Mastering Forms 1095-C and 1094-C. Brought to you by Preferred Insurance and The DeChristopher Group May 20, 2015

Transcription

1 Mastering Forms 1095-C and 1094-C Brought to you by Preferred Insurance and The DeChristopher Group May 20, 2015

2 Disclaimer The information contained in this presentation is based on IRS guidance issued as of 2/21/2015 It may be subject to further regulatory clarification This presentation is not a substitute for professional, tax, legal, accounting or benefit advice You are encouraged to seek services from a trusted advisor to help with reporting, provide expertise around the law and to ensure accuracy of the reports produced and filed 2

3 AGENDA Why is reporting required? Due Dates Who must file the new forms? Capturing correct data and tips Variable-hour employees Line-by-line analysis of: Form 1095-C Form 1094-C 3

4 ACA reporting what other employers are thinking and doing According to a recent survey conducted by PWC and Equifax Only 10% of 480 employers in 36 industries have implemented an in-house or outsourced solution to comply with the ACA reporting requirements 16% have not yet begun to think about how they will comply with reporting requirements, or are unaware of the steps needed to be in compliance 45% of employers plan to use their payroll service vendor to comply with ACA reporting The number one concern employers face is the inability to aggregate data monthly for reporting purposes Nearly 50% indicated they are worried about their capacity to respond to notices they might receive from public healthcare exchanges 4

5 Key Terms Individual Mandate Employer Mandate Section 6055 Form 1095-B and 1094-B Why is Reporting Required? To support enforcement of the individual mandate and employer mandate authorized under Section 6055 and 6056 of the Internal Revenue Code. Section 6055 (Minimum Essential Coverage Reporting) Required by providers of coverage Details all individuals covered by provider and which months in the calendar year they were covered Providers of coverage include private insurers (Aetna, UHC, BCBS, Kaiser, etc.) Employers that self-insure are ALSO considered providers of coverage As a convenience to employers that self-insure, information required by this section can be reported under section 6056 on Form 1095-C 5

6 Key Terms Section 6056 Form 1095-C and 1094-C Section 6056 (Employer Shared Responsibility Reporting) Provides IRS with data needed to administer the employer shared responsibility provisions of the ACA Provides employees with data needed to determine eligibility for premium tax credits when purchasing exchange coverage For employers who self-insure, the associated return can also include who s covered information otherwise required by Section

7 During today s webinar, we will be reviewing Forms 1095-C and 1094-C There are Four New IRS Forms 2 Information Returns (1095 Series) 2 Transmittal Forms (1094 Series) 1095-B Health Coverage 1094-B Transmittal of Health Coverage Information Returns 1095-C Employer Provided Health Insurance Offer and Coverage 1094-C Transmittal of Employer Provided Health Insurance Offer and Coverage Information Returns 7

8 Goal of C Forms Report to the IRS an employer s compliance with the Employer Mandate to offer affordable coverage that meets minimum value. Section 6056, Form 1095-C 1095-C is a new form the employer must issue to the employee and file with the IRS It offers details of coverage offered by the employer, and the status of the employer s offer of coverage to that employee by month Fully insured employers must provide a 1095-C to employees that were full-time for one or more month in the previous calendar year Self-insured employers must issue a 1095-C to each covered employee, regardless of full-time status Form 1095-C to employees by January 31, 2016 (same deadline as W-2) The 1095-C is unique to each employee (just like a W-2) The 1095-C must be furnished to each full-time employee by January 31, 2016 for the previous calendar year Employers issuing more than Cs must file electronically 8

9 Form 1094-C filing to IRS due by March 31, 2106 (February 28 th if filing on paper) Section 6056, Form 1094-C 1094-C is called a transmittal It sums up the information from the individual 1095-C forms (much like a W-3 is a transmittal of all the employer s Form W-2s) Provides employer-specific details such as the number of full-time employees and total employees per month, and whether the employer is eligible for other relief criteria This filing is due to the IRS by March 31, 2016 for the previous year s information if filing electronically (February 28 th if filing on paper) 9

10 Applicable large employers (ALEs) REGARDLESS of whether they offer health coverage must file Form 1095-C Who Must File Form 1095? Form 1095-Cs must be accompanied by Form 1094-C transmittal (summary information) Employers that cover nonemployees (COBRA, retirees) may, but are not required to, use the B Forms instead of Form 1095-C Multiemployer plans must file Form 1095-B) Small employer (fewer than 50 full-time equivalent employees) Applicable Large Employer (ALE) 50 or more fulltime equivalent employees ALE with 100 or more fulltime equivalent employees Fully Insured Health Plan No filing requirement. The insurance carrier will file Form 1095-B ALE member files Form 1095-C Parts I and II (not Part III), even though may not be subject to employer mandate in Insurer files Form 1095-B ALE member files Form 1095-C Parts I and II (not Part III). Insurer files Form 1095-B Self-Insured Health Plan Small employer must file Form 1095-B File Form 1095-C Parts I, II and III, even though may not be subject to employer mandate in 2015 ALE member files Form 1095-C Parts I, II, and III 10

11 There s a lot more to ACA reporting than just filling out forms. Who will be responsible for capturing information? The employer, payroll vendor, or third-party service provider? Steps and Considerations: Capture appropriate information Determine who will be responsible for gathering and recording information Determine who will be responsible for completing and generating the forms Determine who will be responsible for filing the forms to the IRS and mailing the forms to employees 11

12 Know the data requirements Engagement executive management Tips The employment status in your HRIS may not match the fulltime/part-time determination for your employee s stability period If the following data is incorrect, your 1095-C Lines will be incorrect for full-time employees: affordability benefits eligibility date benefits effective date Don t wait too long. The more complicated the data gets, the more the solution will cost Engage your company s executive management to validate procedural compliance and assist with budget 12

13 If you employ variable-hour employees (including seasonal employees) get to know these definitions: *measurement period *administrative period *stability period Measurement Period a company selected 3-12 month timeframe that is used to determine whether a variable-hour employee is considered full-time for benefit eligibility. If the employee averages 30 hours per week or 130 hours per month or more in this period, they are considered full-time and must be offered health coverage. There are two types of measurement periods: Standard Measurement applies to all current variable-hour employees Initial Measurement applies to newly hired variable-hour employees Administrative Period employer may select a period of up to 90 days to determine eligibility and to enroll employee Stability Period an employee s full-time status is locked in during this period (may not be less than 6 months) 13

14 A LOOK AT FORM 1095-C 14

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16 Part I Employee Must be filed for each individual who was a full-time employee for any one month of the calendar year If the employer provides self-insured coverage, must also be filed for any employee who enrolls in the coverage, regardless of whether the employee is a full-time employee for any month in the calendar year Part I Applicable Large Employer Member (Employer) Line 10: Telephone number that can be used by an individual seeking additional information 16

17 Part II Employee Offer of Coverage Must be completed if the employee is full-employee for any month in the calendar year (full time = 30 hours per week or 130 hours in a calendar month) Line 14: Identifies if there was an offer of coverage, whether it provided minimum essential coverage and who it covered See codes from Code Series #1 (Offer of Coverage) Enter a code for each month, even if the employee was not a full-time employee for that month (for self-funded plans). If the code is the same for all 12 months, enter it in the All 12 Months column and do not enter a code for each month. Line 15: Shows monthly employee premium for single coverage in the least expensive minimum essential coverage plan offered. Only complete if the corresponding line 14 code is 1B, 1C, 1D, or 1E Employee s share of lowest cost monthly premium, for self-only minimum value coverage. Complete this line only if the coverage offered provides minimum value and the line 14 code is 1B, 1C, 1D, or 1E either in the All 12 Months column or any of the monthly boxes. 17

18 Line 14 Use Code Series 1 Offer of Coverage Look over these codes and determine which code(s) apply to you Code 1A 1B 1C 1D 1E 1F 1G 1H Description Qualifying Offer: MEC/MV with employee contribution for self-only coverage equal to or less than 9.5% mainland single federal poverty line and at least MEC offered to spouse and dependent(s) MEC/MV offered to employee only MEC/MV offered to employee and MEC offered to dependents MEC/MV offered to employee and MEC offered to spouse MEC/MV offered to employee and MEC offered to dependents and spouse MEC not providing minimum value offered to employee, or employee and spouse or dependent(s), or employee, spouse and dependents Offer of coverage to employee who was not a full-time employee for any month of the calendar year and who enrolled in self-insured coverage for one or more months of the calendar year No offer of coverage (employee not offered any health coverage or employee offered coverage that is not minimum essential coverage) 1I Qualifying Offer Transition Relief

19 Part II Employee Offer of Coverage Line 16: Identifies employer safe harbors for coverage and affordability Applicable Section 4980H Safe Harbor; see codes from Code Series #2 Only one code from Series #2 per month If the code is the same for all 12 months, enter it in the All 12 Months column and do not enter a code for each month If none of the codes apply, leave the box blank for that month 19

20 Line 16 Use Code Series 2 Section 4980H Safe Harbor Codes and Other Relief for Employers Look over these codes and determine which code(s) apply to you Code 2A 2B 2C 2D 2E 2F 2G 2H 2I Description Employee not employed during the month. Do not use code 2A for the month during which an employee terminates employment. Employee not a full-time employee Employee enrolled in coverage offered Employee was in their initial measurement or administrative period (section 4980H(b) Limited Non-Assessment Period) Multiemployer interim rule relief Section 4980H affordability Form W-2 safe harbor Section 4980H affordability federal poverty line safe harbor Section 4990H affordability rate of pay based on 130 hours/month safe harbor Non-calendar year transition relief applies to this employee for the month 20

21 Part III Covered Individuals Complete only if employer offers self-insured coverage and the employee enrolled in the coverage, even if the employee was not a full-time employee. Note check-box to indicate that employer provided self-insured coverage. List each individual who was covered. 21

22 Part III Covered Individuals Part III Covered Individuals Column (a): Name of covered individual Includes covered spouses and covered dependents Dependents for this purpose no longer includes stepchildren, foster children, or children who are not U.S. citizens or nationals and do not reside in the U.S. Skip (b) and (c) Column (d): Check if the individual was covered for at least one day per month in all 12 months of the calendar year Column (e): If the individual was not covered for at least one day per month in all 12 months, check the boxes for each month in which the individual was covered for at least one day 22

23 SSNs Special Rule Special rule regarding SSNs for both 6055 and 6056 Reporting entity may use DOB instead of SSN, without penalty, if the reporting entity acted in a reasonable manner and the failure to obtain the SSN was due to significant mitigation factors beyond its control Reporting entity is deemed to act reasonably if, after an initial unsuccessful effort to obtain the SSN, it makes 2 consecutive annual solicitations 23

24 SAMPLE Completed 1095-C 24

25 1H - Employee in waiting period January and February 2014 and was not offered coverage 1E - Employee was offered Minimum Essential Coverage providing minimum value to employee, spouse and dependents $ Monthly premium for self-only for the lowest cost plan offered (does not matter if employee enrolled in higher cost plan) 2D Employee hired other than 1 st of the month 2F employer used W-2 affordability safe harbor March through December

26 A LOOK AT FORM 1094-C 26

27 Key Terms ALE Group Reporting 1094-C: Authoritative Transmittal ALE Member An employer can choose to file multiple 1094-Cs (one for each division for example). If they do this, ONE of the 1094-Cs must be designated as the Authoritative Transmittal. The authoritative transmittal reports aggregate information for parts II-IV of the 1094-C (total 1095-Cs, monthly employee counts) An employee that works for multiple employers in the same ALE group in the same calendar month is treated as an employee of only the member for which she worked the most hours that month (i.e., only that employer must file the 1095-C for her, though the employee may also receive the form from other members she worked for). 27

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29 Form 1094-C Transmittal These forms will be attached to the 1095-Cs and will provide summary information to the IRS. Part I: ALE Member A single person or entity that is an ALE or a member of an Aggregated ALE Group Aggregated ALE Group is a group of entities treated as a single employer under the IRC controlled group rules (Parent/Sub and Brother/Sister groups) Line 1 enter employer s name Line 2 Enter employer s 9-digit EIN including the dash 29

30 Part II: ALE Member Information Line 18 Enter total number of Forms 1095-C submitted with transmittal Line 19 Indicate if this is the Authoritative Transmittal for this ALE member. Only one Authoritative Transmittal permitted for each employer Multiple 1094-C forms may be filed, but one must report aggregate data for the employer and be designated as the Authoritative Transmittal Lines should only be completed on the Authoritative Transmittal 30

31 Part II Line 22 A. Qualifying Offer Method This is an alternative reporting method available to ALEs that made a Qualifying Offer to one or more full-time employees for ALL months of the year. You may not use the Qualifying Method for any employees that did not receive a Qualifying Offer for all 12 months of the calendar year (for example, because the employee was not employed for all 12 months or was in a permissible waiting period for one or more months). B. Qualifying Offer Method Transition Relief This is available to ALEs that made a Qualifying Offer to at least 95% of their full-time employees in C. Section 4980H Transition Relief Based on Number of FT Employees Transition Relief: If certain eligibility conditions are met, an ALE that has full-time (and full-time equivalent) employees on business days in 2014 will not be subject to a Section 4980H penalty for any month in or More Transition Relief: If an ALE that has 100 or more full-time (and full-time equivalent) employees on business days in 2014 and is subject to a Section 4980(a) penalty in 2015 for failing to offer coverage to substantially all full-time employees and dependents, the ALE may reduce its number of full-time employees by 80 (rather than by 30) when calculating the penalty amount. D. 98% Offer Method This is an alternative reporting method available to ALES that, for all months of the calendar year, offered affordable, minimum value coverage to at least 95% of their employees (and dependents) that are reported on a Form 1095-C filed for the ALE. 31

32 Part III ALE Member Information Monthly (Line 23-35) Column (a) Minimum Essential Coverage Offer Indicator If employer offered minimum essential coverage to at least 95% of its full-time employees and their dependents for the entire calendar year, enter X in the Yes checkbox on line 23 for All 12 Months or for each of the 12 calendar months. 32

33 Part III ALE Member Information Monthly (a) (b) (c) (d) (e) Minimum Essential Coverage Offer Indicator- Check Yes if ALE member offered employer-sponsored plan to substantially all full-time employees and dependents for each month of the calendar year. For 2015, offered coverage to at least 70% to its FTEs and dependents. For 2016 and beyond, offered coverage to at least 95% of tis FTEs and dependents. Full-Time Employee Count for ALE Member Do not count employees in Limited Assessment Period. You are not required to complete this line if you certified that the ALE was eligible for 98% Offer Method. Total Employee Count for ALE Member Include non full-time employees for each month. Aggregated Group Indicator Skip if not a member of an Aggregated ALE Group. Section 4980H Transition Relief Indicator Select Code A if the ALE is eligible for the Relief. Select Code B if the ALE is eligible for the 100 or More Relief. Skip if you did not indicate that you are eligible for Section 4980H Transition Relief 33

34 Thank you for your participation. If you have any questions that were not addressed during today s webinar, please feel free to contact Lucia Fan directly. 34