Getting Ready for 2016 ACA Reporting: Because Some Things Are Too Much Fun to Do Only Once

Transcription

1 Getting Ready for 2016 ACA Reporting: Because Some Things Are Too Much Fun to Do Only Once October 20, 2016 Presented by Edward Fensholt, JD Scott Behrens, JD Rory Akers, JD Compliance Services, Lockton Benefit Group Click the Lockton logo to join the webcast 2016 Lockton Benefit Group Images 2016 Thinkstock. All rights reserved.

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6 Getting Ready for 2016 ACA Reporting: Because Some Things Are Too Much Fun to Do Only Once October 20, 2016 Presented by Edward Fensholt, JD Scott Behrens, JD Rory Akers, JD Compliance Services, Lockton Benefit Group 2016 Lockton Benefit Group Images 2016 Thinkstock. All rights reserved.

7 Agenda

8 Agenda ACA Reporting Snapshot Which Employers Must Report? Who Are ALEs Reporting On? Changes for 2016: Transition Relief When to Report How to Report: Form 1095-C Part II, Line 14 How to Report: Form 1095-C Part II, Line 15 How to Report: Form 1095-C Part II, Line 16 How to Report: Form 1095-C Part III How to Report: Form 1094-C Odds and Ends: COBRA and Transfers Cleaning Things Up 8

9 ACA Reporting Snapshot Ed Fensholt

10 ACA Reporting Snapshot Our Focus Today Process largely unchanged from last year; this presentation will touch on the basics, and many of the slides address and include examples of the basics, but we will mainly focus on the new things, the nuances, and the common errors from last year Due dates are accelerated Good faith effort standard does not apply Some transition relief expires, some lingers through all or part of the 2016 reporting year New codes for Line 14, 1095-C Line 15 remains deceptively complicated for wellness and opt-out incentives, and some HRA and flex credits; vendor programming shortcomings are likely going to manifest here COBRA remains a mess, M&A remains a bit of a mystery Accepted with errors messages what to do and when to do it, especially about missing or erroneous SSNs, and how the IRS intends to provide additional clarity around errors on 2016 filings 10

11 ACA Reporting Snapshot A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms what they re asking for, and why make more sense) : Allows the IRS to verify individuals compliance with the individual mandate, and Allows the IRS to verify applicable large employer (ALE) compliance with the employer mandate The reporting forms are, with one exception, specific to the employee (like W-2) 11

12 ACA Reporting Snapshot Here s the exception ALEs also file Form 1094-C, which also serves multiple purposes Transmittal document to accompany all the Forms 1095-C sent to the IRS, identifying the transmitter (the ALE) similar to a W-3 in that regard ALE also demonstrates compliance with the employer mandate s aggregate obligation the Tier 1 obligation to offer coverage to at least 95% of FTEs and their children ALE also identifies the other members of its controlled group, to facilitate IRS enforcement of the employer mandate between employer members of an ALE Group 12

13 Employer Reporting - Summary Form Used by B Insurers to report actual coverage provided to primary insureds and their dependents; form is supplied to the covered primary insured, copy to IRS Non-ALEs to report actual non-supplemental self-insured coverage provided to primary insureds and their dependents; form is supplied to the covered primary insured, copy to IRS ALEs (at their option) to report actual self-insured coverage to non-employees (retirees, partners, outside directors, COBRA beneficiaries, contractors, etc.); form is supplied to the covered primary insured, copy to IRS 1094-B Insurers, non-ales and ALEs (as applicable) to transmit the individual Forms 1095-B to IRS 1095-C Parts I and III, and maybe II 1095-C Parts I and II, and maybe III ALEs to report self-insured coverage provided to primary insureds and their dependents; employer makes abbreviated entry in Part II if the primary insured was not an ACA full-time employee for at least a month during the year Form is supplied to the primary insured, copy to IRS ALEs to report coverage offers to individual full-time employees, to demonstrate Tier 2 compliance If the full-time employee is covered under insured coverage, or not covered under any coverage, the employer completes just Parts I and II; if covered under self-insured coverage, the employer completes Parts I, II and III Form is supplied to the FTE, copy to IRS 1094-C ALEs to transmit the individual forms 1095-C to the IRS, and demonstrate Tier 1 compliance 13

14 Which Employers Must Report? Rory Akers

15 Which Employers Must Report? Applicable Large Employers (ALEs): In short, employers subject to the employer mandate that is, employers that, together with controlled group and affiliated service group members, have an average of 50 or more full-time employees (including full-time equivalent employees fictional full-timers made up of part-time hours) during the prior calendar year Calendar year look-back; some employers confuse this look-back with their measurement periods for determining FTEs Controlled groups: Generally, at least 80% common ownership This is the only place where part-time hours or fictional full-timer employees matter; if the relevant numbers put the employer in the boat (i.e., if they subject the employer to the employer mandate), coverage offers are compelled only with respect to real fleshand-blood FTEs Small Employers Providing Non-Supplemental Self-Insured Coverage Rare; we ll speak no more about this 15

16 Which Employers Must Report? HoldCo, Inc. [EIN ] 15 full-time employees SubCo 1, Inc. [EIN ] 35 full-time employees 100% 83% SubCo 2, Inc. [EIN ] 25 full-time employees 50% SubCo3, Inc. [EIN ] 10 full-time employees There is an ALE Group (the green box) consisting of HoldCo, SubCo1 and SubCo 2 Each of these three entities is an ALE, subject to the employer mandate and reporting, even though considered separately none of them would be an ALE; SubCo3 is not an ALE Even though HoldCo, SubCo1 and SubCo2 are all ALEs by virtue of their being part of an ALE Group, each of them applies Tier 1 and Tier 2 of the employer mandate separately, and reports separately even though their employees might be covered under a single plan; this is EIN-by-EIN reporting, not plan-level reporting like the Form

17 Who Are ALEs Reporting On? Scott Behrens

18 Who Are ALEs Reporting On? Any person who had coverage for at least a day during the calendar year, under a self-insured plan offered through the employer Can be a common law employee (FTE, part-timer, regular, temp, seasonal, per diem, etc.), non-common law employee (contractor, former employee, retiree, partner, outside director, COBRA enrollee or dependents of any of these) OR Any common law employee, who was an ACA FTE for at least a month during the calendar year, and who had cleared his or her limited non-assessment period (LNAP) before year end 18

19 Who Are ALEs Reporting On? What s a Common Law Employee? Tax Code question Not partners, independent contractors, outside directors What about temps? Is the employer hiring them, or obtaining them from a staffing firm? Staffing industry takes the view that a staffing associate is a common law employee of the staffing firm Factors: A bunch of them, key among them the right control what the individual does and how he/she does it; allow the employer to decide the common law employee question 19

20 Who Are ALEs Reporting On? When is a Newly-Hired Employee an ACA FTE The newly-hired FTE : Is not an ACA FTE until the first day of fourth full calendar month, as long as coverage offered by then Example: Employee hired in Sept. or later, gets a coverage offer by Jan. 1 What if the coverage offer comes earlier, and the employee enrolls? Is literally measured month-to-month; even if employer applies look-back measurement method to determine FTEs, the newly hired FTE is measured month-to-month until employed through an entire standard measurement period (SMP), then FTE status depends on average hours over SMPs, as with everyone else Those emerging from SMPs averaging 30+ hrs/week are ACA FTEs for the ensuing stability period (plan year) Change from FTE to VH/PT/Seasonal before completing an SMP: Continue to measure month-to-month Lockton clients: Ask your Account Team for our white paper titled, Those Vexing Changes in Status 20

21 Who Are ALEs Reporting On? When is a Newly-Hired Employee an ACA FTE The newly-hired variable hour/part-time/seasonal employee Is not an ACA FTE until: The first day of the Initial Stability Period or (if not then, because he or she averaged fewer than 30 hours of service per week over the Initial Measurement Period) then The first day of the Standard Stability Period (plan year) following the first Standard Measurement Period in which he/she averages 30+ hrs/week Changes from VH/PT/Seasonal to FTE during the initial measurement period (IMP): Treat as an ACA FTE on the earlier of two dates: First day of the Initial Stability Period, if the employee averaged 30+ hrs/week over the IMP First day of the fourth full calendar month following the change in status, as long as a coverage offer is made by then Lockton clients: Ask your Account Team for our white paper titled, Those Vexing Changes in Status 21

22 Who Are ALEs Reporting On? Determining FTEs: Hours of Service Paid hours NOT hours worked abroad NO NEED to convert certain payments to hours: workmen s comp, state-mandated disability leave payments, disability benefits funded by employees on an after-tax basis Some unpaid leaves can t hurt the employee, in an average hours of service calculation Lockton clients: Ask your Account Team for our white paper detailing what hours must be taken into account, and what hours may be disregarded. 22

23 Who Are ALEs Reporting On? What Are Limited Non-Assessment Periods and When Are They Cleared? LNAPs include: The first partial month of employment An initial measurement and administrative period, for newlyhired variable hour, part-time or seasonal employees tracked via the look-back measurement method To claim this as an LNAP, an employee emerging from the measurement period must be offered coverage for the ensuing stability period it s the timely coverage offer that buys the relief The waiting period for newly-hired FTEs, as long as an ACAcompliant coverage offer is made not later then the first day of the fourth full calendar month of employment Similar period following a variable hour, part-time or seasonal employee s switch to full-time status during the initial measurement period For employers first qualifying as an ALE because of growth in FTE/FTEq count for the prior CY), the first three months of the CY, with respect to employees not offered coverage at any point during the prior CY 23

24 Changes for 2016: Transition Relief Ed Fensholt

25 Changes for 2016: Transition Relief (A Quick Summary) Had FTEs/FTEqs in 2014: Free pass from the employer mandate for 2015 (but not reporting!) If had non-cy plan relief, free pass from employer mandate through the end of the plan year; begin making adequate coverage offers by first day of PY beginning in 2016 or risk penalties Employer mandate s Tier 1 aggregate obligation : Make coverage offer to at least 70% of FTEs in the EIN, and their children Becomes 95% for months in 2016 and later For employers with non-cy plan relief, it remains 70% for months in 2016 through the end of the plan year 1 Penalty calculation Free 80 vs. the Free 30 for aggregate obligation penalty calculations For employers with non-cy plan relief, it remains Free 80 through the end of the plan year 1 Multiemployer plan relief (employer bound to make contributions to a multiemployer plan (not MEWA) under a bargaining agreement; union supplies MV and affordable coverage, and offers coverage to children) Relief continues for 2016 reporting 25 1 Employers in a controlled group/affiliated service group with an employer that qualifies for non-cy plan relief can also take advantage of it

26 When to Report Rory Akers

27 When to Report 2016 Reports Due in 2017 Form Due Date How Extensions & Waivers 1095-C Jan. 31 to FTEs, others with self-insured coverage On paper or electronically with consent May apply to IRS via letter for 30- day extension 1095-C 1094-C Feb. 28 to IRS, unless e-filing, then March 31 Must e-file if submitting 250+ Forms 1095-C, unless get waiver Automatic 30-day extension via Form 8809; may apply for additional 30- day extension May apply for e- filing waiver on Form

28 How to Report: Form 1095-C Part II, Line 14 Scott Behrens

29 How to Report: Form 1095-C Part II, Line 14 Remember An employer only deals with Line 14 of Part II of Form 1095-C if it s dealing with: An employee who was an ACA FTE (i.e., common law employee, 30+ hours of service per week on average, cleared any LNAP etc.) for at least one month during the reporting year, OR An individual (FTE or otherwise) with self-insured coverage for at least a day during the reporting year (very abbreviated entry more on that in a minute) 29

30 How to Report: Form 1095-C Part II, Line 14 Generally, Line 14 tells the IRS whether the ALE offered coverage to the FTE for a given month or months and if it did, whether the coverage was Minimum Value (MV), meaning at least 60% actuarial value (i.e., Bronze-level coverage) or merely Minimum Essential Coverage (MEC), and whether coverage was offered to the employee only, or family members too This is all described by the use of 1 of 10 codes, 2 are new and MUST be used if applicable The reporting employer MUST ACCOUNT FOR ALL 12 MONTHS ON LINE 14 Only report a coverage offer for a month if offered for entire month otherwise, report No coverage (1H) even if there s a legit reason for no offer 30

31 How to Report: Form 1095-C Part II, Line 14 Codes Line 14 Codes 1A 1B 1C 1D 1E 1F 1G 1H 1I 1J 1K Means Qualifying Offer for the month in question; a Qualifying Offer is an offer of MV coverage to the employee, with the employee s cost for single coverage not in excess of 9.66% of the mainland single poverty level; at least MEC must be offered to spouse and children Offered MV to e ee only, for entire month Offered MV to e ee, at least MEC to kids (not spouse) for entire month Offered MV to e ee, at least MEC to spouse (not kids) for entire month; don t use 1D if offer to spouse was conditional (use 1J) Offered MV to e ee, at least MEC to spouse and kids for entire month; don t use 1E if offer to spouse was conditional (use 1K) Offered MEC but not MV to e ee or to e ee and any combination of family unit, for entire month E ee was not a FTE for any month but covered under employer s self-insured plan No MV or even MEC coverage offered to e ee, for one or more days of the month Reserved by the IRS Offered MV to e ee, conditional offer of at least MEC to spouse (no offer to kids) Offered MV to e ee, at least MEC to kids; conditional offer of at least MEC to spouse 31

32 How to Report: Form 1095-C Part II, Line 14 Line 14 common situations MV coverage offered to the employee and family for the entire month 1E Employer offers MV coverage to the employee for the entire month, at an employee cost less than 9.66% of the mainland poverty level, and offers at least MEC to the spouse and children 1A Employer offers MV coverage to employee and family, but coverage for spouse is conditioned on spouse NOT being eligible for coverage elsewhere, such as through his or her own employer 1K MEC but not MV coverage offered to the employee and family for the entire month 1F Coverage not offered, or offered for less than entire month, because the employee was hired mid-month 1H Coverage not offered, or offered for less than entire month, because the employee was in a waiting period 1H Coverage not offered, or offered for less than entire month, because the employee was in an initial measurement or initial administrative period 1H 32

33 How to Report: Form 1095-C Part II, Line 14 Line 14 common situations Coverage not offered for the entire month because the employee terminated midmonth, and coverage didn t continue to month s end 1H Employer didn t offer coverage to the FTE, even including where the employer is bound by a bargaining or similar agreement to make contributions to a unionaffiliated health plan on the employee s behalf (and even where the employee was enrolled in that coverage) 1H Person was enrolled in self-insured coverage of the employer for at least a day (meaning employer must complete Part III of Form 1095-C) but the person was not a full-time employee for even a single month 1G in the All 12 months box Offer of COBRA coverage for all or part of the month, to a former employee 1H COBRA coverage actually supplied for all or part of the month to a former employee 1H 33

34 How to Report: Form 1095-C Part II, Line 14 Line 14 Examples Employer offers MV coverage to eligible employees and their spouses and children thru the month the children attain age 26. The employee is an FTE and eligible for coverage the entire calendar year (whether enrolled or not is not relevant for Line 14 purposes only the offer) 1E 34

35 How to Report: Form 1095-C Part II, Line 14 Line 14 Examples Same coverage offer as on previous slide. Employee joins the employer on March 10 as an FTE, and is offered coverage on June 1 (first of the month following 60 days) through the end of the year 1H 1H 1H 1H 1H 1E 1E 1E 1E 1E 1E 1E 35

36 How to Report: Form 1095-C Part II, Line 14 Line 14 Examples Same coverage offer as on previous slide. Employee begins the year as an eligible FTE, and remains so through May 12, when he terminates. What if eligibility had continued through May 31? 1E 1E 1E 1E 1H 1H 1H 1H 1H 1H 1H 1H 36

37 How to Report: Form 1095-C Part II, Line 14 Line 14 Examples Same coverage offer as on previous slide. A variable hour employee joins the employer on July 10, 2015, completes an initial measurement period on July 9, 2016 and is offered coverage as an FTE effective August 1, 2016, through the end of the 2016 calendar year 1H 1H 1H 1H 1H 1H 1H 1E 1E 1E 1E 1E 37

38 How to Report: Form 1095-C Part II, Line 14 Line 14 Examples Employer offers self-insured coverage to hourly employees, whether FTEs or PTEs. A part-time employee, who is not an FTE for even a single month during the year, enrolls in the self-insured coverage for all or even part of the year. What if she had never enrolled? What if the coverage had been fully insured and she had enrolled? If using 1G, put it in the All 12 Months box 1G 38

39 How to Report: Form 1095-C Part II, Line 14 Line 14 Examples Employer offers MV coverage to an FTE for the entire year; coverage is made available to the family. The eligibility of the spouse is conditioned on the spouse NOT being eligible for group coverage offered by another employer. If 1J or 1K applies, must use it! 1K 39

40 How to Report: Form 1095-C Part II, Line 14 Key Takeaways Line 14 Lockton clients: Ask your Account Team for our white paper on Lines of the Form 1095-C, updated for 2016! 40 Every month must be accounted for; leave no month blank! Of course, if completing the All 12 Months box, no need to complete the rest of the line Insert a code for a coverage offer ONLY if the coverage was available for the ENTIRE month This is a different standard than under Part III, where coverage is listed for a month if the individual had coverage for merely a day Generally, report coverage as having been offered for a month if the employee could have had it for that month, had he elected it (potential wrinkles here) Watch conditional offers new codes for 2016 Watch non-cy plan transition relief Don t leave line 14 blank for the months prior to the first day of the PY, and Don t show 1H where there was actually a coverage offer made for the months prior to the first day of that PY, even though the employer wasn t subject to the employer mandate Use 1G on line 14, and don t complete lines 15 and 16, where self-insured coverage is provided to someone who was not an FTE for even a single month

41 How to Report: Form 1095-C Part II, Line 15 Ed Fensholt Here is where your vendor is most likely to err

42 How to Report: Form 1095-C Part II, Line 15 Line 15 Only complete for a month if code 1B, 1C, 1D, 1E, 1J or 1K is on line 14 (the minimum value offers) IRS doesn t care about the affordability of MEC coverage 1A is also a MV offer, but it s dealt with differently 1A on line 14 means NOTHING in line 15 Tells the IRS how much the FTE is asked to pay for the least expensive employee-only MV coverage option offered to him or her this will often not be what the employee is actually paying! 42

43 How to Report: Form 1095-C Part II, Line 15 Line 15 Include cents. If there is no e ee contribution, insert $0.00 don t leave blank for any month in which 1B, 1C, 1D, 1E, 1J or 1K is on line 14 This number can be an average of the monthly costs for the plan year (not the calendar year ); reflecting and average is easy for CY plans, little complicated for non-cy plans E.g., April 1 March 31 PY; average monthly cost for the PY could be placed in the Jan., Feb. and March boxes; average monthly cost for the PY could be placed in the boxes for April through December See the definition of Employee Required Contributions on page 15 of the Instructions

44 How to Report: Form 1095-C Part II, Line 15 Line 15 Qualifying Offers. If the employer makes a qualifying offer to the employee and inserts code 1A on line 14 for one or more months, line 15 is NOT completed for those months What s a qualifying offer? An offer of at least MV coverage to the employee, and at least MEC to the spouse and children to age 26, where the employee would pay no more than 9.66% (for 2016) of the mainland poverty level for employee-only coverage Why no entry on line 15? The actual cost of the offer is irrelevant because the employer is effectively claiming the poverty level safe harbor, for affordability purposes If code 1A is in line 14 Leave line 15 blank 1A 44

45 How to Report: Form 1095-C Part II, Line 15 Line 15 Opt-Out Incentives: Include the value of an opt-out incentive in the employee s cost on Line 15, unless the opt-out incentive is a qualifying incentive (or the incentive pre-dated Dec this grandfather rule goes away for 2017) An incentive is qualifying if it s not provided unless and until the employee attests he and his tax family (individual for which he expects to claim an exemption) have or will have other group coverage Potential FLSA issues related to opt-outs Here is where your vendor is most likely to err 45

46 How to Report: Form 1095-C Part II, Line 15 Line 15 Wellness Incentives and Penalties: Adjust the line 15 coverage cost as follows, for wellness incentives and penalties: Assume the employee failed to meet the criteria to win incentive/avoid penalty for nontobacco-related components of a wellness program, i.e., don t deduct the incentive amount, but add the penalty Assume the employee met the criteria to win the incentive/avoid the penalty for tobacco-related components, i.e. deduct the incentive amount, but don t add the penalty Here is where your vendor is most likely to err 46

47 How to Report: Form 1095-C Part II, Line 15 Line 15 HRA Credits: If they can be applied to pay premium (or premium and pay for OOP expenses), adjust the employee monthly cost by a monthly ratable portion of the HRA benefit for the year If they can only be applied to reimburse OOP costs (and can t be used to pay premium), do not adjust the employee cost on line 15 to account for any portion of the HRA benefit Here is where your vendor is most likely to err 47

48 How to Report: Form 1095-C Part II, Line 15 Line 15 Flex Credits: If the flex credit can ONLY be used to pay premium for medical coverage, apply the credits to reduce the employee cost on line 15 If the flex credit can also be taken as cash, or used to pay premiums for non-medical care (like a dependent care FSA), do not adjust the employee cost on line 15 to account for any portion of the flex credits Here is where your vendor is most likely to err 48

49 How to Report: Form 1095-C Part II, Line 15 Line 15 Examples in most examples we ll assume a CY plan, and full year s eligibility Employer offers a single MV coverage option to eligible employees and their spouses and children under a calendar year plan. The employee is an FTE and eligible for coverage the entire calendar year (whether enrolled or not is not relevant for Line 15 purposes only the offer is relevant). The cost to the employee, for e ee-only coverage under the MV option, is $ per month, and this rate stays in effect for all 12 months. 1E

50 How to Report: Form 1095-C Part II, Line 15 Line 15 Examples Same facts, except the employee declines employee-only coverage, and enrolls in family coverage for $ per month. Same facts, except the employer also offers a second MV option that is slightly more expensive ($ per month for employee-only coverage). The employee enrolls in the more expensive option. 1E

51 How to Report: Form 1095-C Part II, Line 15 Line 15 Examples: Non-CY Plan Year, Change in Cost Employer offers MV coverage to eligible employees and their spouses and children under a plan with a July 1 June 30 PY. Employee is eligible all calendar year. The employer charges $105.10/mo for the least expensive e ee-only coverage offer supplying minimum value for the PY, and $120.20/mo for that coverage for the PY 1E

52 How to Report: Form 1095-C Part II, Line 15 Line 15 Examples: Opt-Out Incentive Same facts, except the employer offers a new (for 2016) $50/month opt-out incentive if the employee attests that he and his tax family have or will have other group coverage What if no attestation were required? 1E

53 How to Report: Form 1095-C Part II, Line 15 Line 15 Examples: Wellness Programs Employer offers a single MV coverage option to eligible employees and their spouses and children under a CY plan. The employee is an FTE and eligible for coverage the entire calendar year. The cost to the employee, for e ee-only coverage under the MV option, is $155 per month, and this rate stays in effect for all 12 months. The cost for family coverage is $260 per month. The employee enrolls in family coverage. The employer offers a wellness program providing a $75/month incentive for employees whose weight and blood pressure are within range, and $50/month for tobacco non-users. The employee qualifies for the first, but as a tobacco user he does not qualify for the latter. His actual premium for family coverage is $185/month. 1E

54 How to Report: Form 1095-C Part II, Line 15 Line 15 Examples: Wellness Programs How do we get $105.00? 1. Start with the cost to the employee, for e ee-only coverage under the cheapest (in this case, only) MV coverage option available to the e ee: $155 per month, not what the employee is actually paying 2. Even though the employee qualifies for the $75/mo. discount for weight and blood pressure, we have to assume he did not. We re still at $155 per month 3. Even though the employee does NOT qualify for the tobacco incentive, we have to assume he does: $155 - $50 = $ E

55 How to Report: Form 1095-C Part II, Line 15 Key Takeaways Line 15 Line 15 is rather straightforward, for most employers Often, the amount on line 15 won t be what the employee is paying Adjustments for opt-out incentives (for new incentives in 2016, and for 2017 or later), wellness incentives, HRA credits and flex credits (same effective dates) are almost certainly going to be jacked up Opt-outs: Key question is, Is it a new incentive? If so, is it a qualified incentive? Wellness: Calculate deemed employee-only premium, assuming failure to meet nontobacco standards, but assuming success in meeting tobacco standards HRAs: Key question is, Can the account balance be applied to premium? Flex credits: Key question is, Can the credits be taken as cash or used to pay for nonmedical coverage, or can they only be used to pay for medical coverage? 1A on line 14 means no entry on line 15 COBRA is a mess; more on it later. Different results depending on nature of the employee s qualifying event Lockton clients: Ask your Account Team for our white paper on Lines of the Form 1095-C, updated for 2016! 55

56 How to Report: Form 1095-C Part II, Line 16 Ed Fensholt

57 How to Report: Form 1095-C -- Part II, Line 16 Line 16 tells the IRS, via 1 of 8 codes (if any are applicable) Whether a FTE was enrolled in employer-based coverage (MV or even MEC) for a given month If the employer reports no coverage offer on Line 14 (1H), why the employer didn t offer coverage (i.e., the Exculpatory Codes that is, I didn t offer coverage but the IRS can t fine me because I didn t have to offer coverage ) If the employee waived MV coverage, whether the employer offered the e eeonly tier at a price point within an affordability safe harbor 57

58 How to Report: Form 1095-C Part II, Line 16 Codes Line 16 Code 2A 2B 2C 2D 2E 2F 2G 2H 2I Means E ee not employed by the employer for a single day during the month E ee was employed during the month but was not a full-time employee for the month, or terminated before end of month and coverage lapsed before end of month E ee was enrolled in at least MEC for every day of the month Use this code if it and another 2-series code applies, except where 2E applies. Do not enter 2C on line 16: If 1G is entered in the All 12 Months box (line 16 should be blank) For terminated employees enrolled in COBRA (use 2A) E ee was not covered for the entire month, but was employed during the month but was in a limited non-assessment period for the month (first partial calendar month of employment, first three full calendar months of employment, initial measurement and administrative period, period following certain change in status during initial measurement period) Multiemployer (union-affiliated) health plan relief rule applied to the employer for every day of the calendar month E ee not covered for the entire month, but was offered MV coverage that was affordable under W-2 safe harbor E ee not covered for the entire month, but was offered MV coverage that was affordable under poverty level safe harbor E ee not covered for the entire month, but was offered MV coverage that was affordable under rate of pay safe harbor Reserved by the IRS Trump Code! 58

59 How to Report: Form 1095-C -- Part II, Line 16 Line 16 common situations Employee enrolled in the employer s MEC or MV coverage 2C ( trump code ) Employee received no offer of coverage for the entire month because he wasn t even an employee at any point in that month 2A Employee received no offer of coverage for the entire month because she terminated employment during the month and lost coverage mid-month as a result 2B Employee received no offer of coverage for the entire month because it was his first month of employment, and he joined the employer other than on the first day of the month 2D Employee received no offer of coverage for the entire month because she was a newly-hired FTE and was in her waiting period (but not beyond the first three full months of employment) 2D Employee received no offer of coverage for the entire month because he was still in an initial measurement or administrative period 2D 59

60 How to Report: Form 1095-C -- Part II, Line 16 Line 16 common situations Employee received no offer of coverage from the employer for the entire month but the employer was bound by a collective bargaining or similar agreement to make contributions to a union-affiliated health plan (that offers MV and affordable coverage to employees, and coverage to family members) on the employee s behalf 2E The employee waived MV coverage but the price point, for e ee-only coverage, was within one of the three affordability safe harbors 2F, 2G, 2H The employee waived a qualifying offer 2G (optional) 60

61 How to Report: Form 1095-C -- Part II, Line 16 Line 16 Examples: Full year of coverage Employer offers MV coverage to eligible employees and their spouses and children under a CY plan. The employee is an FTE and eligible for coverage the entire calendar year and enrolled (whether enrolled or not IS relevant for Line 16). The employer charges the employee $ per month for e ee-only coverage under its only MV option, for all 12 months. 1E C 61

62 How to Report: Form 1095-C -- Part II, Line 16 Line 16 Examples: Full year of eligibility, employee declines coverage Same facts, only the employee declined coverage for the year. Assume the offer of coverage was within the rate of pay safe harbor. What if the offer had not been within any affordability safe harbor? Can the employer pick and choose which safe harbor to apply? 1E H 62

63 How to Report: Form 1095-C -- Part II, Line 16 Line 16 Examples: New employee eligible mid-year, enrolls Employer offers MV coverage to eligible employees and their spouses and children. Employee joins the employer on March 10 as an FTE, and is offered coverage on June 1 (first of the month following 60 days) through the end of the year. She enrolls in the coverage what s the coding for Jan-Feb, March, Apr-May, June-Dec? 1H 1H 1H 1H 1H 1E 1E 1E 1E 1E 1E 1E Ignoring Line 15 for purposes of these examples 2A 2A 2D 2D 2D 2C 2C 2C 2C 2C 2C 2C 63

64 How to Report: Form 1095-C -- Part II, Line 16 Line 16 Examples: New employee eligible mid-year, declines enrollment Same facts. What if employee-only coverage was within a W-2 safe harbor, and the employee declined the offer of coverage? What s the line 16 coding for Jan-Feb, March, Apr-May, and June-Dec? 1H 1H 1H 1H 1H 1E 1E 1E 1E 1E 1E 1E Ignoring Line 15 for purposes of these examples 2A 2A 2D 2D 2D 2F 2F 2F 2F 2F 2F 2F 64

65 How to Report: Form 1095-C -- Part II, Line 16 Line 16 Examples: Employee covered for part of year, terminates Employer offers MV coverage to eligible employees and their spouses and children. Employee is eligible and covered as an FTE January through May 12, when he terminates. What s the coding for Jan-Apr, May, June-Dec? What if the employer offered COBRA due to the loss of coverage on account of employment termination? (more on this later) 1E 1E 1E 1E 1H 1H 1H 1H 1H 1H 1H 1H Ignoring Line 15 for purposes of these examples 2C 2C 2C 2C 2B 2A 2A 2A 2A 2A 2A 2A 65

66 How to Report: Form 1095-C -- Part II, Line 16 Line 16 Examples: Bargaining unit employee; coverage may be available through union For all of 2016, the employer is bound by a bargaining agreement to make contributions to a union-affiliated plan (that offers affordable MV coverage, and treats family members as eligible) on the employee s behalf. What s the coding? What if the employee is not enrolled in the union plan? What if the employee is not even eligible under the union plan? What if the union plan s coverage is NOT MV or affordable? How would employer know? 1H 2E 66

67 How to Report: Form 1095-C -- Part II, Line 16 Line 16 Examples: Waived Qualifying Offer The employer makes a qualifying offer for all of 2016, but the employee waives the offer all year. What goes on line 16, if anything? Is it optional? 1A 2G 67

68 How to Report: Form 1095-C -- Part II, Line 16 Line 16 Examples: Non-FTE covered under self-funded plan Employer offers self-insured coverage to hourly employees, including part-time employees. A part-time employee, who is not an FTE for even a single month during the year, enrolls in the self-insured MEC coverage for all or even part of the year. What s the coding for lines 14-16? Nothing goes on Lines 15 or 16 1G 68

69 How to Report: Form 1095-C Part II, Line 16 Key Takeaways Line 16 Use Code 2C when employee enrolls, except where 1G is on line 14 (never an FTE for a single month during the year) or for COBRA coverage following termination (more on COBRA later) Where employee declines coverage, no requirement to put anything on line 16 Where employee declines coverage, and the coverage offer was within an affordability safe harbor, the employer may insert an affordability safe harbor code on line 16 Where the coverage offer was a qualified offer (1A on line 14) and the employee declines, the employer may use 2G on line 16 but is not required to Line 16 (and line 15) are blank when self-insured coverage is provided to an individual who was not an FTE for even a single month during the year. Code 1G is placed on line 14, but the rest of Part II is left blank 69 Lockton clients: Ask your Account Team for our white paper on Lines of the Form 1095-C, updated for 2016!

70 How to Report: Form 1095-C Part III Ed Fensholt

71 How to Report: Form 1095-C Part III Part III is easy Only applies for self-insured coverage, MV or MEC Check the box Identify the covered person(s), listing employee (if applicable) first Report coverage for anyone, not just employees, and not just full-time employees Plug in their SSNs (or birthdates, for spouses and dependents, if no SSN) Indicate months for which they had the self-insured coverage for at least a day If the primary insured shown on the form was not an FTE for at least a month during the reporting year, remember to insert code 1G on line 14 71

72 How to Report: Form 1095-C Part III Key Takeaways Part III ONLY completed to report self-insured coverage Report self-insured coverage for anyone Unlike in Part II, line 14, where the employer reports a coverage offer only if the offer would result in coverage for an entire month, in Part III the employer reports self-insured coverage for a month if it was in force for even a single day in the month Insert code 1G on line 14 of Part II, if the primary insured reflected in Part III was not an FTE for even a single month during the reporting year. 1G should go in the All 12 Months box 72

73 How to Report: Form 1094-C Scott Behrens

74 How to Report: Form 1094-C Remember Form 1094-C serves four purposes: Serves as a transmittal form to accompany the employer s Forms 1095-C to the IRS Proves compliance with Tier 1 of the employer mandate the aggregate obligation Identifies other members of the controlled group/affiliated service group Claims certain relief (e.g., claim the Free 30 for a Tier 1 violation, or the ability to skip a reporting step) 74

75 How to Report: Form 1094-C Lines 1-17 are self-explanatory; basically, identifies the employer Line 18: How many 1095-Cs accompany this 1094-C? 75

76 How to Report: Form 1094-C Line 19: Is this Form 1094-C the employer s only 1094-C? If so, it is the authoritative transmittal and the employer should check the box If this employer (this EIN) is submitting its 1095-Cs to the IRS in more than one batch, each batch must be accompanied by Form 1094-C. But the IRS only wants the rest of the Form completed just once. That one Form 1094-C is the authoritative transmittal 76

77 How to Report: Form 1094-C Line 20: Will typically be the same as Line 18 Line 21: Was the employer a member of a controlled group or affiliated service group for at least part of the reporting year? 77

78 How to Report: Form 1094-C Line 22: An employer is NOT REQUIRED to check a box on line 22 An employer might qualify to check more than one box on line 22 Lockton clients: Ask your Account Team for our white paper on Line 22 of the Form 1094-C, updated for 2016! 78

79 How to Report: Form 1094-C Line 22: Check box A if the employer used code 1A ( qualifying offer ) on line 14 for one or more FTEs A qualifying offer is MV coverage to employee, at least MEC to spouse and children; employee-only cost to the employee is within 9.66% of mainland poverty level ($95.64 for 2016) Box B is reserved, for

80 How to Report: Form 1094-C Line 22: Box C is rarely applicable; check box C only if: Employer has a non-cy plan and qualifies for non-cy plan transition relief, and either Employer had an average of FTEs/FTEqs in 2014, so its relief lingers into 2016, through the end of the PY, or Employer failed Tier 1 for some months in 2016 and is claiming the Free 80 (instead of merely the Free 30 ) for the months in its PY that fall in 2016 Might also apply if Tier 2 penalties would exceed Tier 1, as Tier 2 penalties are capped at Tier 1 80

81 How to Report: Form 1094-C Line 22: Check box D only if the employer made an offer of MV and affordable coverage to at least 98% of its employees receiving a 1095-C not just FTEs and at least MEC to their children, for all months during the year that they were employees, except for when they were in an LNAP What s going on here? If coverage was offered that extensively, employer clearly met Tier 1, and gets to skip Part III, column (b), the month-by-month count of FTEs 81

82 82 How to Report: Form 1094-C Part III Tier 1 Compliance Column (a) was at least MEC offered to at least 95% of FTEs, and their biological and adopted children to age 26, for the entire month? Employers with non-cy plans and qualifying for non- CY plan transition relief can check the Yes box for months in their PY falling in 2016 if they hit at least 70% for those months Employer is deemed to have offered coverage to FTEs with respect to whom it claimed Code 2E (multiemployer plan relief) on line 16 DISREGARD employees in an LNAP but they might still receive their own Form 1095-C if they had self-insured coverage for at least a day! Take credit for an offer to an employee and children for the entire year if it was offered, even where employee enrolls in single coverage and only he/she is offered COBRA due to a reduction in hours Most employers will check the All 12 Months box, under Yes

83 How to Report: Form 1094-C Part III Tier 1 Compliance Column (b) how many FTEs did the employer have, in its EIN? We re concerned with true FTEs, not the FTEqs we counted in determining whether the employer mandate applied Again, DISREGARD employees in an LNAP SKIP this column (b) in its entirety if the employer checked box D 98% Offer Method, on Line 22 83

84 How to Report: Form 1094-C Part III Tier 1 Compliance Column (c) how many total employees did the employer have, in its EIN? INCLUDE EVERYONE Full-timers Part-timers Seasonals Employees in an LNAP Make the count as of one of four dates each month (but use the same method for all 12 months) First day of the month Last day of the month First day of first payroll period starting during the month Last day of first payroll period starting during the month, but only if that day is in the same month that payroll period started 84

85 How to Report: Form 1094-C Part III Controlled Group/ Affiliated Service Group Disclosure Column (d) is directly related to line 21 on the Form 1094-C; if the employer checked Yes on Line 21, indicate whether for all 12 months, or only some months, the employer was part of a controlled group or affiliated service group Usually, if this applies, it will apply for all 12 months. But sometimes a single employer will make an acquisition during the year, or a two-company group will sell off one of its companies If there are controlled group or affiliated service group members, identify them in Part IV 85

86 How to Report: Form 1094-C Part III Identifying Relief the Employer is Claiming via Box C on Line 22 Column (e) rarely applicable If the employer has non-cy plans and checked box C on Line 22, use code A or B here in column (e) to indicate what transition relief it s claiming: A - Claiming relief from the employer mandate under the FTE/FTEq rule for the months of the PY falling in 2016 B Failed Tier 1 for one or more months in the PY falling in 2016, and claiming the Free 80 for those months 86

87 How to Report: Form 1094-C Part IV Identifying Controlled Group/Affiliated Service Group Members List controlled group or affiliated group members in descending order, starting with the member with the highest average monthly number of FTEs, and ending with the member with the lowest monthly average. If there are more than 30 members, use the 30 with the highest average monthly number of full-time employees. Common errors from last year: Each entry must have a valid EIN. Use the name of the employer associated with that EIN, as registered with the IRS DON T include the reporting employer 87

88 How to Report: Form 1094-C Key Takeaways Form 1094-C Each reporting EIN must file its own 1094-C; no 1094-Cs are filed for controlled groups or affiliated service groups Each reporting EIN must file a 1094-C with each batch (if more than one) of Forms 1095-C filed with the IRS Where an EIN files more than one 1094-C, only one should be completed beyond Part I; that one 1094-C is the authoritative transmittal Line 22 is widely misunderstood by employers and vendors Employers are not required to check any boxes on line 22, but might qualify to check more than one Box A will be more prevalent than you think Box C will rarely be relevant Many employers (those hiring predominantly only FTEs, and offering good coverage to them) will qualify to check box D (and thus skip column (b) in Part III, but don t check the box Part III, column (d) is related to line 21; column (e) is related to line 22, box C 88

89 Odds and Ends COBRA Coverage Ed Fensholt

90 Odds and Ends COBRA Coverage Termination of employment Report no offer on line 14 (1H) for full months after termination, and for month of termination if coverage ended mid-month Use 2A on line 16 even if the former employee elected COBRA coverage and thus was enrolled in the employer s plan that is, DON T use the Trump Code 2C Example: Employee enrolled in family coverage under a CY minimum value plan, under which e ee-only coverage cost to an employee is $105.10/mo; employee terminates on May 18, coverage ends May 31. Employee is offered COBRA coverage and accepts it What if coverage had ended on May 18? 1H on line 14, 2B on line 16 for May 1E 1E 1E 1E 1E 1H 1H 1H 1H 1H 1H 1H C 2C 2C 2C 2C 2A 2A 2A 2A 2A 2A 2A 90

91 Odds and Ends COBRA Coverage Reduction in hours Report the COBRA coverage offer on line 14 as any other coverage offer, and e ee-only cost on line 15; use 2C on line 16 if the employee elected COBRA coverage Example: Same employee enrolled in family coverage under a CY plan, suffers reduction in hours on May 18, loses eligibility on May 31. Is offered COBRA coverage and accepts it What if the employee had declined family coverage but elected employee-only coverage effective Jan. 1, so that upon the qualifying event only the employee received the offer of COBRA coverage? What goes on line 14? Instructions say use 1B for the COBRA offer, on line 14, for June-Dec treat like a second coverage offer and report it differently, since only the employee received it 1E 1E 1E 1E 1E 1E 1E 1E 1E 1E 1E 1E C 2C 2C 2C 2C 2C 2C 2C 2C 2C 2C 2C 91

92 Odds and Ends COBRA Coverage Key Takeaways Reporting COBRA Coverage For Part II reporting, with respect to the employee affected by the qualifying event, the process differs depending on the qualifying event (termination vs. reduction in hours) For Part III reporting, for years in which self-insured COBRA coverage being reported is supplied to an individual who was not an FTE for even single month, remember to add 1G on line 14 Treat retiree, severance and similar non-cobra coverage, as applicable, like COBRA coverage, for reporting purposes 92

93 Odds and Ends Employee Transfers Rory Akers

94 Odds and Ends Employee Transfers Transfers between divisions within the same EIN All hours count The EIN reports on coverage offers etc. in Part II and, for self-insured coverage, actual coverage in Part III, irrespective of division 94

95 Odds and Ends Transfers Transfers between EINs in a controlled group/affiliated service group All hours count; no break in service For whole months prior to the transfer, the transferor EIN owns the employee (will show coverage offers, etc. for those months; will show 1H/2A for full months after the transfer) For whole months after the transfer, the transferee EIN owns the employee (will show coverage offers, etc. for those months; will show 1H/2A for full months prior to the transfer) Who owns the employee for the month of the transfer? The ALE member for whom the employee had the most hours of service for the month; if the hours of service are the same, the two ALE members can decide 95

96 Odds and Ends Transfers Key Takeaways Transfers ACA reporting applies on an EIN-by-EIN basis, so when an employee transfers between operating divisions or departments within the same EIN, that transfer is inconsequential for ACA reporting purposes Where the transfer occurs between separate EINs in the same controlled group or affiliated service group: The employee doesn t have a break in service (because all hours of service in the controlled/affiliated service group are counted for FTE determinations) The transferor claims the employee for reporting purposes for complete months prior to the transfer The transferee claims the employee for reporting purposes for complete months after the transfer For the month of the transfer, the employee belongs for ACA reporting purposes to the employer for whom he or she had the most hours of service during the month; if that number is the same, the two EINs decide the matter 96

97 Odds and Ends Mergers & Acquisitions Ed Fensholt

98 Odds and Ends Mergers and Acquisitions M&A activity raises many ACA questions, but the IRS has been largely silent about how to handle Three main issues come up Determining ALE status Determining full-time status for acquired employees Reporting (related to the first two issues) 98

99 Odds and Ends Mergers and Acquisitions ALE Status: Non-ALE Acquired by an ALE or ALE Group Mid-Year Stock purchase: Safe play is to say that the newly acquired entity becomes an ALE immediately Asset purchase: Acquired employees treated as new e ees of buyer; treat as any other new hire 99

100 Odds and Ends Mergers and Acquisitions ALE Status: ALE Acquired by a Non-ALE Mid-Year Stock purchase: Same result for the non-ale, arguably immediately an ALE? Asset purchase: Acquired employees treated as new e ees of buyer; might affect the non-ale s ALE determination for following year; successor rules apply to make the non-ale an ALE immediately? 100

101 Odds and Ends Mergers and Acquisitions ALE Status: Two Non-ALEs Merge, Combined Company has 50+ FTE/FTEqs - Couple possibilities: Treat like an entirely new ALE, esp. if new EIN; offers of coverage should go out by the first day of the fourth month following the transaction? Treat one of the companies as the survivor (particularly where one EIN survives) and take the view that ALE status for next year will be determined based on this year s FTE/FTEq count 101

102 Odds and Ends Mergers and Acquisitions ALE Status: Spin-off from ALE group Does the spun off employer maintain ALE status or is it looked at separately? Probably best to play it conservatively; ideally the M&A lawyers will have thought through this 102

103 Odds and Ends Mergers and Acquisitions Determining FTE status for acquired employees This is hard enough on its own, and combining separate systems adds additional complexity Does transaction type matter? Asset purchase: Can the buyer in an asset purchase treat newly acquired employees as they would new employees, or does some other rule apply? What if it is a successor? Stock purchase: Different EINs within the same controlled group can have different MPs/APs/SPs, but what about employees who switch EINs or if they want to have a single system for administrative ease? The general rule when employees transition from one set of rules to another is to not let the new rules negatively affect the employee. In short, proposed guidance says: Employees in a SP: Maintain status under seller s SP ends, then determine status in buyer s SP using hours worked for both buyer and seller in seller s MP Employees in a MP: Employee is placed in buyer s MP using hours worked for both buyer and seller 103

104 Odds and Ends Mergers and Acquisitions Reporting Implications of the M&A Which entity reports what information will depend on the transaction type and the positions the parties take with respect to ALE and FTE status The key is to have access to information (e.g., hours), especially if we represent the buyer 104

105 Odds and Ends Mergers and Acquisitions Reporting Implications of the M&A In a stock deal, the newly acquired entity will have its own reporting responsibility (remember, reporting is EIN-by-EIN) If it becomes an ALE on close, the acquired entity will still report for the entire year; currently there s no Line 16 excuse code for We weren t an ALE for these months! If acquired company merges out of existence, it will still have a reporting obligation for the year, if it was an ALE for part of the year Different controlled group information might need to be reported 105

106 Odds and Ends Mergers and Acquisitions Reporting Implications of the M&A In an asset deal, both the buyer and seller might have a reporting obligation for the period of time they were employers What happens if the seller ceases to exist? Is it buyer s problem? 106

107 Odds and Ends Mergers and Acquisitions Key Takeaways Mergers and Acquisitions When an ALE client acquires a small, non-ale mid-year in a stock purchase, the small non-ale becomes an ALE upon the closing Dealing with different MPs, APs and SPs between merged companies is complicated; as the client transitions everyone onto a consistent platform make sure employees get the better of two results: under the new periods, or under the periods they re in at the time of the change 107

108 Cleaning Things Up Scott Behrens

109 Cleaning Things Up Missing/Incorrect SSNs Background Employer is required to provide IRS with correct SSNs (or another TIN where SSN isn t available) on the 1095-C Failure can trigger penalties of up to $260 per form Employers receive Accepted with Errors message for self-funded employers issuing 1095-Cs with dependents in Part III, these messages don t identify where the error occurred 109

110 Cleaning Things Up Missing/Incorrect SSNs IRS won t levy penalties until after it issues the employer Form 972CG, Notice of Proposed Civil Penalty The common Accepted with Errors message is NOT a Form 972CG notice so that message does NOT necessarily mean the employer will be penalized Literally, the employer who receives the Accepted with Errors message doesn t have to do or demonstrate anything (about getting to the bottom of the error message) until it receives Form 972CG But the employer may want to take remedial steps earlier rather than later It s easier to solicit the SSN earlier rather than after receiving Form 972CG. If the employer waits to solicit the missing or correct SSN until after the 972CG shows up, the form and manner of the request is dictated by the IRS, and may be cumbersome If the request is mailed, must include a return envelope Special rules for electronic distribution Must include a notice to the individual that failure to supply a correct SSN can result in $50 penalty to the individual 110

111 Cleaning Things Up Missing/Incorrect SSNs Employer Defenses to Incorrect/Missing SSNs Good Faith Effort Applies for 2015 reports only Not clear if the employer loses that defense if it fails to try to get to the bottom of the problem after receiving the Accepted with Errors message Reasonable Cause Available for missing SSNs, and for incorrect SSNs, but the employer s hurdles vary just a bit Both situations require the employer to ask for the SSN up to 3 times, but at different times Incorrect/missing SSNs for the employee are looked at separately from an incorrect/missing SSN for the spouse; ditto for other dependents

112 Cleaning Things Up Missing/Incorrect SSNs Incorrect SSNs Establishing Reasonable Cause for the Error Ask for SSN at initial enrollment (probably ok to have asked for it later, but prior to 1095-C submission) Ask again by Dec. 31 following receipt of Form 972CG (Jan. 31 if the form comes in Dec.) if the employee is still employed There s the appearance of an anomaly here, because the Form 972CG will ask for a response within 45 days Ask a third time by Dec. 31 of the year following the initial request if the employee is still employed Employer has met its obligation has a solid reasonable cause defense once it makes the request at enrollment and the two requests following receipt of the 972CG (follow IRS procedures for the post-972cg requests!) What if the employer obtains the correct SSN from the employee or dependent? Does not appear to be an obligation to re-file rather, use the correct SSN going forward However, if the employer obtains the correct SSN before receiving a 972CG, voluntarily re-filing with the correct information makes it less likely the employer will receive a Form 972CG (i.e., stay off the IRS s radar screen) 112

113 Cleaning Things Up Missing/Incorrect SSNs Missing SSNs Establishing Reasonable Cause for the Error Ask for SSN at initial enrollment or, if later, first OE period after September 17, 2015 If that date was missed, but the person was enrolled on July 29, 2016, this first request requirement is waived Second requests should be made within 75 days of the initial request; this means someone/something should be evaluating the enrollment forms, alerting plan sponsor when no SSN is provided For 2015 filings, where you re already past the 75-day deadline, you get a reasonable amount of time making the second request by Oct. 12, 2016 (see our Alert from late Sept.) is deemed reasonable; no need to solicit the SSN if employee is no longer employed Ask a third time by Dec. 31 of the year following the initial request, if employee is still employed Employer has met its obligation has a solid reasonable cause defense in response to Form 972CG, once it makes the three requests What if the employer obtains the missing SSN? Does not appear to be an obligation to re-file rather, use the correct SSN going forward However, if the employer obtains the missing SSN before receiving a 972CG, voluntarily refiling with the correct information makes it less likely the employer will receive a Form 972CG (i.e., stay off the IRS s radar screen) 113

114 Cleaning Things Up Missing/Incorrect SSNs: Recommendations If the employer has received an Accepted with Errors message, and it s not crazily burdensome to do so, try to run down the SSN before Form 972CG shows up (the employer can avoid having to comply with the IRS s procedures) 114 If the Form 972CG shows up, and the problem is an incorrect SSN, make the additional requests as described on the previous slides, if the employee is still employed; comply with IRS procedures For missing SSNs related to 2015 filings, make the effort before Oct. 12, 2016 (see our Alert from late Sept.) and if the employer doesn t receive the SSN again at the following open enrollment, if the employee is still enrolled; if the Form 972CG has shown up, comply with IRS procedures If the employer receives what it believes to be the missing or correct SSN, even before Form 972CG shows up, consider re-filing Form 1095-C voluntarily The employer should keep records of all requests If the problem is a missing SSN for a spouse or dependent, for Part III purposes, during and after the three-step process the employer can use spouse/dependent date of birth if the SSN on file remains missing DOB does not appear to work for employees, in Part I of Form 1095-C

115 Questions

116 Our Mission To be the worldwide value and service leader in insurance brokerage, employee benefits, and risk management Our Goal To be the best place to do business and to work Lockton, Inc. All rights reserved. Images 2015 Thinkstock. All rights reserved.