ACA Update and Tackling the ACA s Reporting Requirements February 19, Presented by: Stacy H. Barrow Proskauer Rose LLP

Transcription

1 ACA Update and Tackling the ACA s Reporting Requirements February 19, 2014 Presented by: Stacy H. Barrow Proskauer Rose LLP sbarrow@proskauer.com

2 Agenda Recent Developments ACA Reporting Requirements 1

3 Recent Developments: The Legal Landscape SCOTUS will hear King v. Burwell in 2015 Issue: Does ACA provide for subsidies in states with a federal Exchange? On its face, the ACA only provides subsidies for insurance purchased in state Exchanges Majority of states have federal Exchanges This case can go either way Does the Administration want to chance going down 3-1? Will the Administration and Congress work together to fashion a legislative fix? 2

4 Recent Developments: EEOC & Health Risk Assessments Wellness is an important component of ACA Someone neglected to tell the EEOC DOL has blessed conditioning eligibility and amount of premium on completion of Health Risk Assessment (HRA), as long as not resultsoriented EEOC sees involuntary HRA requirement as violation of ADA Three High Profile Cases Filed in 2014 Will 2015 See More? Will Seff v. Broward County help? 3

5 Recent Developments: Employer Opt-Out Credit On 11/6/14 the Federal Regulators released FAQ XXII: Reiterates position on premium reimbursement and states that arrangements where employers pay an employee more to drop or not take coverage violates ERISA Focus was on high claims targeting strategy Impact is greater: Service Contract Act employers who offer cash in lieu of benefits (based on rates in SCA contract) Employment contracts in which employees opt out for higher pay 4

6 Recent Developments: Wellness Programs Wellness Programs: Employers may treat all employees as non-smokers for affordability purposes For example, if an employer charges tobacco users $150 per month and non-tobacco users $100 per month, then $100 is the required employee contribution for affordability purposes, even if some employees pay $150 Employers using tobacco/non-tobacco rates must do so within the confines of a bona fide wellness program Reasonable alternative standard applies 5

7 ACA EMPLOYER AND PROVIDER REPORTING 6

8 2014 Individual Tax Returns Some tax preparers are asking employees for 1095 forms for 2014 taxes Employers are not required to provide a Form 1095-C for 2014 Carriers are not required to provide a Form 1095-B for 2014 These forms are not necessary to prepare an individual s tax return for 2014 Individuals with Marketplace coverage in 2014 will receive a Form 1095-A from the Marketplace, which is used to reconcile premium credits. In Massachusetts, 1099-HC is still required 7

9 2014 Individual Tax Returns For 2014 returns, taxpayers will check a box on line 61 of Form 1040 (line 11 on Form 1040EZ) indicating that they had coverage the entire year If a taxpayer did not have full-year coverage in 2014, they should see the instructions for line 61 (line 11 on Form 1040EZ) and Form 8965 for more information Form 8965 is used to report or claim a coverage exemption If, for any month, the taxpayer or another member of the taxpayer s tax household had neither health care coverage nor a coverage exemption, the instructions for Form 8965 provide the information they will need to calculate their shared responsibility payment 8

10 Getting Ready ACA imposes complex reporting requirements in order for the government to track compliance with the individual and employer mandates, and to determine eligibility for premium tax credits used to purchase Exchange coverage Employers should determine which reporting requirements apply based on their size and plan type (insured, self-funded, or none at all), and which internal systems house the information necessary for reporting May involve payroll systems, time & attendance Will generally need to track FT/PT status on a monthly basis, offers of coverage, premiums, and controlled group status 9

11 Getting Ready Controlled Groups Applicable large employer status is determined on a controlled group basis Thus, Form 1094-C (for applicable large employers) requires disclosure of controlled group status Employers will need to report related entities: Parent-Subsidiary controlled group Brother-Sister controlled group Affiliated Service Groups Familial attribution rules also apply Talk to ERISA counsel if analysis is needed 10

12 Overview of Reporting Requirements Code Sections 6055 (all insurers and self-insured plans) & 6056 (applicable large employers ALEs) Effective Dates Both reporting rules are effective in 2014; however, compliance is voluntary until 2015 First mandatory reporting in January/February 2016 for 2015 Complex reporting requirements Relief offered to employers who are offering affordable coverage to employees and to spouses and children Reporting includes employers with FTEs who are exempt from the pay-or-play mandate in 2015 Must certify on their Code 6056 reporting filed in 2016 that they qualify for the transition relief in the pay-or-play regulations 11

13 Overview of Reporting Requirements Code Sections 6055 (insurers and self-insured plans, & 6056 (applicable large employers) Reminder: Applicable large employers are employers with at least 50 fulltime equivalent employees (employees having an average of at least 30 hours of service per week) Employers are only required to report full-time employees under Code Section 6056; however, employers with self-insured plans must report on all covered employees to comply with Code Section

14 Forms 1094-B and 1095-B Required by Code 6055 Reporting used by government to track individual mandate compliance Used to verify that individuals had insurance have been provided minimum essential coverage and are not subject to ACA Penalty Small Employers (< 50 FTE) offering fully insured plans: no filing requirement carriers will provide/file 1095-B is provided to participants (and sent to IRS) 1094-B is the transmittal form sent to the IRS Small Employers (<50 FTE) sponsoring self-insured plans: must provide and file 1094-C and 1095-C for covered participants 13

15 Forms 1094-B and 1095-B Large Employers ( 50 FTE) file using 1094-C and 1095-C DO NOT FILE B-SERIES Reporting not required for HSAs, on-site medical clinics, wellness programs or dental/vision FINAL forms and instructions have been released Form 1094-B (transmittal to IRS) Form 1095-B: (an employee statement) Instructions: 14

16 Forms 1094-C and 1095-C Required by Code 6056 Reporting Applies to Applicable Large Employers Reporting used by government to track play-or-play and to determine individuals eligibility for premium tax credits FINAL forms and instructions released Form 1094-C (transmittal to IRS) Filed with IRS by February 28 (March 31 if electronic) Form 1095-C (an employee statement) Provided to full-time employees by January 31 Electronic delivery is permissible with employee s consent Fully-insured: Employer completes top half of the form (Parts I and II) Self-insured: Employer completes whole form (Parts I, II and III) Instructions: 15

17 Forms 1094-C and 1095-C General Reporting Method Full Reporting for all full-time employees Reporting on a month-by-month basis Lowest cost monthly premium for self-only coverage To whom was coverage offered (employee, spouse, dependents?) Did the coverage provide minimum value? Indicator codes will be used to report certain other information Employers filing 250 or more Forms 1095-C must file the forms electronically (including Form 1094-C) 16

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24 Nuts and Bolts of Form 1094-C Transmittal Form to the IRS Provides a summary to the IRS of aggregate employer-level data Discloses any Transition Relief employer is claiming Essentially a cover page to Forms 1095-C that are sent to the IRS What information is required? Company information, including Controlled Group information Information about whether an offer of coverage was made to 70% of FT employees and their dependents (95% starting in 2016) Total number of Forms 1095-C issued to employees Full-time employee counts by month Total employee counts by month 23

25 Nuts and Bolts of Form 1095-C The employee statement provided to FT employees to use when filing their tax returns Copies also filed with the IRS, along with 1094-C Reports information about employer s offer of coverage, if any, and any safe harbors or other relief relied upon by the employer Helps the IRS determine if employer owes a Pay-or-Play Penalty and whether employees and their dependents are eligible for the premium tax credit 24

26 Nuts and Bolts of Form 1095-C What information is required? Which employees are full-time in each month Identifying information for employer and employee such as name and address Information about the health coverage offered by month, if any The employee s share of the monthly premium for lowest-cost self-only minimum value coverage Months the employee was enrolled in your coverage Months the employer met an affordability safe harbor with respect to an employee and whether other relief applies for an employee for a month If the employer offers a self-insured plan, information about the covered individuals enrolled in the plan, by month 25

27 Form 1095-C: Line 14 Indicator Codes to Report Offers of Coverage 1A Qualifying Offer (discussed later) 1B Minimum essential coverage (MEC) providing minimum value offered to employee only 1C MEC providing minimum value (MV) offered to employee and at least MEC offered to dependents (not spouse) 1D MEC providing MV offered to employee and at least MEC offered to spouse (not dependents) 1E MEC providing MV offered to employee and at least MEC offered to dependents and spouse 1F MEC NOT providing MV offered to employee, or employee and spouse or dependents, or employee, spouse and dependents 1G Offer of coverage to employee who was not a FT employee for any month and who enrolled in self-insured coverage 1H No offer of coverage 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 months 26

28 Form 1095-C: Line 15 (Cost of Coverage) 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 Note that this amount may not be the amount the employee is paying for the coverage, for example, if the employee chose to enroll in more expensive coverage such as family coverage 27

29 Form 1095-C: Line 16 Indicator Codes to Report Safe Harbors 2A Employee not employed during the month 2B Employee not FT employee; not enrolled Use if employee terminated during the month 2C Employee enrolled in coverage offered Use regardless of whether affordability safe harbor applies 2D Employee in a Limited Non-Assessment Period For example, initial measurement period or waiting period 2E Use for any month for which the multiemployer interim relief applies for the employee (slides 41-42) 28

30 Nuts and Bolts of Form 1095-C Line 16 Indicator Codes to Report Safe Harbors 2F W-2 Safe Harbor applies for the year Must be used in all months of the year during which employee was offered coverage 2G Federal Poverty Level safe harbor applies 2H Rate of Pay safe harbor applies 2I Non-calendar year transition relief applies 29

31 Limited Non-Assessment Period (LNAP) An employer need not file a Form 1095-C for an individual who for each month of a calendar year is either not an employee of the employer or is an employee in an LNAP Examples of LNAP s include waiting periods and initial measurement periods Note that the employee is still included in the total employee count reported on Form 1094-C for any month in which the employee was employed For example, an employee who terminates during an initial measurement period or waiting period will not receive a Form 1095-C 30

32 Plans offering coverage to Non-Employees Employers that have non-employees who enroll in their self-insured health plan may use Forms 1094-B and 1095-B, rather than Form 1095-C, Part III, to report coverage for those individuals and other family members The Series-C forms may be used, if desired Form 1095-C has indicator codes for an employer to use when reporting on non-employees covered under a self-insured plan (e.g., non-employee directors, retirees (after year of retirement), or former employees on COBRA (after year of termination) 31

33 Plans offering Spousal Coverage For reporting purposes, an offer to a spouse includes an offer to a spouse that is subject to a reasonable, objective condition, regardless of whether the spouse meets the reasonable, objective condition For example, an offer of coverage that is available to a spouse only if the spouse certifies that the spouse does not have access to health coverage from another employer is treated as an offer of coverage to the spouse for reporting purposes 32

34 Simplified Reporting Qualifying Offer A Qualifying Offer is an offer of minimum value coverage to the employee that costs the employee no more than 9.5% of the FPL (~$1,100 in 2014) for single coverage Offer must include offer of MEC to spouse and children Employer not required to contribute toward the cost of spouse/dependent coverage 33

35 Simplified Reporting Qualifying Offer Employer reporting for employees who receive a Qualifying Offer for the entire calendar year is simplified Employers making a Qualifying Offer will only need to report names, addresses, and tax IDs for employees who receive Qualifying Offers for the entire year Indicator Code used on 1095-C to denote Qualifying Offer If Qualifying Offer not made for all 12 months, full reporting required for any month in which Qualifying Offer was not made Employees with Qualifying Offers either receive Form 1095-C or may be provided an alternative statement informing them that the family is ineligible for a premium credit that year 34

36 Alternative Statement for Qualifying Offers If an employee (A) is not covered under a self-insured plan, and (B) receives a Qualifying Offer for the entire calendar year, the employer may provide an alternative statement in lieu of Form 1095-C Limited usefulness, as employer must still provide 1095-C to IRS An employer may report that it made a Qualifying Offer to an employee in certain months, even if the employee did not receive one for the entire year; however, use of the alternative statement is not permissible unless the Qualifying Offer was made for the entire calendar year 35

37 Alternative Statement Content Employer name, address, and EIN Contact name and telephone number at which the employee may receive information about the offer of coverage and the information on the Form 1095-C filed with the IRS for that employee A statement indicating that, for all 12 months of the calendar year, the employee and his or her spouse and dependents, if any, received a Qualifying Offer and therefore are not eligible for a premium tax credit A statement directing the employee to see Pub. 974, Premium Tax Credit (PTC), for more information on eligibility for the premium tax credit 36

38 Alternative Statement 2015 Transition Relief For 2015, employers making a qualifying offer to 95% of their FT employees for one or more months may use the alternative statement method for all employees, even those who did not receive a qualifying offer for the entire year Statement must: Include employer name, address, and EIN; Include contact name and telephone number at which the employee may receive information about the offer of coverage (if any) and the information on the Form 1095-C filed with the IRS for that employee; Indicate that an employee who did not receive a Qualifying Offer (or received no offer) may be entitled to the premium tax credit for one or more months of 2015; and Direct the employee to see Pub. 974 for more information on eligibility for the premium tax credit 37

39 Simplified Reporting 98% Method Option to Report without Separate Certification of FT Employees Employers that offer affordable, minimum value coverage to at least 98% of employees (and dependents) included on the report may certify the offering without identifying which employees are full time All the 98% Method does is allow the employer to report on an employee without identifying FT/PT status 38

40 Simplified Reporting 98% Method When might the 98% Method be useful? When an employer with a self-insured plan offers coverage to FT and PT employees and does not want to have to identify FT/PT status when reporting covered employees on 1095-C Employers using this method are not required to complete the FT employee count in Part III, column (b) of Form 1094-C 39

41 Employer ACA Reporting Multiemployer Multiemployer plans may facilitate filing and furnishing returns for applicable large employers Liability for section 6056 reporting or information reporting penalties is not transferred to the multiemployer plan Liability for the section 4980H provisions remains with the employer 40

42 Employer ACA Reporting Multiemployer Interim Guidance Regarding Multiemployer Arrangements An employer is treated as offering health coverage to an employee if the employer is required by a collective bargaining agreement to make contributions for that employee to a multiemployer plan that offers, to individuals who satisfy the plan s eligibility conditions, health coverage that is affordable and provides minimum value, and that also offers health coverage to those individuals dependents 41

43 Employer ACA Reporting Penalty Relief Penalty Relief for 2015 Employers that show a good faith effort in complying with the information reporting requirements under section 6056 will not be liable for any accuracy related penalties The reasonable cause standards do apply under normal rules for those that fail to meet the timely reporting requirements 42

44 Questions? Join Proskauer s ERISA blog at: Order the 5 th Edition of Proskauer s Health Care Reform Book: The information provided in this slide presentation is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the firm, our lawyers or our clients. No client-lawyer relationship between you and the firm is or may be created by your access to or use of this presentation or any information contained on them. Rather, the content is intended as a general overview of the subject matter covered. Proskauer Rose LLP (Proskauer) is not obligated to provide updates on the information presented herein. Those viewing this presentation are encouraged to seek direct counsel on legal questions. Proskauer Rose LLP. All Rights Reserved. 43

45 HRCI Recertification Program ID: Title: 6055 and 6056 Employer/Employee Reporting Start Date: 2/19/2015 End Date: 2/19/2015 Recertification Credit Hours Awarded: 1.0 Specified Credit Hours:General