{ Holmes Murphy & Associates }

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1 { Holmes Murphy & Associates } We re for you. The ABCs of Employer Reporting Claire Pancerz, Esq. Holmes Murphy & Associates cpancerz@holmesmurphy.com DFW ISCEBS Luncheon June 11, 2015 Des Moines Cedar Rapids Dallas Davenport Denver Kansas City Oklahoma City Omaha Peoria Scottsdale Sioux Falls

2 Disclaimer Neither Holmes Murphy nor the Holmes Murphy Compliance Team engages in the practice of law, meaning we provide neither legal advice nor legal opinions. While Holmes Murphy strives to help our clients maintain compliance with all laws relating to employee benefits, the information contained in this presentation is not and should not be construed to constitute legal advice. Copyright 2014 by Holmes Murphy & Associates 2

3 BACKGROUND 3

4 Employer Reporting Who do you report on? Full-time employees VH employees found to be working an average of 30 hours/week or more during a measurement period Any part-time employees who accept coverage Any non-employees receiving coverage COBRA Board of Directors, City Council Retirees Shareholders, etc. Copyright 2015 by Holmes Murphy & Associates 4

5 Employee and IRS Forms Summary Chart Fully Insured < 50 FTEs Self-Insured <50 FTEs Fully Insured 50 + FTEs (ALE) Self-Insured 50+ FTEs (ALE) Marketplace Coverage Forms to Employee 1095-B 1095-B 1095-B C offer and coverage Form, Sections 1 & C Offer and Coverage Form, Sections 1,2, & A Completed By Insurance Companies Plan Sponsors (Employers) 1095-B: Insurance Companies 1095-C: Plan Sponsors (Employers) Plan Sponsors (Employers) Marketplace Used to Report on tax return that MEC existed Individual avoids individual penalty Report on tax return that MEC existed Individual avoids individual penalty 1095-B: Report on tax return that MEC existed so individual avoids individual penalty 1095-C: Includes info on offer, premium share and employer shared responsibility 1095-C: Includes info on offer, premium share and employer shared responsibility Forms to IRS Completed By 1094-B Transmittal Form Insurance Companies 1094-B Transmittal Form (with copies of all 1095-Bs) Plan Sponsors (Employers) 1094-B Transmittal Form (with copies of all 1095-Bs) C Transmittal Form (with copies of all 1095-Cs) 1094-B and 1095-Bs: Insurance Companies 1094-C and 1095-Cs: Plan Sponsors (Employers) 1094-C Transmittal Form (with copies of all 1095-Cs) Plan Sponsors (Employers) Info used by taxpayer to complete Form 8962 to claim premium tax credit or reconcile credits Used to Verify MEC existed Verify MEC existed Copyright 2014 by Holmes Murphy & Associates Verify MEC existed + Report info required about offers of health coverage and enollment in health coverage for employees Source: HSA Bank Verify MEC existed + Report info required about offers of health coverage and enrollment in health coverage for employees 5

6 Employer Reporting Three sets of forms A forms distributed by Exchanges to anyone who obtained coverage through an Exchange B forms any size group offering minimum essential coverage (MEC) Most group health plans will be considered MEC C forms for applicable large employers (ALEs) Which forms used depend on Size Funding arrangement Type of individuals being reported Copyright 2015 by Holmes Murphy & Associates 6

7 Employer Reporting B Forms for any size group offering MEC Coverage provider fills out form (FI = carrier) If plan is self-funded and ALE, employer can satisfy B form requirement by filling out Parts I, II and III of the C form C Forms for Applicable Large Employers (ALE) only Who had coverage under the plan If the employer is self-funded, it will fill out Parts I, II and III of 1095-C If the employer is fully insured, it will fill out Parts I and II only Copyright 2015 by Holmes Murphy & Associates 7

8 TIMELINE AND DISTRIBUTION REMINDERS 8

9 Timeline Reporting in 2016 for 2015 plan year is MANDATORY $1.5 million fine for total non-compliance with reporting Up to $100 per return and $200 per employee IRS seeking good faith effort for 2015 FT employees, employees with coverage, nonemployees with coverage - January 31, 2016 IRS receives forms by March 31, 2016 (since this is a Sunday, reports due by April 1, 2016) Copyright 2015 by Holmes Murphy & Associates 9

10 Distribution Reminders Employee forms may be mailed along with W-2s Employee forms may NOT be posted to a website (even if password-protected) for employees to view/print May obtain employee consent to electronic form Cannot use previously obtained W-2 consent Consent standard used is IRS more strict than DOL If seeking consent, don t wait until last minute Copyright 2015 by Holmes Murphy & Associates 10

11 Critical Reminders Changes to Final Forms When reporting the total number of employees, may CONSISTENTLY use either First day of month Last day of month First day of first payroll period in month Last day of first payroll period in month Employees in a limited non-assessment period (LNP) Not counted as part of FT employee population Not counted toward percentage offered MEC Do NOT receive 1095-C unless they are enrolled Copyright 2015 by Holmes Murphy & Associates 11

12 INFORMATION NEEDED TO COMPLETE TRANSMITTAL FORMS (1094) 12

13 IRS Transmittal Forms (1094) Transmittal Forms (1094) Roll up all the individual information 1094-B does not contain substantive information about MEC Carriers to provide 1094-B Self-funded clients with less than 50 FTEs 1094-C does contain substantive information about different types of transition relief, aggregated ALEs Copyright 2014 by Holmes Murphy & Associates 13

14 IRS Transmittal Forms (1094) When reporting the total number of employees, consistently use either: First day of month Last day of month First day of payroll period in month Last day of payroll period in month Copyright 2014 by Holmes Murphy & Associates 14

15 IRS Transmittal Form 1094-C ALE EIN and contact information Whether this is the authoritative transmittal Total number of 1095-C forms Whether ALE is part of an aggregated group Whether certain qualifying offers were made OR transition relief applied Signature of corporate official Penalties of perjury apply Remember, good faith effort for 2015 Copyright 2014 by Holmes Murphy & Associates 15

16 1094-C Transmittal Page 1 Is the ALE part of a controlled group? Is ALE certifying to any special offer method, or using the exemption? Is this the authoritative transmittal? Copyright 2014 by Holmes Murphy & Associates 16

17 1094-C Transmittal Page 1 Box A certifies you are offering MV, affordable MEC to full-time employees with affordability based on 9.5% of FPL, plus MEC to spouses and dependents. Box B is a qualifying offer of coverage to 95% of the FT population, and may be used in 2015 only. (No 95% offer required in 2015; only a 70% offer is required.) If either Box A or B is checked, an employer will not need to fill out line 15 on the 1095-C, and the employer may use a simplified statement for any employees who did NOT join the health plan. Box C is used for employers qualifying for the transition relief. These employers must report, but they will not be fined for not offering coverage. Box C may be used by employers with 100+ employees only if they are not offering coverage, and will be subtracting the first 80 employees from their employee count. If the employer checks off Box D, the 98% offer method, the relief is that the employer does not have to report the full-time employee count in Part III, column (b). Copyright 2014 by Holmes Murphy & Associates 17

18 1094 Transmittal Page 2 If employer is non-calendar year and qualifies for transition relief, it is deemed to have offered coverage, so check yes. Employees in a limited non-assessment period are not counted as FT employees. Copyright 2014 by Holmes Murphy & Associates 18

19 Questions? Copyright 2014 by Holmes Murphy & Associates 19

20 1095-C the 50k Foot View Part I Recipient Information Responsible Individual Employer Information Part II Employment Status Offers of Coverage Affordability Quality of Coverage Offered Part III Enrollment

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22 Part 0 Time Warp Requirement Complete the C per the IRS guidelines and filing instructions Problem #1 Currently, only the 2014 forms are available in final form Answer The ability to pivot as final instructions are released is key. Additionally the IRS has been forthright in their willingness to overlook errors for the 2015 review period.

23 Part I Full-time, and then some Requirement - Every employee who is full-time, or is enrolled in MEC, or is offered MEC/MVC coverage for any one month receives a 1095-C Problem #1 Misinformation that only full-time employees need to receive a 1095-C Answer KNOW THE DEFINITION! Employers must diligently review their tracking and enrollment data to ensure even part-time employees who accept coverage are included if the plan is selffunded. Part-time employees who are offered both MEC and MVC coverage must also be listed.

24 Part I Identity Crises Requirement List the demographic and contact information for the employer Problem #2 Multiple entities as part of the control group with multiple FEINs Answer Each ALE member must report for their employees who are enrolled, considered full-time, or offered MEC/MVC coverage for any month of the reporting year

25 Part I There can be only one Requirement Employees should receive ONLY ONE 1095-C for each member of the ALE Group Problem #3 - Incorrect SSNs, HRIS/payroll transitions and multiple corporate units may have different systems with an employee who migrates between them Answer - Employers must aggregate individuals that exist multiple times due to different systems or changes in demographic data into a single record to be reported

26 Part I Unless there are two Requirement List the demographic and contact information for the employer Problem #4 Employee worked for multiple members of the control group in sequence Answer Each ALE member must report for their employees who are enrolled, considered full-time, or offered MEC/MVC coverage for any month of the reporting year

27 Part I Or more! Requirement List the demographic and contact information for the employer Problem #5 Employee worked for multiple members of the control group in parallel for any month Answer The employer with the most hours of service must claim the full-time employee for that month for 1095-C purposes

28 Part II Measure who? Requirement Select 1 of 9 codes describing the employee status, quality of offer of coverage offered, its affordability, and the dependent types included Problem #1 Determining full-time/part-time status of all employees Answer Employers must select a method of measure (Look Back or Monthly), measure, and store outcomes for all employees

29 Part II Collective conundrum Requirement Select 1 of 9 codes describing the employee status, quality of offer of coverage offered, its affordability, and the dependent types included potentially by month Problem #2 Even for employees for whom the employer contributes to a union or collectively bargained plan, the employer must still report eligibility and enrollment information Answer Employers must either collect this information from the union plan sponsor, or have enough information to impute the values independently

30 Part II Temp time Requirement Select 1 of 9 codes describing the employee status, quality of offer of coverage offered, its affordability, and the dependent types included Problem #3 Temporary employees are classically not considered benefits eligible regardless of the hours they are expected to or actually work Answer Employers must categorize all employees as either full, part, variable or seasonal and apply the appropriate offers of coverage or tracking

31 Part II Fear the unknown Requirement Select 1 of 9 codes describing the employee status, quality of offer of coverage offered, its affordability, and the dependent types included Problem #4 Accounting for hours of service for untracked employees or employees paid in increments (per diem, half days, etc ) Answer Employers must either track actual hours or use the 8 hours per day or 40 hour per week equivalency methods, regardless of look back or monthly method, no other option is available

32 Part II Dollar and cents Requirement List the employee s portion of the employee only coverage tier. Problem #5 Row only relevant for certain codes in row 14 and for the lowest cost MEC/MVC plan available for that month Answer Row should only be populated if corresponding Line 14 value is 1B, 1C, 1D, or 1E. Employers must also make sure to show the relevant premium for that month for non calendar year plans

33 Part II and other cents Requirement List the employee s portion of the employee only coverage tier. Problem #6 Employee premiums that are based as a percentage of pay up to a defined % maximum Answer Employer must calculate and report premium amounts for each month for each employee, regardless of enrollment status

34 Part II Who s on 16? Requirement Select 1 of 9 codes indicating employee status, enrollment, affordability, and other interim transition relief rules Problem #7 For many employees more than one code may legitimately apply Answer KNOW THE RULES!!! The IRS has provided hierarchal definitions between the various codes. For example, 2C (employee enrolled in coverage) trumps all other codes

35 Part II Waiting and watching Requirement Select 1 of 9 codes indicating employee status, enrollment, affordability, and other interim transition relief rules Problem #8 Knowing when to use code 2D, Limited Non- Assessment period Answer For full-time new hires, track the waiting periods. Identify new hires in initial measurement periods who are found to be fulltime during the reporting year. For variable and part-time do NOT report if full-time stability is not in reporting period.

36 Part III Ask and you may not receive Requirement For self-funded plans, list the name SSN and months subscribers and dependents were covered Problem #1 Missing SSNs for dependent enrollees Answer Plan sponsors must attempt to collect SSNs three times. At enrollment, by December 31 st of that year, and by December 31 st of the subsequent year.

37 Part III Promoted! Requirement For self-funded plans, list the name SSN and months subscribers and dependents were covered Problem #2 What happens to COBRA continuant dependents of active employees? Answer Dependents who become COBRA continuants during the year will not be reported for those months on the employee 1095-C, and rather will receive their own 1095-B for the months they are the responsible individual

38 Part III Time warp X 30 Requirement For self-funded plans, list the name SSN and months subscribers and dependents were covered Problem #3 Participants with partial months of coverage Answer For Part III ONLY, any day of coverage is sufficient to credit the employee with coverage for the entire month

39 Questions?