the employee's right to receive the optout payment is conditioned upon (1) the employee declining to enroll in the employersponsored coverage and (2) the employee providing reasonable evidence that the employee and all other individuals for whom the employee reasonably expects to claim a personal exemption deduction for the taxable year or years that begin or end in or with the employer's plan year to which the opt-out arrangement applies (employee's expected tax family) have or will have minimum essential coverage (other than coverage in the individual market, whether or not obtained through the Exchange) during the period of coverage to which the opt-out arrangement applies

15 Changes for 2016 ACA Reporting Clarifications by IRS Multiemployer Relief (Line 16, Code 2E) Instructions indicate that the relief for multiemployer plans is extended for 2016 Other 2015 Transition Relief is no longer available in 2016 Exception: Transition Relief and 100 or more Transition Relief (1094-C, Line 22, Box C) is applicable only if the ALE Member has a non-calendar year plan with plan year beginning in 2015 that continues into The transition relief is only available for those remaining months in the 2015 plan year that occur in 2016

16 Affordability Safe Harbors W-2 Safe Harbor Rate of Pay Safe Harbor Federal Poverty Level Safe Harbor

17 Safe Harbor W-2 Safe Harbor Rate of Pay Safe Harbor Federal Poverty Level Safe Harbor Description Affordability Safe Harbors Employee s share of lowest-cost self-only coverage (providing minimum value) may not exceed 9.66% of employee s Box 1 W-2 Income. If an ALE Member uses this safe harbor for an employee, it must be used for all months of the calendar year for which the employee is offered health coverage. Employee s share of lowest-cost self-only coverage (providing minimum value) may not exceed 9.66% of an amount equal to 130 hours x employee s rate of pay (or salaried employee s monthly salary). Rate of pay must be 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 Not available for salaried employees if the monthly salary is reduced during plan year, including due to a reduction in work hours Employee s share of lowest-cost self-only coverage (providing minimum value) may not exceed 9.66% of FPL for a single individual ($11,880 in 2016 (approximately $ per month), so monthly premium may not exceed $95.63 per month)

18 Rules for Missing Social Security Numbers Error Code AIRTN500 TIN Validation Error Correction required? Reporting entity must act in a responsible manner to obtain TINs (more important for self-funded plans) Solicitation process: (1) an initial solicitation when an account is opened or a relationship is established, (2) a first annual solicitation by December 31 of the year the account is opened (or January 31 of the following year if the account is opened in December), and (3) a second annual solicitation by December 31 of the year following the year in which the account is opened.

19 Code Combinations Lessons Learned ACA returns with incorrect code combinations increase the possibility that the employer will be subject to an IRS audit because the IRS will be unable to properly process the returns Line 15 Should only be completed if 1B, 1C, 1D, 1E, 1J, or 1K is entered on Line 14 Do NOT complete Line 15 if Line 14 Code is 1A, 1F, 1G, or 1H Watch out for strings attached to Affordability Safe Harbors GET STARTED ASAP!! Contact software vendor Register for TCC Compile data Check your Affordability Safe Harbors Establish ACAMeasurement Period (and policy)

20 2016 ACA Reporting: A Closer Look at the Final Forms and Instructions Matt Stiles mstiles@maynardcooper.com Matthew Cannova mcannova@maynardcooper.com 1901 Sixth Avenue North 2400 Regions Harbert Plaza Birmingham, Alabama Fax S.S. Nesbitt Contact Information: EmployeeBenefits@SSNesbitt.com