Affordable Care Act Financial Advisory Council November 11,2016

Transcription

1 Affordable Care Act Financial Advisory Council November 11,2016 1

2 Disclaimer The materials and information contained herein are intended only to provide general information and in no way constitute legal advice. If you have specific questions or concerns, please consult legal counsel. 2

3 Minimum Value 3

4 What is the purpose behind reporting? Marketplace submits Forms 1094-A and 1095-A Employer Mandate MEC Providers submit Forms1094-B and 1095-B IRS IRS Individual Mandate ALEs submit Forms 1094-C and 1095-C Premium Tax Credit Eligibility 4

5 Forms 5

6 Forms 6

7 Forms 7

8 Forms 8

9 Forms 9

10 Exemptions 1. Homeless 2. Evicted or Foreclosed upon in past 6 months 3. Recent Domestic Violence 4. Recent Death of a Close Family Member 5. Recent Fire, Flood, or other natural human-caused disaster that caused substantial damage to your property 6. Bankruptcy in Last 6 months 7. Medical expenses you couldn t pay in the last 24 months 8. Caring for the Ill, Disabled, or Aging Family member 9. Denied CHIP 10. A person required by court to give Medical support to a child 11. Ineligible for Medicaid because your State didn t expand eligibility for Medicaid under the ACA 12. Your current health plan is being cancelled and other plans are unaffordable 13. Any other Hardship 10

11 Exemptions 11

12 Affordability For 2016 plan year: The employee s share of premium; For self-only coverage; For the lowest cost plan offered; That has minimum value; Is not more than 9.66% of household income. 12

13 Who Knows Household Income? Affordability Safe Harbors 1. Box 1 of current year W-2 wages I. Can t apply safe harbor until year is over 2. Monthly rate of pay I. Based on rate of pay at start of plan year 1. Hourly employees = Base monthly rate of pay on 130 hours per month, regardless of actual hours worked 2. Salaried employees= Base monthly rate of pay as 1/12 of II. salary at the start of plan year This method cannot be used for tipped employees or employees who are paid exclusively by commissions 3. Federal Poverty Level (FPL) I. Based on most recently published mainland FPL for household of one at the start of plan year 13

14 Affordability Safe Harbors Form W 2 FPL Rate Pay EE required contribution for self- only coverage does not exceed an indexed 9.66% of Box 1 wages. EE required contribution for self- only coverage does not exceed an indexed 9.66% of the FPL for a single individual ($93.76 per month in 2015; $95.63 per month in 2016). EE required contribution for self- only coverage does not exceed an indexed 9.66% of that employee s rate of pay. For salaried employees, use their monthly salary. For hourly employees, assume 130 monthly hours. 14

15 TRS s lowest cost Plan ActiveCare 1-HD cost $341 Subtract the District s $225= $116 Premium Monthly Rate 12 1,560 hourly wage affordability 2015 $116 X 12 = $1,392 / 9.5% = $14, / 1,560 = $9.39 (30 hours X 52 weeks= 1,560) 2016 $116 X 12= 1,392/ 9.66%= 14, = $

16 Affordability Avoiding Part B Tax for Offering Unaffordable Coverage TX Medicaid Eligible Qualifies for Subsidy within the Exchange (Tax Credit) Household Size 100% 133% 150% 200% 300% 400% 1 $11,670 $15,521 $17,505 $23,340 $35,010 $46,680 2 $15,730 $20,921 $23,595 $31,460 $47,190 $62,920 3 $19,790 $26,321 $29,685 $39,580 $59,370 $79,160 4 $23,850 $31,721 $35,775 $47,700 $71,550 $95,400 5 $27,910 $37,120 $41,865 $55,820 $83,730 $111,640 6 $31,970 $42,520 $47,955 $63,940 $95,910 $127,880 7 $36,030 $47,920 $54,045 $72,060 $108,090 $144,120 8 $40,090 $53,320 $60,135 $80,180 $120,270 $160,360 Based on 2014 Poverty Guidelines 16

17 How Much Do I Owe? 4980H(a)Penalty Failure to Offer Requirements $2,080 $2,160 Applies when offer percentage is not met; and At least 1FT employee receives a subsidy in the Exchange Penalty is multiplied by the number of FT employees minus 30 Minus 80 in 2015 Penalty is pro-rated on a monthly basis 17

18 Failure to Offer XYZ Company has 110 FT employees Does not meet the offer requirements for the entire year, and At least 1 FT employee receives a subsidy through the Exchange 2015 Penalty=(110-80) X $2,080= $62, Penalty=(110-30) X $2,160= $172,800 18

19 How Much Do I Owe? 4980H(a)Penalty Unaffordable and/or No Minimum Value $3,120 $3,240 Applies when a FT employee is not offered coverage is unaffordable; and The FT employee receives a subsidy in the Exchange Penalty only applies to FT employees receiving a subsidy Penalty is pro-rated on a monthly basis 19

20 No Minimum Value/Unaffordable XYZ Company has 110 FT employees They meet the offer requirements, but For 10 employees the coverage is considered unaffordable Of the 10 employees, 4 apply through the Exchange and receive a subsidy for the entire year 2015 Penalty= 4 X $3,120 = $12, Penalty= 4 X $3,240 = $12,960 20

21 2016 Deadlines (2015 Tax Year) Due dates for Forms 1095-B and 1095-C for calendar year Copies must be provided to Responsible Individuals by March 31. Copies filed to the IRS Filing manually by May 31 Filing electronically by June 30 One transmittal form (Form 1094-B or 1094-C) is to be submitted with employee forms 21

22 Future Deadline (2016 Tax Year) Same deadlines as W2 Reporting Copies must be provided to Responsible Individuals by January 31. Reporting filed to the IRS Filing manually by February 28 Filing electronically by March 30 (2017 for 2016 Tax Year) 22

23 Don t Want to Do the Reporting? Beware, the penalties are steep: Penalties can be as high as $520 per person $260 penalty for not filing with IRS and a $260 penalty for not providing a copy of the form to the responsible individual Penalties capped at $3 million per year Lesser penalties may apply if reporting is incomplete or inaccurate, but the IRS has indicated these penalties will generally not apply during the first reporting year 23

24 Forms 1095-C Lines 14 and 16 Codes 24

25 Forms 1095-C Lines 14 and 16 Codes 25

26 Avoid TIN Validation Errors The error formerly known as AIRTN500 was likely the most common 1095-C reporting error for TY 2015 IRS did not indicate which covered individual was associated with AIRTN500 error Special solicitation rules outlined DOB is SSN or other TIN is not available Error message was not a proposed penalty for TY 2015 Penalty for Tax Year 2016? 26

27 TIN/SSN Solicitation: Two Accepted Approaches General Rule: Must act in a responsible manner to solicit a TIN from a individual, which requires potentially making up to three attempts to obtain a TIN before they can report using DOB. Two approaches currently available- IRS Notice and Proposed IRS regulations. (See IRS Pub for more information.) 27

28 Confirm Your Employer Name/FEIN AIREX126 was likely the most common 1094-C error that led to filing rejections. Business & Specialty Help Line: 1 (800) Qualifications to call: The paid preparer and the paid preparer authorization on the last filed return must be checked An officer of the corporation Have or provide a Form 8821 Tax Information Authorization authorizing you to discuss the corporation s entity information Have or prove a Form 2848 Power of Attorney and Declaration of Representative authorizing you to discuss the corporation s entity information 28

29 ACA Information Return (AIR) System Required if submitting 250+ Form 1095s at a time 29

30 IRS Transmittal Process is Lengthy The steps necessary in order to file to the IRS are detailed, take time, and are not trivial Information transmitted through the AIR system (ACA Information Return System) 4 important steps (if filing directly): Step 4: File! Step 1: Register Step 2: Obtain Transmitter Control Codes (update application from last year) Step 3: Test in the AIR System (not required to test if you passed testing last year) 30

31 Mind the Rules! The IRS has outlined very specific schema rules and business rules, some of which have changed for TY Transmissions will be rejected if they do not pass schema Ten schema elements that were optional for TY 2015 are required for TY 2016 Error threshold enforced this year Error codes are a thing of the past! Use the IRS website 2016 Business and Schema Rules 31

32 Penalties: Good Faith Effort Relief Does Not Apply The steps necessary in order to file to the IRS are detailed, take time, and are not trivial Watch out for double penalties! These penalties apply per form filed with the IRS and furnished to individuals. $50 if corrected within 30 days $100 if corrected after 30 days but before Aug. 1 $260 if no corrections are made $520 if acted with intentional disregard 32

33 2015 Plan Year Section 4980H Transition Relief No Employer Mandate 2 No penalty risk 0 for any month 1 in 2015 when 5 certain conditions are met FTE Count 100+ FTE Count Relaxed Employer Mandate 2 Substantially all means 70% Disregard FTEs from the 6 6 A Penalty Full Employer Mandate Full force of the employer mandate applies for the first time eff. the first day of the 2016 PY Full Employer Mandate Substantially all means 95% Disregard 30 FTEs from the A Penalty 33

34 Penalty Assessment Refresher ALE Member? FTE Count Does coverage provide Minimum Value? Offer MEC to 95% of all FT Employees? Is coverage Affordable? Don t forget- penalties are only triggered when a FT Employee enrolls in subsidized Exchange coverage! Yes to All? No penalty risk 34

35 Letters FTE Count 35

36 Letters FTE Count 36

37 Letters FTE Count 37

38 Letters FTE Count 38

39 Letters FTE Count 39

40 Letters FTE Count 40

41 Letters FTE Count 41

42 Letters FTE Count 42

43 WellSystems Option FTE Count 43

44 Eligibility Tracking Calculators (ETC) Option 44

45 Pricing TRS ActiveCare/ Wellsystems- $2.00 per employee (You will still need to complete, file and/or provide Form 1094-C and Form 1095-C (completing Parts I and II), either yourself or by hiring a third-party.) ETC (Tracking and Reporting)- $1.05 PEPM- FBS/ $1.25 PEPM- Non- FBS (indemnify the client, assumes liability for tracking eligibility, import files from districts payroll software to track employees, notifies you when offer is needed, and handles appeals on behalf of clients) 45

46 Sample Template 46

47 Thank you for your attendance! Tom Sawyer Benefit Consultant Cindy Leal-McClure Benefit Consultant 47