ACA Compliance Briefing for Self-Insured Employers. Part 2 ( Deep Dive on Pay or Play) John Hickman, Esq. 4980H In a Nutshell

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1 1 ACA Compliance Briefing for Self-Insured Employers Part 2 ( Deep Dive on Pay or Play) Atlanta Office One Atlantic Center 1201 West Peachtree Street Atlanta, Georgia (404) John Hickman, Esq. john.hickman@alston.com All Rights Reserved Alston & Bird, H In a Nutshell Only applicable to Applicable Large Employers Generally effective January 2015 (but see transition relief) Small Applicable Large Employers are not subject to excise taxes until 2016 (but must still report for 2015) Small applicable large employer is controlled group of corporations that satisfy the following conditions: FTEs in 2014 Employer does not reduce size of workforce or reduce overall hours of service of employees for other than bona fide business reasons Employer does not eliminate or materially reduce health coverage maintained on 2/9/14 Contribution for employee only coverage must be at least 95% of dollar amount on 2/9/14 or same or higher percentage Changes in employee only coverage permitted so long as coverage retains minimum value status No reduction in classes of employees/dependents who were eligible on 2/9/14 1 1

2 2 4980H in a Nutshell Compliance with 4980H determined on controlled group member basis Full time employee Any common law employee who has the requisite hours of service to qualify as a full time employee 2 methods for identifying employees who qualify as a full time employee Look back measurement Monthly measurement Excise tax rules: They are assessed against a controlled group member for each month generally for each month that an employee who qualifies as a full time employee to whom qualifying coverage must be offered receives a subsidy in the Exchange Do you offer coverage each month through an eligible employer sponsored plan that is both affordable and provides minimum value to 100% of your employees who qualify as a full time employee to whom coverage must be offered (and their dependent children)? If yes, no excise taxes for that month If no, determine which excise tax bucket you are in H in a Nutshell Sledgehammer Bucket You fail to offer coverage through an eligible employer sponsored plan to 95% of your employees who qualify as a full time employee to whom coverage must be offered (and their dependent children) and ONE employee who qualified as a fulltime employee to whom coverage must be offered receives a subsidy in the Exchange 70% in 2015 ONLY 1/12 of 2000 ($167) x all employees of the controlled group member who qualified as a full time employee to whom coverage must be offered reduced by the employer s allocable share of in 2015 The reason that employee receives subsidy is not relevant 3 3

3 Tackhammer Bucket 4980H in a Nutshell Employer satisfies substantially all test but does not offer affordable, minimum value coverage through an eligible employer sponsored plan to 100% of its employees who qualify as full time employee to whom qualifying coverage must be offered (and their dependent children) and a full time employee to whom coverage must be offered receives a subsidy in the exchange 1/12 of 3000 ($250) x the total number of full time employees who receive a subsidy in the Exchange that month H in a Nutshell Offer coverage Effective opportunity to enroll or decline each year Affordability Safe harbors W 2 wages (annual determination) Rate of pay FPL Affordability in Exchange is based on household income 6056 Reporting Provide coverage offer information for each month during the year with respect to each employee who qualifies as a full time employee at least 1 month 5 5 3

4 4 4980H in a Nutshell Fiscal Year Transition Relief Fiscal Year Transition Relief available for those that did not change their plan year after 12/27/2012 Effective first day of plan year in 15 (or 16, as applicable) for all employees who satisfy the terms of eligibility that were in effect on 2/9/14 and not eligible for a calendar year plan Effective first day of plan year in 15 (or 16, as applicable) for everyone else if coverage/offer percentage satisfied H in a Nutshell Fiscal Year Transition Relief All employee test: Employer offered coverage under the fiscal year plan to 33 1/3% of its employees during the enrollment period preceding 2/9/14 or employer covered 25% of its employees at some date in 12 month period ending on 2/9/14 Not applicable to employees who would have been eligible for a calendar year plan maintained by the employer on 2/9/14 All full time employee test Employer offered coverage under the fiscal year plan to 50% of its full time employees during enrollment period preceding 2/9/14 or Employer covered 33 1/3% of its full time employees at some date in 12 month period ending on 2/9/14 7 7

5 Key Terms and Concepts Who is an Applicable Large Employer (ALE) subject to the penalty? Who are full time employees? What is minimum essential coverage offered through an eligible employer sponsored plan? When is coverage affordable? When does coverage provide minimum value? 8 8 Applicable Large Employer Status Are You Subject to the Pay or Play Rules? 9 9 5

6 6 Key Terms for ALE Status Every controlled group of corporations who employed 50 or more FTEs, on average, during the preceding calendar year Full time employee Common law employee of a controlled group member who is credited, on average, with 30 or more of hours of service during a week in a month 120 hours of service in a month is considered full time Count actual hours of service safe harbor for determining FT for purposes of the tax not applicable to ALE status Do not count hours for services performed outside the United States Full time equivalent Divide total hours of service for employees who are NOT full time employees (not to exceed 120 hours of service) by 120 Seasonal Worker If you exceed 50 for no more than 4 months/120 days solely because of seasonal workers, then not an ALE Who is seasonal worker? An employee who performs work on a seasonal basis Based on labor regulations Not necessarily the same as Seasonal Employee Applicable Large Employer Determination Final Regulations Employers not in existence in prior calendar year If one day, then first year is determined based on reasonable expectations for remainder of that year Subsequent year is based on average FTEs during portion of prior year that company first came in existence New first year ALE transition guidance No penalty in first year that employer is ALE if covered offered by 4/1 Applicable only to employees to whom coverage had previously been offered Aggregation No specific guidance on Governments Predecessor/successor Use employment tax rules Employers in existence in 2014 may use any 6 consecutive month period to determine ALE status for

7 Are you an ALE? NO!!!!! Stop, you are not subject to 4980H!!!!! But other aspects of ACA still apply (health coverage mandates, etc.) YES!!!! Then you must comply with Section 4980H This doesn t mean you have to provide coverage; it simply means you have to pay the assessable penalties due under 4980H The following rules help you determine the assessable penalties Compliance with 4980H Generally Compliance is determined on a controlled group member by controlled group member basis!!!!!! Analysis must be done at the subsidiary level not at the corporate level. Compliance with 4980H is simply a matter of identifying the assessable payment an ALE owes (if any) IT IS NOT A MANDATE TO OFFER COVERAGE i.e. full time employees have no cause of action under 4980H for coverage if not otherwise offered coverage In some situations, paying the excise tax for a month may be optimal to providing coverage

8 Identifying full time employees Compliance with 4980H Key Concepts Who is an employee that qualifies as a full time employee during a month? Who is a full time employee that qualifies as a full time employee during a month TO WHOM COVERAGE MUST BE OFFERED IN ORDER TO AVOID EXCISE TAXES What is an offer of coverage for purposes of 4980H? What is minimum essential coverage? What is affordable minimum essential coverage? When does minimum essential coverage provide minimum value? Compliance with 4980H Identifying Full Time Employees

9 9 Who is a Full time Employee? 4980H(c)(4): A full time employee is, with respect to a month, an employee who is employed, on average, 30 or more hours of service per week during a month 2 key elements: COMMON LAW EMPLOYEE of employer with the requisite HOURS OF SERVICE Monthly measurement Each month except during a limited non assessment period Look back measurement period New Employees» Non Variable Monthly» Variable/PT/Seasonal: Measurement period Caution: Initial Measurement Period is a limited non assessment period Ongoing Employees» EVERYONE!!!!!! key questions: Who is a Full time Employee? Who is a common law employee? What is an hour of service? How do you apply the measurement methods to identify employees who qualify as a full time employee for a month? 17 17

10 10 Who is a Common Law Employee? 20 factor IRS test Essence of Test: Do you have the right to control the manner in which the services are performed? Trouble areas: Individuals obtained from staffing agency Rev. Rul Temporary employees (individuals that YOU hire for short periods of time but who do not qualify as seasonal) Section 530 Employees Statutory Employees Leased Employees as defined in Code Section 414(n) Individuals with H2A/2B Visas Maybe What is an Hour of Service? HOURS OF SERVICE are defined as Each hour for which an employee is paid or is entitled to payment for performance of services AND Each hour for which an employee is paid or is entitled to payment on account of a period for which no services are performed due to the following (i.e. Paid Leave): Vacation Holiday Illness/disability Issues with disability benefits paid for solely by the employee!!! Layoff Jury duty Military duty Leave Paid leave defined according to 29 C.F.R b 1(a) Is there a limit on the hours of service allocable to a paid leave? What about employees on a workers compensation leave? 19 19

11 What is an Hour of Service Hourly Employees based on records of actual hours of service Non Hourly (SALARIED) KEY POINT!!!!!!! Actual hours Days equivalency: A day credited with one hour of service is credited with 8 hours of service Weeks equivalency: A week with one hour of service is credited with 40 hours of service Cannot use the equivalency method if it operates to substantially understate the hours of service (e.g. nurse that works 3, 12 hour shifts per week) May use different methods for different classifications of non hourly May change method each calendar year 20 What is an Hour of Service? Services performed outside the U.S. do not count as Hours of Service for purposes of 4980H Do NOT treat hours of service performed outside the united states as 4980H hours of service if compensation for such services is considered income from a source without the United States Generally, pay for services performed outside the U.S. is considered income from sources without the U.S. Don t confuse with income tax rules as U.S. Citizens are generally taxed on income within and without the U.S. U.S. is defined as the 50 states and D.C. Territories and possessions are NOT considered the U.S. for this purpose See Measurement Period rules applicable to domestic employees who transfer to foreign subsidiary and vice versa 21 11

12 12 What is an Hour of Service? Hours of service performed for one ALE member treated as performed by any other ALE member for whom the employee provides services during the year If hours of service with two or more members during a month, treated as employee of member with most hours of service If same number for each member, then members may choose whose employee he/she is. Issues arise when different subsidiaries use different measurement periods. 22 What are Hours of Service? Employees whose hours of service each month will be difficult to calculate are subject to special rule: commission employees, adjunct faculty, transportation employees, and similar positions Any reasonable method may be used (until further guidance is issued) A method is NOT reasonable if it takes into account only a portion of the employee s hours of service such that it re characterizes as non full time an employee in a position that traditionally averages 30 hours of service or more per week Safe harbors for Adjunct faculty Employees subject to layover On call 23

13 What are Hours of Service? Exclusions! Even though common law and paid the following will not be treated as having hours of service for purposes of 4980H: Bona fide volunteer Certain clergy Student in a federal/state work study program 24 How do you Identify Employees Who Qualify as Fulltime Employees in a Month? 2 methods: Monthly measurement period approach Look back measurement period approach Each ALE member may use a different approach Each ALE member may apply a different method to each distinguishable class of employees Special rules apply when employee switch between positions that use different methods Key Concept: If an employee qualifies as a full time employee for a month, qualifying coverage must be offered for that month or the ALE member could be subject to an excise tax for that month unless... The employee is in a limited non assessment period 25 13

14 14 How do you Identify Employees Who Qualify as Fulltime Employees in a Month? What are the distinguishable classes of employees? Hourly Salaried Union (generally) Employees subject to different collective bargaining agreements Employees working in different locations Variable and non variable are NOT distinguishable classes of employees!!!!!!! 26 Monthly Measurement Period Approach If employee has requisite Hours of Service in month, employee qualifies as a full time employee If employee qualifies as a full time employee for that month but is in limited non assessment period, then does not qualify as a full time employee to whom coverage must be offered to avoid excise taxes Limited non assessment period applies only once to a continuous employee I.e. employee who has not experienced a break in service 27

15 Monthly Measurement Period Approach What are the requisite hours of service? Average of 30 hours of service per week during the month 130 hours of service in the month Weekly rule: Months with 4 weeks 120 Hours of Service Months with 5 weeks 150 hours of service 28 Monthly Measurement Period Approach What is a limited non assessment period under monthly measurement period approach? First month of partial employment First 3 full calendar months beginning with first full month that that employee first becomes full time ( 3 month limited non assessment period) provided that: Employee is otherwise eligible during those 3 months but for a waiting period AND Coverage is offered by the first day of 4 th full calendar month following that first full month that the employee was first full time If coverage through eligible employer sponsored plan is offered but it does not provide minimum value, then employee is disregarded for purposes of substantially test BUT could trigger Tackhammer Tax If coverage also provides minimum value, then employer is treated as offering affordable, minimum value coverage during the 3 month limited non assessment period Only applicable 1 time for a continuous employee (i.e. employee who has not experienced a break in service) 29 15

16 16 Monthly Measurement Period Approach Example Bob is employed by ABC on June 5, Bob is does not have the requisite hours until August Bob does not have the requisite hours of service again until January Bob does not have a break in service. ABC will not be subject to an excise tax for June ABC will not be subject to an excise tax with respect to Bob for August provided that: Bob is otherwise eligible for the Plan but for a waiting period during August, September, and October AND] Bob is offered coverage providing minimum value that will be effective November 1, 2015 Presumably he would only have to be offered coverage for November 2015 ABC will not be subject to an excise tax with respect to Bob for January 2016 if Bob is offered minimum value coverage for January 2016 The 3 month limited non assessment period rule applies only once to a continuous employee. Since Bob has not had a break in service, he is a continuous employee. 30 Look Back Measurement Period Approach Two different parts to the look back measurement period method: New employees Variable/part time/seasonal Non variable Ongoing employees ALL employees employed during the applicable measurement period NO DISTINCTIONS between variable, non variable!!!!!!! Impact of this felt during a stability period in the following situations: Full time employee rehired as part time employee Full time employee takes unpaid, personal leave of absence Full time employee changes from a full time position to a part time position 31

17 Look Back Measurement Period Approach 3 components to each part: Measurement Period New Employees Initial Measurement Period Ongoing Standard Measurement Period Administrative Period Stability Period 32 Look Back Measurement Period Approach New Employee: employee who has not been employed as a common law employee for one standard measurement period (the measurement period for ongoing employees) Employee who is rehired after 13 weeks or more with no hours of service Types of New Employees (2 buckets) Non Variable Bucket Other Bucket New Variable Seasonal Employees Part time 33 17

18 18 Look Back Measurement Period Approach New Employees What is a non variable employee? Facts and circumstances test On the start date, you can make a determination that they are reasonably expected to have the requisite hours each month while employed by you. Expected length of service generally NOT relevant Exception for seasonal employee Who is a variable employee? Facts and circumstances On start date, you cannot make a determination that they will be reasonably expected to have the requisite hours of service because their hours will fluctuate or are uncertain 34 Look Back Measurement Period Approach New Employees Who is a seasonal employee? Employee hired into a position the typical duration of which is 6 months or less and The start date is the same time each year GET TO TREAT AS VARIABLE EVEN THOUGH MIGHT OTHERWISE BE NON VARIABLE!!!!! Contrast with Temporary position does not necessarily start same time each year Who is a part time employee? On the start date, you can make a determination that they are not expected to have the requisite hours of service Why does it matter? 35

19 Look Back Measurement Period Approach New Employees Initial Measurement Period ( IMP ) 3 12 month period Begins on any date between start date (date first credited with an hour of service) and first day of the first calendar month following employee s start date If start of IMP delayed to first day of month following employment delay counted towards the administrative period Recommendation: 11 or 12 month initial measurement period 36 Look Back Measurement Period Approach New Employees Administrative period No more than 90 CALENDAR days Any period preceding the start date of the IMP is counted towards 90 days Coverage must be offered no later than end of the 1 st month beginning on or after the anniversary of the employee s start date 37 19

20 20 Look Back Measurement Period Approach New Employees Stability Period following IMP Employees who average requisite hours of service over IMP qualify as full time employee during each month of the stability period that they are employed; employees who don t average requisite hours of service qualify as other than a full time employee during each month of the stability period Hours of service during each month of the stability period NOT relevant Employees who average requisite hours of service over the IMP No shorter in duration than the IMP (but at least 6 months) IMP is a limited non assessment period: If offered minimum value coverage by start of stability period, no excise tax with respect to the employee for months actually full time during IMP If only offered MEC that does not provide minimum value, then disregarded for purposes of substantially all test only BUT could trigger a Tackhammer Tax Reporting on 6056 for employees who qualify as full time in one or more months during IMP Employees determined NOT to be full time during IMP Stability period not more than 1 month longer than the IMP 38 Look Back Measurement Period Approach New Employees Special rules for Stability Period following IMP: Stability period following the IMP will overlap with the standard measurement period and stability period following standard measurement period will control if determined to be full time Special rule if gap between end of stability period following IMP and start of stability period following standard measurement period E.g., employees hired in October or November after stability period beginning in October has begun Treat as is until start of next stability period Change in employment status during stability period for continuing employee will GENERALLY NOT affect status during stability period If changes to a position that would not have been expected to have the requisite hours of service, then may apply the monthly measurement period beginning with the fourth full calendar month following the change in positions IF: Employee had continuously been offered minimum value coverage since 1 st day of fourth full month of employment and The employee does not average the requisite hours of service during each of the three full calendar months following the month in which the position change occurs 39

21 21 Look Back Measurement Period Approach Ongoing Employees Standard Measurement Period (SMP) 3 12 months Payroll period rule applies ALL ONGOING EMPLOYEES ARE IN SMP Biggest impact on full time employees who experience the following during a stability period: Unpaid leave of absence Terminate/rehire to part time position (unless the period between is 13 weeks or longer) Unlike IMP, SMP is NOT a limited non assessment period Administrative Period no more than 90 calendar days 40 Look Back Measurement Period Approach Ongoing Employees Stability Period following SMP If employee averages requisite hours of service over SMP Stability must be at least 6 months but no shorter in duration than the SMP If employee determined NOT to be full time Stability period same duration as SMP Recommend 12 months SMP Transition Rule for 2015/2016 (as applicable): May use a standard measurement period of 6 months or more and a stability period of 12 months for both full time and nonfull time 41

22 Look Back Measurement Period Approach Ongoing Employees Special rules for Stability Period following SMP: Change in employment status during stability period for continuing employee will NOT affect status during stability period If changes to a position that would not have been expected to have the requisite hours of service, then may apply the monthly measurement period beginning with the fourth full calendar month following the change in positions IF: Employee had continuously been offered minimum value coverage since 1 st day of fourth full month of employment and The employee does not average the requisite hours of service during each of the three full calendar months following the month in which the position change occurs 42 Breaks in Service If an employee has a period with no hours of service (other than a special unpaid leave) that is at least 13 full weeks (week=7consecutive calendar days), he has a break in service. If he/she resumes service after the break in service, he/she is treated as a new employee Rule of Parity: A period of at least 4 weeks that is longer than the prior period of employment See special unpaid leave rule If the employee has a period with no hours of service that is less than 13 weeks and then resumes service, he/she is treated as a continuous employee Impact of Break in Service Rules: Look Back Measurement Period: If continuous, employee resumes measurement period If resumes during a stability period and was full time, then must be offered coverage by first day of month following start date IF employee was previously offered and accepted coverage. If coverage was offered and declined, no need to offer again during that stability period. Monthly Measurement Period If continuous, then no available limited non assessment period upon resumption of services if already used 43 22

23 23 Special Leaves of Absence/Employment Break Applicable only if you use look back measurement period Special unpaid leaves of absence include leaves subject to FMLA, USERRA and jury duty leaves Employment Break for educational organizations (limit to 501 hours of service) ANY PERIOD WITH NO HOURS OF SERVICE OTHER THAN A SPECIAL UNPAID LEAVE When calculating average hours worked for a measurement period that includes a special leave of absence/employment break, employers have 2 options: Option 1: disregard the weeks of unpaid special leave and average the remaining weeks, or Option 2: credit employees with hours of service for special unpaid leave at the rate equal to the average weekly rate at which the employee was credited with hours of service during the weeks in the measurement period that are not special unpaid leave Employment break credit/disregard limited to 501 hours of service 44 Assessment of Penalties Compliance with 4980H 45

24 24 Excise Tax Buckets No Tax Bucket No excise taxes for any month that: An ALE Member offers to 100% of its employees who qualify as a fulltime employee to whom qualifying coverage must be offered coverage that is affordable and provides minimum value Must also offer to dependent children No full time employees received a Premium Subsidy in the exchange for that month Coverage under health plan was not affordable but they were enrolled anyway Did not qualify based on household income Did not enroll in the Exchange 46 Excise Tax Bucket Sledgehammer Tax If ALE Member failed to offer coverage through an eligible employer sponsored plan to all but 5% (or if greater, 5) of its employees who qualify as a full time employee to whom coverage must be offered AND 1 employee who qualifies as a full time employee to whom coverage must be offered receives a premium subsidy in the exchange Reason that employee received subsidy isn t relevant!!!!!! % 47

25 Excise Tax Bucket Tackhammer Bucket You are in Tackhammer Bucket for a month if you do not fit in either of the other two buckets AND 1 employee who qualifies as a full time employee to whom QUALIFYING coverage must be offered receives a subsidy The reason they receive the subsidy isn t relevant!!!! 48 Assessment of Penalties: Offer Offer Must extend to children (natural and adopted/placed for adoption) under age 26 BUT NOT SPOUSES Effective opportunity to enroll (or decline to enroll) no less than 1 time per plan year 125 election rules not impacted Special enrollment rules not impacted Partial Calendar Month Rule: Generally must offer coverage for whole month Special rule for mid month terminations COBRA premium payment rules apply Grace period Insignificant Shortfall Rule 49 25

26 Minimum Value Minimum value (MV) is satisfied if: The plan must pay 60% of the allowed costs What are allowed costs? Based on EHB 3 ways to determine if plan provides minimum value Minimum value calculator Array of design based safe harbors provided by the IRS, or Appropriate certification by an actuary that the plan provides minimum value HRA (if limited to expenses covered by plan) and HSA contributions may be taken into account in determining MV 50 Affordability Based on self only premium for lowest cost option that provides minimum value Safe harbor for determining affordability W 2 Rate of pay FPL 51 26

27 27 Affordability W 2 wages Based on annual wages for current year compared to sum of premiums for employee only coverage Wages does NOT include pre tax salary reductions Adjustments required for partial year offer of coverage Premium must remain a constant amount or percentage of W 2 This safe harbor poses problems where employee changes from fulltime to part time during the year or has an unpaid leave of absence 52 Affordability Rate of Pay Safe Harbor (hourly and monthly rate determined generally prior to start of coverage period) Hourly rate of pay X 130 (for hourly employees) Monthly rate of pay (for salaried employees) This appears to be based on GROSS pay Can still use if hourly rate changes during coverage period Use lower of rate of pay at start of coverage period or rate of pay for that month CANNOT USE IF SALARY CHANGES Federal Poverty Safe Harbor Federal poverty limit for single individual (based on most recent published report at start of plan year or anytime in last 6 months) SIMPLEST TO USE 53

28 28 Employer Reporting Obligations 2 new filing requirements that potentially may apply Code Section 6055 Designed to help the IRS administer the individual mandate Helps individuals report to IRS regarding individual mandate Code Section 6056 Designed to help IRS administer both Code Section 4980H (employer shared responsibility) and Code Section 36B (premium tax subsidy/credit) Helps full time employees substantiate premium subsidy/tax credit Reporting If fully insured, insurance carrier reports If self insured, then plan sponsor reports Every member of a controlled group that participates in a single plan is considered a plan sponsor and each must file a separate form Unrelated employers participating in a MEWA The Plan Administrator if a multi employer plan 1094 B transmittal form 1095 B Form (filed both with IRS and furnished to responsible individual) If also required to file under Code Section 6056, then use combined form to satisfy both 6055 and

29 Reporting What information is reported Name, address and EIN of plan sponsor Name and contact information of designated contact Name, address, and social security number of EACH INDIVIDUAL COVERED UNDER AN ELIGIBLE EMPLOYER SPONSORED PLAN for at least one day during a month in the calendar year!!!!! Active employees and covered dependents Retired employees (see exception) and covered dependents COBRA qualified beneficiaries and covered dependents QMCSO alternate recipients May use date of birth of dependents if unable to obtain SSN When first enrolled 2 annual attempts thereafter Report number of months covered for at least one day Reporting What is an Eligible Employer Sponsored Plan? Any group health plan that provides other than excepted benefits Self insured group health plan Doesn t have to provide minimum value Doesn t have to be affordable Fully insured policy issued in small or large group market Exemptions: Plans that supplement major medical E.g. HRA Plans that supplement Medicare 57

30 Reporting To whom and by when? Furnished to responsible individual by January 31 following the year being reported Responsible individual is the primary individual through whom all coverage is provided (i.e. the person responsible for enrolling) E.g. Active employee What about parents of QMCSO kids? May be provided electronically if advance consent is provided Filed with IRS by February 28 if filing paper March 31 if filing electronically Third party may file on employer s behalf First one due 2016 (for 2015 calendar year) Reporting Tied to 4980H Requirements Report for each employee who qualified as a full time employee during at least month during the calendar year Each ALE Member is responsible for reporting File with IRS (1094 C transmittal; 1095 C form) (February 28 if not filed electronically) March 31 Issue statements to employees (1095 C) January 31 Advance, affirmative consent required to provide electronically Third may file on ALE Member s behalf First one due 2016 (for 2015 calendar year) NO EXCEPTIONS 59

31 Reporting General Reporting with respect to each full time employee Name, address, and EIN of ALE Member Name, address and telephone of contact Calendar year being reported Certification as to whether the ALE member offered to its full time employees (and their dependents) the opportunity to enroll in minimum essential coverage through an eligible employer sponsored plan The months during the year that minimum essential coverage under the plan was available EACH full time employee s share of the lowest cost employee only coverage providing MV PER MONTH The number of the ALE Member s employees who qualify as full time to whom coverage must be offered Name, address, and SSN of the full time employee and the number of months actually covered Reporting Additional Information reported to IRS: Whether coverage offered to full time employees and their dependents provided minimum value and whether the employee had the opportunity to enroll the spouse Total number of employees by calendar month Whether an employee s effective date was affected by a waiting period by month Whether employer is a member of a controlled group and the name of the other controlled group members If contributing to an MET, whether the employer is not subject to assessable payments due to its contributions to the MET Name, address and EIN of third party reporting on behalf of ALE member 61

32 6056 Reporting Even more information related to the particular full time employee reported for each month Code indicating the levels of coverage offered (e.g. employee only, employee plus spouse, etc.) Coverage was NOT offered and: No penalty will be triggered (e.g. they are in a limited non assessment period) The employee did not qualify as a full time employee that month The employee was not employed during that month No other exception applies Coverage was offered but the employee was not a full time employee The employee was covered The ALE member met one of the affordability safe harbors for that month Reporting Simplified Reporting Qualifying Offer: If qualifying offer of coverage was made for all 12 months during the year, then file with IRS: Name, address, and SSN of employee Indicator code indicating that qualifying offer was made for all 12 months Statement to employee informing the employee that he and his/her family is not eligible for a subsidy in the exchange Must use general method of reporting if did not make qualifying offer for all 12 months, BUT May use qualifying offer indicator code for months that qualifying offer was made Qualifying offer: MV, affordable (under mainland FPL), offered to spouse and dependent children 63 32

33 Reporting Simplified Reporting 98% Rule If employer offers coverage through an eligible employer sponsored plan that is affordable and provides minimum value to 98% of all employees reported on form, then no need to identify employees on the form as full time or not and you don t have to identify total number of full time employees. Must satisfy reporting requirements otherwise Reporting Simplified Reporting (2015 only) If ALE member certifies made qualifying offer to 95% of its full time employees, then: Employee statement to employees If for all 12 months need only say that they are not eligible for premium subsidy If not for all 12 months, the employee statement must say that they might qualify for a subsidy and give contact File with IRS form that identifies employee s name, social security number and address with indicator code indicating that qualifying offer was made for all 12 months or if not, which months qualify offer was made 65

34 34 Question & Answer 66