ACA Tax Reporting Requirements AUMCPBO Annual Meeting October 2014
Disclaimer The material in this update is provided as general information and education. It should not be construed as, and does not constitute, legal advice nor accounting, tax, or other professional advice or services on any specific matter, nor does this message create an attorney-client relationship. Readers should consult with their counsel or other professional advisor before acting on any information contained in this presentation. 2
Agenda ACA* New Regime of Reporting Requirements Minimum Essential Coverage Individual Shared Responsibility W-2 Reporting Employer Shared Responsibility Rule Premium Tax Credits (PTC) Church Plan Sponsor/Employer Concerns * ACA: Affordable Care Act 3
ACA Reporting and Tax Forms
Individual Tax Returns Form 1040 Line 61 (New): Individual Mandate Line 69 (New): Net Premium Tax Credit Form 8962 Premium Tax Credit Form 8965 Health Coverage Exemption 5
Information Returns Form 1095 1095-A: Marketplace Coverage 1095-B: Plan Coverage (insured or self-funded employer plans) 1095-C: Employer-Provided Coverage Form W-2 Box 12, Code DD: Cost of employer-sponsored health coverage 6
IRS Databases Coverage Data Repository (CDR) Forms 1095-A Marketplace Coverage Advanced Premium Tax Credits Form 14950 Premium Tax Credit Verification 7
Minimum Essential Coverage
Plan Coverage Reporting 2016 Deadlines Minimum essential coverage (MEC) reporting (Code 6055) beginning with 2015 calendar year February 1 March 31 Reporting Entity issues statements (copies of Form 1095-B) to all covered lives Reporting Entity submits Form 1095-B to IRS for each covered individual in the Plan Reporting Entity submits Form 1094-B (transmittal cover) to IRS February 28 deadline for hardcopy paper forms This reporting is a Plan Sponsor responsibility. 9
Who Is Reporting Entity? Fully-Insured Plans Insurance Company Self-Insured Plans Plan Sponsor 10
Who Is the Plan Sponsor? HealthFlex GBPHB Self-Insured Conference Plan CBOP* Other Cases Local church self-insured medical plan Local church (rare) Local church-provided health reimbursement arrangement (HRA) or employer payment plan (EPP) Local church * CBOP: Conference Board of Pensions (if it so chooses) 11
Small Plans Must Report Unlike the reporting requirement for ACA applicable large employers (ALEs) [ 6056 reporting], 6055 reporting applies to self-insured plans of small employers (fewer than 50 FTEEs*) Smaller self-insured annual conference plans Local church-provided HRAs * FTEE: Full-time equivalent employees 12
Plan Coverage Reporting Section 6055 Report must include: Name, address, EIN* of reporting entity Name of each person with MEC Name of responsible person (primary participant) TIN* (SSN*) of each covered person Calendar months each person was covered * EIN: Employer identification number; TIN: tax identification number; SSN: Social Security number 13
Form 1095-B Draft 14
TIN Safe Harbor Section 6055 Reporting entities must use TIN DOB* may be used instead of TIN, if TIN is not available after reasonable effort: Plan solicits TIN for covered dependents at annual enrollment or initial enrollment for new hires, and Follows up at least one additional time during calendar year Reporting entities may use truncated TINs on statements to the employee * DOB: Date of birth 15
Penalties Section 6055 2015 2016 Penalties not assessed if Reporting Entity makes good faith effort to comply Penalties similar to 6056 Reporting $100 per covered life Maximum $1.5 million per calendar year [for both IRS Form and participant statement] 16
Individual Shared Responsibility
Minimum Essential Coverage Government coverage Medicare, Medicaid, CHIP*, TRICARE and veterans coverage Employer-sponsored coverage Church health plans are minimum essential coverage Individual market plans Exchange plans, private market plans, grandfathered plans Other health benefit plans recognized by HHS** examples: Student health plans and state high-risk pools (2014 only) Medicare Advantage plans AmeriCorps coverage Foreign health services (if approved) * CHIP: Children s Health Insurance Program ** HHS: U.S. Department of Health and Human Services 18
Tax Return Verification Individual Responsibility (Mandate) on Form 1040: Line 61 2014: Honor system 2015: Reported on Form 1095-A or 1095-B 19
Penalty Tax Code 5000A Have minimum essential coverage (MEC) or pay excise tax April 2015 tax return* Individual Penalty (Adults) 2014 2015 2016 Maximum Greater of $95 or 1% of income Greater of $325 or 2% of income Greater of $695 or 2.5% of income National average** bronze plan premium Family penalty: Limited to 3x (300%) individual penalty Child penalty: 50% of individual adult penalty * Line 61 Form 1040 2014 ** $2,448 per individual in 2014 20
Penalty Tax Exemptions Examples No affordable coverage Costs > 8% of MAGI* Hardship Low income (less than tax filing threshold) Undocumented aliens Incarcerated Religious objectors (Amish), health care sharing ministries Native Americans Form 8965 * MAGI: Modified adjusted gross income 21
W-2 Reporting
W-2 Reporting Employers (e.g., local churches) required to report cost of health coverage on employees W-2s January 2013 on secular, large employer W-2s Temporary exemptions remain for: Employers in church plans (unless church plan is subject to ERISA) Small employers (fewer than 250 W-2s) Union plans HRAs 23
W-2 Reporting IRS may end exemption upon 6 months notice No earlier than 2014 Tax Year 2017 Tax Year more likely (ahead of Cadillac Tax) Cost of Health Coverage For self-insured plans: 4980B(f)(4) COBRA Rate Church Plans exempt from COBRA Blended rates, percentage of compensation, part of apportionment Church Alliance Comment Letter 24
Employer Shared Responsibility
Employer Coverage Reporting Applicable large employers* must report to IRS: covered full-time employees (FTEs) Code 6056 Required for 2015 calendar year Even if not subject to Employer Mandate until 2016 Submit Form 1095-C for each covered FTE (with single Form 1094-C) by March 31, 2016 Provide statement to covered FTEs by February 1, 2016** Penalty for failures: $100 per FTE; maximum $1.5 million per calendar year [for both IRS Form and participant statement] This reporting is an employer responsibility. GBPHB/CBOP will likely not perform this reporting for churches. * Applicable large employer: 50+ full-time equivalent employees ** January 31 most years 26
Employer Certification (2015) Related to new delay for mid-sized employers (50-99 FTEEs) Certification required for 2015 (with 2015 reporting of covered FTEs) Employer has 50 99 FTEEs in 2014 Has not cut staff to have fewer than 100 FTEEs (February 9 December 31, 2014) Has not/will not drop or reduce health coverage (February 9, 2014 December 31, 2015) 27
Employer Coverage Reporting 6056 Report must include: Name, address, EIN* of employer Contact person at employer Certification that employer offered coverage to FTEs and dependent children FTEs for each month FTEs share of premium of lowest-cost plan Name, address, TIN* (SSN*) of each FTE * EIN: Employer identification number; TIN: taxpayer identification number; SSN: Social Security number 28
Form 1095-C Draft 29
Who Must Report? Applicable Large Employer (ALE) 50 or more FTEEs No extension for medium employers 50 100 FTEEs Third-party vendor can assist or do reporting but penalties for failures accrue to ALE 30
Affordability Safe Harbors ALEs can report the ACA Affordability safe harbor used to avoid Shared Responsibility penalties Part II of Form 1095-C Safe Harbor reporting for FTEs, may reduce likelihood of assessed penalties when an employee receives a PTC 31
PTC Verification
Reporting APTC* Form 1095-A from Marketplace to taxpayer reports month-by-month: Premium Second-lowest-cost Silver plan premium Advanced premium tax credit * APTC: Advanced premium tax credit 33
Form 8962 Premium Tax Credit Form 8962 PTC calculation Advanced PTC reconciliation 34
Reconciliation Form 1040: Line 69 Net premium tax credit From Form 8962 35
Church Plan/Employer Concerns
Plan Sponsor Ambiguity Who is plan sponsor in a multiple employer church plan? Who submits Form 1095-B? Default each separate employer Plan document may assign plan sponsor duty under Section 6055 to plan administrator or trustee Preliminary HealthFlex approach 37
Duplication If GBPHB or CBOP submits Forms 1095-B for all covered lives; Must participating ALEs (large local churches, conference offices, etc.) report covered lives in Forms 1095-C (Part III)? May be duplicative 38
1-800-851-2201 www.gbobphb.org 40