Affrdable Care Act Preparedness Guide January 2018 Editin Presented by:
Intrductin Since the Affrdable Care Act (ACA) was signed int law n March 23, 2010, emplyers have wrked in a changing envirnment in regards t their health insurance benefits. The ACA is the largest change in the wrld f health insurance since Medicare was intrduced in 1966. The implementatin f the ACA has been a jurney. The law itself has seen a gradual intrductin int the market when it cmes t implementatin. There have been multiple curt challenges t the law. There have been delays and changes t the law frm regulatrs. We have experienced the implementatin f mst scheduled requirements and nw stand at a crssrads in 2018 with certain changes ahead. Thrughut this prcess, we have taken the apprach that slw and steady wins the race. We have wanted t interpret the law and regulatins prperly s that yu can make the best decisins fr yur rganizatin and emplyees. T supprt this apprach we have ffered clients numerus webinars, in-persn seminars, rundtables and fact-sheets t make sure we are ready. We want t prvide yu with ne mre tlbx item: a preparedness guide. The fllwing ACA Preparedness Guide is designed t be a step-by-step guide t assist yu with yur n-ging cmpliance bligatins. All f the infrmatin in this guide has been cvered since the passage f the law, but fr yur cnvenience we have put in all in ne place. There are fur verall sectins t this dcument: 1. General cmpliance: There are tpics which still apply t the implementatin f the ACA. 2. Fees and Taxes: This is an verview f the fees and taxes cnnected t the implementatin f the ACA. 3. Emplyer shared respnsibility: These are tpics which help yu t determine yur respnsibilities fr ffering cverage t emplyers. 4. IRS reprting: The newest respnsibilities fr emplyers is t reprt their ffers f cverage t the Internal Revenue Service. This sectin includes nt nly yur respnsibilities, but als scenaris fr reprting. Our gal is that this reference guide will help t clarify any questins yu may have abut the Affrdable Care Act. Updates t this dcument will ccur as necessary. As always, whenever yu have cncerns please use ur Health Care Refrm Tracker r cntact yur M3 accunt management team, wh will be glad t find the answers t yur questins. The infrmatin abve is a summary f laws and regulatins regarding prvisins relating t prvisins in the Patient Prtectin and Affrdable Care Act (PPACA). The infrmatin shuld nt be cnstrued as legal r tax advice. In all cases, emplyers shuld be advised t cnsult with their accuntant r legal cunsel fr assistance.
Table f Cntents Intrductin 1 Table f Cntents 2 Sectin 1: Cmpliance Review 4 Grandfathered Plan Status 5 Cst Sharing Limits 6 Health Flexible Spending Accunt Cntributins 8 Sectin 2: Fees and Taxes 9 Reinsurance Fees 10 PCORI Fees 12 Cadillac Tax 15 Sectin 3: Emplyer Shared Respnsibility 17 Determine Grup Size 18 Determine Effect Date 20 Manage t Penalties 21 Minimum Essential Cverage 22 Minimum Value (MV) 22 Affrdable Cverage 23 Manage t 30 Hur Threshld 24 Mnthly Measurement Methd 24 Lk Back Measurement Methd 26 Initial Measurement Perids 29 Mid-Year Status Changes 31
Sectin 4: IRS Reprting Requirements 33 Overview f Emplyer Reprting 34 Frms 34 Emplyer Requirements 34 Filing Deadlines 36 1094-C Transmittal Frm 37 Reprting Relief 38 IRS Cdes fr 1095-C 40 Scenaris 41 IRS Enfrcement f ESR 49 Wrap-Up & Reminders 51 Resurces 52 Exhibits 53 Exhibit A: Imprtant Definitins fr Schls 53
Sectin 1: General ACA Cmpliance Making sure yu remain cmpliant with Affrdable Care Act requirements is necessary, nt just in terms f yur health insurance plans, but fr yur business r rganizatin as well. Keeping up-t-date with key regulatins helps keep yur cmpliance effrts current and can greatly minimize an emplyer s risk f fines and/penalties. We have identified a few key areas that emplyers shuld be fcused n frm a general ACA cmpliance perspective. Being aware f and legally cmpliant in these areas will set the stage fr yur plans t remain penalty/risk-free. We encurage yu t review these tpics t ensure that yu and the health plans yu ffer remain cmpliant. The infrmatin abve is a summary f laws and regulatins regarding prvisins relating t prvisins in the Patient Prtectin and Affrdable Care Act (PPACA). The infrmatin shuld nt be cnstrued as legal r tax advice. In all cases, emplyers shuld be advised t cnsult with their accuntant r legal cunsel fr assistance.
General ACA Cmpliance Review Grandfathered Plan Status Yu shuld review yur health insurance plan t determine if it has grandfathered status. Plans which have grandfathered status are plans that were already in existence when the Affrdable Care Act was enacted in 2010. Grandfathered plans dn t have t meet the new standards and requirements put int place by the ACA. If yu have made changes t yur plan that g beynd permitted guidelines, yur plan can lse grandfathered status. As f 2018, mst plans are n lnger grandfathered. If yu believe yu have a grandfathered plan, please verify with yur Accunt Executive. Actin Items: If yu have a health plan which still has grandfathered status, determine whether it maintain its grandfathered status fr any plan year. Grandfathered plans are exempt frm sme f the ACA s mandates. A grandfathered plan s status will affect its cmpliance bligatins frm year t year. If yur plan will lse grandfathered status, cnfirm that the plan has all f the additinal patient rights and benefits required by the ACA fr nn-grandfathered plans. This includes, fr example, cverage f preventive care withut cst-sharing requirements. If yur plan will keep grandfathered status, cntinue t prvide the Ntice f Grandfathered Status in any plan materials prvided t participants and beneficiaries that describe the benefits prvided under the plan (such as the plan s summary plan descriptin and pen enrllment materials). Mdel language is available frm the Department f Labr.
Cst Sharing Limits Cst sharing refers t c-insurance, cpayments and deductibles built int the design f a health insurance plan. This des nt include premiums r amunts fr ut-f-netwrk medical care. Effective fr plan years beginning n r after Jan. 1, 2014, nn-grandfathered health plans are subject t limits n cst-sharing fr essential health benefits (EHB). The ACA s verall annual limit (r an ut-f-pcket maximum) applies fr all nn-grandfathered grup health plans, including self-insured health plans and insured plans. A health plan s ut-f-pcket maximum fr EHB may nt exceed $7,350 fr self-nly cverage and $14,700 fr ther than self-nly cverage, effective fr plan years beginning n r after Jan. 1, 2018. Health plans with mre than ne service prvider may divide the ut-f-pcket maximum acrss multiple categries f benefits, rather than recncile claims acrss multiple service prviders. Thus, health plans and issuers may structure a benefit design using separate ut-f-pcket maximums fr EHB, prvided that the cmbined amunt des nt exceed the annual ut-f-pcket maximum limit fr that year. Fr example, in 2018, a health plan s self-nly cverage may have an ut-f-pcket maximum f $5,000 fr majr medical cverage and $2,350 fr pharmaceutical cverage, fr a cmbined ut-f-pcket maximum f $7,350. Hwever, effective as f the 2016 plan year, the Department f Health and Human Services (HHS) clarified that the self-nly annual limit n cst-sharing applies t each individual, regardless f whether the individual is enrlled in self-nly cverage r family cverage. This guidance embeds an individual ut-fpcket maximum in family cverage s that an individual s cst-sharing fr essential health benefits cannt exceed the ACA s ut-f-pcket maximum fr self-nly cverage. Nte that the ACA s cst-sharing limit is higher than the ut-f-pcket maximum fr high-deductible health plans (HDHPs). In rder fr a health plan t qualify as an HDHP, the plan must cmply with the lwer ut-fpcket maximum limit fr HDHPs. In an FAQ, HHS prvides guidance n hw this ACA rule affects HDHPs with family deductibles that are higher than the ACA s cst-sharing limit fr self-nly cverage. Accrding t HHS, an HDHP that has a $10,000 family deductible must apply the annual limitatin n cstsharing fr self-nly cverage ($7,350 in 2018) t each individual in the plan, even if this amunt is belw the $10,000 family deductible limit. Because the $7,350 self-nly maximum limitatin n cst-sharing exceeds the 2018 minimum annual deductible amunt fr HDHPs ($2,700), it will nt cause a plan t fail t satisfy the requirements fr a family HDHP. (Cntinued)
Actin Items: Review yur plan s ut-f-pcket maximum t make sure it cmplies with the ACA s limits 2018: $7,350 fr self-nly cverage and $14,700 fr ther than self nly cverage If yu have an HDHP that is cmpatible with a health savings accunt (HSA), keep in mind that yur plan s ut-f-pcket maximum must be lwer than the ACA s limit. Fr 2018, the ut-f-pcket maximum limit fr HDHPs is $6,650 fr self-nly cverage and $13,300 fr family cverage. If yur plan uses multiple service prviders t administer benefits, cnfirm that the plan will crdinate all claims fr EHB acrss the plan s service prviders, r will divide the ut-f-pcket maximum acrss the categries f benefits, with a cmbined limit that des nt exceed the maximum. Cnfirm that the plan applies the self-nly maximum t each individual in the plan, regardless f whether the individual is enrlled in self-nly cverage r family cverage.
Health Flexible Spending Accunt Cntributins A flexible spending accunt (FSA) is a fund that can be used t pay fr cpayments, deductibles, sme medicatins and ther healthcare csts. Effective fr plan years that began n r after Jan. 1, 2013, an emplyee s annual pre-tax salary reductin cntributins t a health FSA must be limited t $2,500. The $2,500 limit des nt apply t emplyer cntributins t the health FSA, and des nt impact cntributins under ther emplyer-prvided cverage. Fr example, emplyee salary reductin cntributins t an FSA fr dependent care assistance r adptin care assistance are nt affected by the $2,500 health FSA limit. On Oct. 31, 2013, the Internal Revenue Service (IRS) annunced that the health FSA limit remained unchanged at $2,500 fr the taxable years beginning in 2014. Hwever, n Oct. 30, 2014, the IRS increased the health FSA limit t $2,550 fr taxable years beginning in 2015, in Revenue Prcedure 2014-61. The health FSA limit did nt change fr 2016. On Octber 25, 2016, the IRS annunced an increase in the limit t $2,600 fr the tax year 2017. The IRS increased the limit in 2018 t $2,650. Actin Items: Wrk with yur M3 Accunt Team t mnitr IRS guidance n the health FSA limit fr 2019. Cnfirm that yur health FSA will nt allw emplyees t make pre-tax cntributins in excess f $2,650. Als, cmmunicate the 2018 limit t emplyees as part f the pen enrllment prcess.
Sectin 2: Fees and Taxes The Affrdable Care Act includes a number f fees and taxes which help fund certain cmpnents f the law. The key fr yu is t understand each f the funding mechanisms and whether/hw they apply t yur plan. We want yu t aware f these fees/taxes s that yu can plan fr and remain cmplaint with these prvisins f the law. We encurage yu t review the fllwing verviews f the federal fees and taxes assciated with the ACA. The infrmatin abve is a summary f laws and regulatins regarding prvisins relating t prvisins in the Patient Prtectin and Affrdable Care Act (PPACA). The infrmatin shuld nt be cnstrued as legal r tax advice. In all cases, emplyers shuld be advised t cnsult with their accuntant r legal cunsel fr assistance.
Fees & Taxes Reinsurance Fees Health insurance issuers/carriers and self-funded grup health plans must pay fees t a transitinal reinsurance prgram fr the first three years f the Exchanges peratin (2014 t 2016). The fees will be used t help stabilize premiums fr cverage in the individual market. Fully insured plan spnsrs d nt have t pay the fee directly. Reinsurance fees are n lnger in effect.
PCORI Fees Patient Centered Outcmes Research Institute (PCORI) fee is a temprary fee n bth fully insured and selfinsured health care benefits that apply fr the seven plicy years between 2012 and 2019. The fees are intended t fund the Patient Centered Outcmes Research Institute, which is an independent, nn prfit rganizatin created under the Affrdable Act t cnduct research fr patients and caregivers n enhancing health care utcmes. The Fees: The PCORI fee is paid annually and is due by July 31st. Fr plicy and plan years ending after Sept. 30, 2012, and befre Oct. 1, 2013, the applicable dllar amunt is $1. Fr plicy and plan years ending after Sept. 30, 2013, and befre Oct.1, 2014, the applicable dllar amunt is $2. Fr plicy and plan years beginning n r after September 30, 2014, and befre Oct. 1, 2015, the applicable dllar amunt is $2.08. Fr plicy and plan years beginning n r after September 30, 2015 and befre Octber 1, 2016, the applicable dllar amunt is $2.17. Fr plicy and plan years beginning n r after September 30, 2016 and befre Octber 1, 2017, the applicable dllar amunt is $2.26. Fr plicy fr plan years beginning n r after September 30, 2017 and befre Octber 1, 2018, the applicable dllar amunt is $2.36. The amunt fr subsequent years is further adjusted t reflect inflatin in Natinal Health Expenditures, as determined by the Secretary f Health and Human Services. Please see attached schedule fr specific due dates as it relates t the plan year. Overall rules fr fees: Fees are generally impsed n either the issuer f a specified health insurance plicy (fully insured plans, n the carrier) r plan spnsrs (emplyers) f an applicable self insured health plan. Fr self insured plans maintained by tw r mre emplyers, the plan spnsr respnsible fr paying the fee is the entity identified as the plan spnsr by the terms f the dcument under which the plan is perated. If n plan spnsr is identified, the plan spnsr respnsible fr the fee is each emplyer that maintains the plan. Hw the fees apply t different plans: Fully Insured Plans: Fees are impsed n specified health insurance plicies. Specified health insurance plicies include any prepaid health cverage arrangement if fixed payments r premiums are received as cnsideratin fr a persn s agreement t prvide r arrange fr the prvisin f accident r health cverage t residents f the United States. Self Insured Plans: Fees are impsed n plan spnsrs. The plan spnsr is the emplyer in the case f a plan established r maintained by a single emplyer and the emplyee rganizatin in the case f a plan established r maintained by an emplyee rganizatin. In the case f a plan established r maintained by tw r mre emplyers r jintly by ne r mre emplyers, a MEWA (Multiple Emplyer Welfare Arrangement) r a VEBA (Vluntary Emplyee Beneficiary Assciatin), the plan spnsr is the assciatin, cmmittee, jint bard f trustees r ther similar grup f representatives f the parties wh wish t establish r maintain the plan.
Excepted Benefits: Certain benefits are nt subjected t the PCORI fee, because they are excepted r nt essential health benefits. Examples wuld include wrkers cmpensatin insurance and standalne dental r visin prgrams. HRAs & FSAs: A Health Reimbursement Accunt (HRA) is nt subject t a separate fee if the HRA is integrated with anther applicable self insured health plan that prvides majr medical cverage, prvided that the HRA and the ther plan are established and maintained by the same plan spnsr. Hwever, an HRA that is integrated with a fully insured plan is treated as an applicable self insured health plan and the plan spnsr (emplyer) wuld be subject t the fee n the HRA. The issuer f the fully insured plan that is integrated with the HRA wuld be subject t the fee n the fully insured health plan. Flexible Spending Accunts (FSAs) that satisfy the requirements f an excepted benefit are excluded frm the definitin f applicable self insured plan and are NOT subject t the fees. FSAs that are nt excepted benefits are subject t the fees. Because it is difficult t determine the number f cvered lives under FSAs and HRAs, the regulatins allw the plan spnsr t assume ne cvered life fr each emplyee with an HRA and fr each emplyee with a health FSA that is nt an excepted benefit. * EAPs, Disease Management & Wellness Prgrams: Emplyee Assistance Prgrams (EAPs), Disease Management Prgrams and Wellness Prgrams are excluded frm the definitin f applicable self-insured plan and the fee wuld nt apply, but nly if these prgrams d nt prvide significant benefits in the nature f medical care r treatment. Actin Items: Determine whether yur health plan is subject t PCORI fees. Full payment f the fee is due annually by July 31 f each year n IRS Frm 720. This frm may als be filed electrnically. Third party reprting and payment f fees is nt allwed. The number f cvered lives fr purpses f the fee can be determined by ne f fur methds: Actual cunt: Cunt the number f cvered lives each day fr the first nine mnths f 2016 and divide by the number f days. Snapsht: Pick ne day each quarter fr the first three quarters f the year and divide by 3. Snapsht Factr: In the case f self-nly and ther than self-nly cverage (family, emplyee + ne r emplyee + children) determine the sum f: (1) the number f participants with self-nly cverage, and (2) the number f participants with ther than self-nly cverage multiplied by 2.35. Frm 5500: Use the cunts frm yur Frm 5500 by adding the number f participants at the beginning f the year and the number f participants at the end f the year. Number f Cvered Lives x $ =
PCORI PAYMENT SCHEDULE Plan Year Payment Amunt Due Date February 1, 2014 January 31, 2015 $2.08 July 31, 2016 March 1, 2014 February 28, 2015 $2.08 July 31, 2016 April 1, 2014 March 31, 2015 $2.08 July 31, 2016 May 1, 2014 April 30, 2015 $2.08 July 31, 2016 June 1, 2014 May 31, 2015 $2.08 July 31, 2016 July 1, 2014 June 30, 2015 $2.08 July 31, 2016 August 1, 2014 July 31, 2015 $2.08 July 31, 2016 September 1, 2014 August 31, 2015 $2.08 July 31, 2016 Octber 1, 2014 September 30, 2015 $2.08 July 31, 2016 Nvember 1, 2014 Octber 31, 2015 $2.17 July 31, 2016 December 1, 2014 Nvember 30, 2015 $2.17 July 31, 2016 January 1, 2015 December 31, 2015 $2.17 July 31, 2016 February 1, 2015 January 31, 2016 $2.17 July 31, 2017 March 1, 2015 February 28, 2016 $2.17 July 31, 2017 April 1, 2015 March 31, 2016 $2.17 July 31, 2017 May 1, 2015 April 30, 2016 $2.17 July 31, 2017 June 1, 2015 May 31, 2016 $2.17 July 31, 2017 July 1, 2015 June 30, 2016 $2.17 July 31, 2017 August 1, 2015 July 31, 2016 $2.17 July 31, 2017 September 1, 2015 August 31, 2016 $2.17 July 31, 2017 Octber 1, 2015 September 30, 2016 $2.17 July 31, 2017 Nvember 1, 2015 Octber 31, 2016 $2.26 July 31, 2017 December 1, 2015 Nvember 30, 2016 $2.26 July 31, 2017 January 1, 2016 December 31, 2016 $2.26 July 31, 2017 February 1, 2016 January 31, 2017 $2.26 July 31, 2018 March 1, 2016 February 28, 2017 $2.26 July 31, 2018 April 1, 2016 March 31, 2017 $2.26 July 31, 2018 May 1, 2016 April 30, 2017 $2.26 July 31, 2018 June 1, 2016 May 31, 2017 $2.26 July 31, 2018 July 1, 2016 June 30, 2017 $2.26 July 31, 2018 August 1, 2016 July 31, 2017 $2.26 July 31, 2018 September 1, 2016 August 31, 2017 $2.26 July 31, 2018 Octber 1, 2016 September 30, 2017 $2.26 July 31, 2018 Nvember 1, 2016 Octber 31, 2017 $2.36 July 31, 2018 December 1, 2016 Nvember 30, 2017 $2.36 July 31, 2018 January 1, 2017 December 31, 2017 $2.36 July 31, 2018
Cadillac Tax Sectin 9001 f the Affrdable Care Act (ACA) impses an excise tax n high cst emplyer-spnsred health cverage beginning with the 2020 tax year. Knwn as the Cadillac Tax, the tax is impsed if an emplyee is cvered under any applicable emplyer-spnsred plan during any time during a taxable perid and there is an excess benefit with respect t the cverage. The tax rate is scheduled t be 40% f the excess benefit. Excess benefit amunts will be determined n a mnthly basis. The excess amunts are any aggregate cst amunts (emplyer + emplyee premium cst) ver 1/12 f the annual limitatin fr the calendar year. Annual limitatins are currently determined by the type f cverage prvided t the emplyee. The type f cverage is brken dwn int tw categries: individual cverage and any cverage ther than individual. The Health Care Recnciliatin Act sets the annual limitatins at the fllwing levels: Current Fiscal Year 2020 Limits Individual cverage: $10,200 All ther cverage: $27,500 Amunts in excess f these limits wuld be taxed at 40%. The current limits were written int law in 2010, and further changes t the excise tax are entirely pssible frm future legislative and/r regulatry actin. Exceptins will apply t retirees and emplyees engaged in a high risk prfessin (ex: thse emplyed t repair r install electrical r telecmmunicatin lines). The limitatins fr these individuals will be higher than the standard limits. Cverage prviders are required t pay the tax. A cverage prvider is defined as: Health Insurance Cverage (fully insured): the health insurance issuer r carrier Other Cverage (self-funded): The plan administratr Health Savings Accunt (HSA) and Medical Savings Accunt (MSA) cntributins: The emplyer The respnsibility fr reprting tax liability currently rests with the emplyer. Each emplyer must determine their tax liability each perid based n the amunt f excess benefit. The amunt f excess benefit will be subject t the tax and must be reprted t the federal Department f Health and Human Services (HHS) Secretary AND each cverage prvider f the amunt determined fr the prvider. Fr situatins in which a plan cvers multiple emplyers (many unin plans), the plan spnsr (nt the emplyer) is required t make the calculatins and prvide the ntice. Applicable emplyer-spnsred cverage includes any grup health plan which is excludable frm the emplyee s incme under IRC Sectin 106. It des nt include lng-term care r any cverage prvided that is nt excludable frm grss incme. (Cntinued)
Actin Items: Mnitr the verall csts f yur health plan versus the Cadillac Tax limits. Mnitr the actins by the federal gvernment regarding the implementatin and excess limits f the Cadillac Tax.
Sectin 3: Emplyer Shared Respnsibility A vital element fr emplyers is t understand hw t cunt their emplyee ppulatin t determine Emplyer Shared Respnsibility (ESR) bligatins and penalty expsure. Understanding yur ESR determines yur respnsibilities as an emplyer t stay cmpliant with the law. Understanding yur emplyee ppulatin and yur rganizatin s ESR bligatins are key t staying cmpliant with the Affrdable Care Act (ACA). This includes: Determining yur grup size Determining yur effective date Determining wh are yur full-time emplyees Determining ffers f cverage and affrdability/value f yur plan The fllwing sectin cvers the elements f Emplyer Shared Respnsibility in great detail. We encurage yu t use this sectin t make sure yu are identifying yur status and identifying yur full-time emplyees prperly fr purpses f the ACA t determine penalty expsure and risk. The infrmatin abve is a summary f laws and regulatins regarding prvisins relating t prvisins in the Patient Prtectin and Affrdable Care Act (PPACA). The infrmatin shuld nt be cnstrued as legal r tax advice. In all cases, emplyers shuld be advised t cnsult with their accuntant r legal cunsel fr assistance.
Emplyer Shared Respnsibility Step 1: Determine Grup Size One f the mst imprtant tenets f the Affrdable Act (ACA) is understanding yur grup size. Knwing yur grup size is vital as that definitin determines yur respnsibilities as an emplyer. Fr purpses f Emplyer Shared Respnsibility there are large and small emplyers. The grup size is hw the federal gvernment determines an emplyer s requirements fr shared respnsibility r pay r play requirements. Large emplyers have the respnsibility t ffer health cverage t their emplyees r will be frced t pay a penalty. The definitins are: Small emplyers: Emply less than 50 full-time and full-time equivalent (FTEs) emplyees n business days during the preceding calendar year. Large emplyers: Emply 50 r mre full-time and full-time equivalent emplyees n business days during the preceding calendar year. T determine whether r nt an emplyer is a large emplyer, the fllwing infrmatin is taken int cnsideratin: Full time emplyees: Full-time emplyees = emplyees wh wrk n average 30 r mre hurs per week (130 service hurs in a calendar mnth) Aggregate f part-time emplyees: Emplyees wh are nt a full-time emplyees must be cunted in aggregate. Hurs f service fr all emplyees with less than 130 service hurs must be added tgether and then divided by 120. Mnthly ttals: Full-time and full-time equivalent numbers must be added fr each mnth, including fractins. Annual average: Mnthly ttals are added fr a yearly ttal which is then divided by 12. Fractins are disregarded at this pint. Seasnal wrker exemptin: Seasnal wrkers wh wrk less than 120 cnsecutive days r 4 calendar mnths need nt be included.
Example f hw t determine grup size fr an emplyer with a mixture f full-time and variable hur emplyees. The emplyer has the fllwing infrmatin fr their emplyee ppulatin: Emplyer has 35 full-time emplyees (30+ hurs per week). Emplyer has 10 emplyees wh wrk 25 hurs per week 25 x 4.33 = 108.25/mnth; 10 x 108.25 = 1082.50/120= 9.02 Emplyer has 15 seasnal emplyees wh wrk 36 hurs/week during June, July and August (NOT INCLUDED). Emplyer has 15 emplyees wh wrk 20 hurs per week fr July December 20 x 4.33 = 86.6/mnth; 15 x 86.6 = 1299/120 = 10.825 Nw let s cunt their emplyee ttals t determine their grup size: Mnth Ttals January 35 + 9.02 = 44.02 February 35 + 9.02 = 44.02 March 35 + 9.02 = 44.02 April 35 + 9.02 = 44.02 May 35 + 9.02 = 44.02 June 35 + 9.02 = 44.02 July 35 + 9.02 + 10.825 = 54.845 August 35 + 9.02 + 10.825 = 54.845 September 35 + 9.02 + 10.825 = 54.845 Octber 35 + 9.02 + 10.825 = 54.845 Nvember 35 + 9.02 + 10.825 = 54.845 December 35 + 9.02 + 10.825 = 54.845 TOTAL 593.19/12 = 49.4325 49 FTEs = Nt subject Fr purpses f Emplyer Shared Respnsibility, this emplyer has 49 FTEs and is cnsidered a small emplyer.
Step 2: Determine Effective Date Once an emplyer determines their grup size based upn their emplyment cunts frm the preceding calendar year, they can determine the effective date f emplyer shared respnsibility penalties. Fr this purpse, there are currently tw categries. Hwever, if yu were a small emplyer in a previus year and are a new large emplyer, yu are required t cmply by April 1 fr just that first year. Use these guidelines t determine yur rganizatin s effective date: Small Emplyers (less than 50 FT and FTEs) Nt subject t the requirements fr the calendar year Nt subject t any reprting requirements Large Emplyers (100 r mre FT and FTEs) Effective date: January 1 fllwing calendar year with 50+ emplyees
Step 3: Manage t Penalties Once an emplyer has determined the size f its wrkfrce and understands when Emplyer Shared Respnsibility (ESR) penalties apply, the emplyer must have a general understanding f the actual penalties and the circumstances in which they wuld apply. Penalty Type #1: Emplyer Shared Respnsibility penalties fr nt ffering cverage The emplyer des nt ffer Minimum Essential Cverage (MEC) r MEC is ffered t less than 95% f 30+ hur emplyees. Size f the Penalties An emplyer will be assessed a $2,000 penalty (2015: $2,080, 2016: $2,160, 2017: $2,260, 2018: $2,320) n all FT (30+ hur) emplyees if at least ne FT emplyee enrlls in Marketplace cverage and receives a subsidy. The emplyer is allwed t subtract the first 30 FT emplyees frm the assessed amunt. Example: Emplyer has 100 FT emplyees and nly ffers cverage t 80% f thse FT emplyees. One FT emplyee enrlls in Marketplace cverage and receives a subsidy. The emplyer wuld we a penalty n 70 FT emplyees (100-30 = 70) Penalty Type #2: Emplyer ffers cverage but it is nt valuable and/r affrdable fr any full-time emplyee. Penalty: $3,000 (2015: $3,120, 2016: $3,240, 2017: $3,390, 2018: $3,480) assessed n each fulltime (30+ hur) emplyee wh des nt receive an ffer f affrdable, valuable cverage and enrlls in Marketplace cverage and receives a subsidy, OR $2000 assessed n all full-time emplyees (minus the first 30), whichever is less In rder t understand the penalties, emplyers need t understand what cnstitutes minimum essential cverage, minimum value and affrdable cverage.
Minimum Essential Cverage (MEC) Minimum Essential Cverage r MEC is the minimum level f cverage that an individual must acquire t meet the individual respnsibility requirement under the Affrdable Care Act. Fr the purpses f an emplyer-spnsred plan the cverage can be: Grup health insurance cverage fr emplyees under: A gvernmental plan, such as the Federal Emplyees Health Benefit Prgram A plan r cverage ffered in the small r large grup market within a state A grandfathered health plan ffered in a grup market A self-insured grup health plan fr emplyees COBRA cverage Retiree cverage Minimum Value (MV) A health plan that is designed t pay at least 60% f the ttal cst f medical services fr a standard ppulatin. Benefits must include substantial cverage f inpatient hspital and physician services. Emplyers have several methds available t determine whether r nt the plan(s) ffered prvide minimum value. Use the federal Minimum Value Calculatr: cms.hhs.gv type in minimum value calculatr Any safe harbr established by HHS and the Internal Revenue Service. Certificatin by an actuary t determine MV if the plan cntains nn-standard features that are nt suitable fr either f the methds described abve. The determinatin f MV must be made by a member f the American Academy f Actuaries, based n an analysis perfrmed in accrdance with generally accepted actuarial principles and methdlgies. Any plan in the small grup market that meets any f the metal levels f cverage, which then satisfies minimum value.
Affrdable Cverage Emplyer insurance is cnsidered affrdable under the health care law if the emplyee s share f the premium fr the lwest priced plan available that wuld cver the emplyee nly nt the emplyee s family is 9.5% (2015: 9.56%, 2016: 9.66%, 2017: 9.69%, 2018: 9.56%) r less f their husehld incme. Hwever, an emplyer s determinatin f affrdable cverage fr penalty purpses des nt have t be based n husehld incme. Rather, the guidance prvides three safe harbrs emplyers can use t determine affrdability. Thse three safe harbrs are: W2 Safe Harbr: Emplyee s prtin f the cntributin cannt exceed 9.5% (2015: 9.56%, 2016: 9.66%, 2017: 9.69%, 2018: 9.56%) f the emplyee s W2 wages Cannt use previus year IRS W2 Frm Must use Bx 1 f IRS W2 Frm Rate f Pay Safe Harbr: Emplyee s prtin fr a mnth cannt exceed 9.5% f the emplyee s hurly rate f pay x 130 r 9.5% (2015: 9.56%, 2016: 9.66%, 2017: 9.69%, 2018: 9.56%) f mnthly salary Cannt be used fr tipped emplyees Must use 130 fr the hurly calculatin regardless f the actual hurs wrked Rate f pay at time f ffer Federal Pverty Safe Harbr: Emplyee s cntributin cannt exceed 9.5% (2015: 9.56%, 2016: 9.66%, 2017: 9.69%, 2018: 9.56%) f the single federal pverty level fr a calendar year divided by 12. $11,770 x 9.5% = 1118.15/12 = $93.18/mnth 2017: $11,880 x 9.69% = 1151.17/12 = $95.93/mnth 2018: $12, 060 x 9.56% = 1152.94/12 = $96.08/mnth
Emplyers must als take the fllwing int cnsideratin when determining affrdability: Health Reimbursement Accunt Amunts: Amunts made newly available under an HRA that are integrated with an eligible emplyer-spnsred plan fr the current plan year are taken int accunt nly in determining affrdability if the emplyee may either: Use the amunts nly fr premiums; r Chse t use the amunts fr either premiums r cst-sharing. Wellness Incentives: General: When cnsidering the affrdability f a plan whse premium differs amng wellness plan participants and nn-participants, affrdability shuld be tested using the lwest single cntributin fr nn-participants. Tbacc: When cnsidering the affrdability f a plan whse premium differs amng tbacc and nn-tbacc users, affrdability shuld be tested using the lwest single cntributin fr nn-tbacc users. This will help insulate the emplyer frm penalty by basing affrdability in the mre affrdable plan, allwing the emplyer t cntinue rewarding healthy behavir. Cash-in-lieu: Prpsed regulatins issued in 2017 require emplyers t add pt-ut r cash-inlieu payments t the lwest cst single cverage premium cntributin when determining affrdability starting in 2017. The amunt shuld nly be added if the emplyer has an uncnditinal pt ut arrangement, meaning the emplyee is nt required t have ther cverage.
Step 4: Manage t 30 Hur Threshld In rder fr emplyers t successfully gauge their penalty risk, it is imperative that full-time emplyees are prperly identified. An emplyer identifies its full-time emplyees based n each emplyee s hurs f service. Fr purpses f the Emplyer Shared Respnsibility prvisins, an emplyee is a full-time emplyee fr a calendar mnth if he r she averages at least 30 hurs f service per week. Fr purpses f determining full-time emplyee status, 130 hurs f service in a calendar mnth is treated as the mnthly equivalent f at least 30 hurs f service per week. Hur f service: Each hur fr which an emplyee is paid, r entitled t payment, fr the perfrmance f duties fr the emplyer, and each hur fr which an emplyee is paid, r entitled t payment, fr a perid f time during which n duties are perfrmed due t vacatin, hliday, illness, incapacity (including disability), layff, jury duty, military duty r leave f absence. An hur f service des nt include any hur f service perfrmed as a bna fide vlunteer, as part f a Federal Wrk-Study Prgram (r a substantially similar prgram f a State r plitical subdivisin theref) r t the extent the cmpensatin fr services perfrmed cnstitutes incme frm surces withut the United States. The regulatins prvide tw methds fr emplyer t utilize t determine FT status f emplyees. Mnthly Measurement Methd (MMM): Using the MMM, an emplyer wuld determine each emplyee s status as a full-time emplyee by cunting the emplyee s hurs f service fr each mnth. If an emplyer chses t use the MMM, the fllwing shuld be nted: Emplyers will nt be subject t a penalty with respect t any emplyee fr the first calendar mnth in which the emplyee is first eligible under this methd and the immediate subsequent tw calendar mnths. Emplyers may chse t use 130 hurs f service in the mnth OR payrll perids f successive ne week perids which wuld allw emplyer t use fur weeks (120 hurs fr FT) during sme mnths and five weeks (150 hurs fr FT) fr thers. Perids during which an emplyee is nt credited with hurs f service are nt subject t the special leave and emplyment break perid rules. This is because determinatins under the MMM are based n hurs f service during that particular calendar mnth and are nt based n averaging ver a prir measurement perid. Emplyers wh chse t use the MMM can face an administrative burden if they have emplyees wh wrk variable hurs and may nt want t select this methd. This is because if an emplyee has average mnthly hurs that g bth abve and belw 30, he r she may be cming n and ff the plan as his r her hurs change.
MMM Example (New Hire) Emplyee A is hired n June 1 st. Under the MMM the emplyer s reasnable expectatins f the emplyee d nt matter at the time f hire since measurement ccurs mnth-by-mnth. The emplyer wuld simply nt need t ffer cverage until the first day after the tw calendar mnths that fllw the first full calendar mnth in which the emplyee meets the 30 hur eligibility requirement (aside frm a waiting perid). S what is really imprtant is that first mnth the emplyee becmes eligible fr cverage. It is imprtant t remember that this rule applies nly nce at the time the emplyee becmes eligible fr cverage. Subsequently, the emplyee wuld need t be tracked every mnth and ffered cverage withut the tw mnth grace perid. S if Emplyee A was nt a 30 r mre hur emplyee until August (after analyzing hurs fr the mnths f June and July which were under 30) cverage wuld nt need t be ffered cverage until the first day f Nvember (meets eligibility in August 2 mnth perid cvers September and Octber), with the emplyer using data frm subsequent mnths t see if the emplyee is still eligible.
Lk Back Measurement Methd The Lk Back Measurement Methd generally invlves using an emplyee s average hurs f service per week during a perid f time t determine if an emplyee is a full-time emplyee during a subsequent perid. The lk back methd includes these cmpnents: Measurement Perid: 3-12 cnsecutive mnths cunting hurs Stability Perid: At least 6 mnths and cannt be shrter than measurement perid. If smene wrked 30+ hurs per week n average during measurement perid, that persn is cnsidered fulltime ( lcked in ) during the stability perid Administrative Perid: Optinal. Cannt exceed 90 days. Example f Lk Back Measurement Methd July 1 plan year: Example f Lk Back Measurement Methd January 1 plan year:
Key items fr the Lk Back Measurement Methd Keep these key items in mind fr full and variable hur emplyees under the Lk Back Measurement Methd: New Full-Time emplyees Must be ffered valuable, affrdable cverage within the first 3 mnths f emplyment. Reasnable Standard applied at time f hire New full time emplyees must be measured by mnthly measurement methd until the emplyee cmpletes ne full measurement perid. New Variable Hur/Seasnal Emplyees Must assign an initial measurement perid between 3-12 mnths t each new variable hur/seasnal emplyee t determine if that persn wrks an average f 30+ hurs per week Initial measurement perid is fllwed by a stability perid f at least 6 mnths and n shrter than measurement perid. Initial stability perid must be the same length as that f nging emplyees and cannt be mre than ne mnth lnger than initial measurement perid Initial administrative perid f up t 90 days (can be split up) The initial measurement perid + initial administrative perid(s) cmbined cannt extend beynd the last day f the first calendar mnth starting n r after the neyear anniversary date f hire (13 mnths + fractinal mnth) Once a new emplyee is emplyed fr ne full standard measurement perid, his r her hurs are analyzed under that perid (Will get cncurrent measurement) Less than 30 hurs/week = lcked int initial stability perid that can be n lnger than remainder f first full standard measurement perid in which it ended Mre than 30 hurs/week = lcked int initial stability perid that is the same length as nging emplyees
Graphics t help demnstrate this prcess: * New Hire: N ffer (Did nt average 30+ hurs during initial measurement perid) New Hire: Offer (Did average 30+ hurs during initial measurement perid) *Standard measurement perid in example is 5/1 4/30, standard administrative perid is 5/1 6/30 and the stability perid is fr a 7/1 plan year.
Use f Payrll Perids fr Measurement Purpses When yu use either the Lk Back Measurement Methd r the Mnthly Measurement Methd, can yu use payrll perids instead f the first and last days f the mnth? Use f Payrll Perids Lk Back Measurement Methd Full-time status is determined by lking back at a defined perid f time frm 3-12 cnsecutive calendar mnths (standard measurement perid). Emplyers can chse the mnths the standard measurement perid starts and ends but must be cnsistent with all emplyees in same categry. Cllectively bargained vs. nn-cllectively bargained Salaried and hurly Emplyees f different entities Emplyees lcated in different states Once the length f the measurement perid is established, payrll perids f neweek, tw-weeks, r bi-mnthly can be used t capture hurs. Emplyers must use payrll perids that include either the first day f the measurement perid OR the last day f the measurement perid, but never bth. Example: Emplyer uses May 1 April 30 as the measurement perid Emplyer either excludes the entire payrll perid that included May 1 and includes the entire payrll that includes April 30 OR Emplyer includes the entire payrll perid that included May 1 and excludes the entire payrll that excludes April 30 Use f Payrll Perids Mnthly Measurement Methd Weekly Rule: Emplyer can measure emplyee hurs ver successive ne-week perids Full-Time status will be determined n a fur-week perid fr sme mnths and fiveweek perids fr ther mnths Emplyers must use weeks f seven (7) calendar days e.g., Sunday thrugh Saturday Payrll perids may be used if the perid used includes either the week that includes the first day f the mnth OR the week that includes the last day f the mnth, but nt bth
Example: Emplyer uses Sunday thrugh Saturday as a week in applying the weekly rule. In measuring fr January 2016, the emplyer measures frm Sunday December 27, 2015 January 30, 2016 t determine an emplyee s full-time status. The emplyer included the week that included the first day f the calendar mnth but did nt include the week that included the last day f the mnth D the rules allw the use f payrll perids fr the Initial Measurement Perid (nly used with the Lk Back Measurement Methd)? Use f Payrll Perids Initial Measurement Perids: New Variable Hur, Seasnal, Part-time Emplyer can use payrll perids fr an initial measurement perid Emplyers are allwed t use an initial measurement perid f 3-12 mnths Emplyers must start measuring a new variable hur, seasnal r part-time emplyee by the first f the mnth starting n r after hire OR if later, the start f the first payrll perid starting n r after the emplyee start date Example: Emplyer hires new variable hur emplyee n May 20 Emplyer can wait until the first f the fllwing mnth (June 1) t start measuring OR Emplyer can wait until the first day f the payrll perid that starts n r after the date f hire. If the next payrll perid starts n May 24, the emplyer can wait until June 1 t start measuring because it is the later date IF the next payrll perid starts n June 3, then the emplyer can wait until June 3 t start measuring because it is the later date
Mid-Year Status Changes When using the Lk Back Measurement Methd there are situatins in which emplyees have a status change which an emplyer must alter the insurance eligibility status f an emplyee. If an emplyer is using the Lk Back Measurement Methd, emplyees are generally cnsidered lcked-in t a full r part-time status during a stability perid. Hwever changes can be made under the fllwing circumstances: Emplyee shifts frm variable hur t a full-time emplyee during an initial measurement perid. In this situatin, an emplyer must make an ffer f cverage t the emplyee within 3 mnths f the status change. During a stability perid a full-time emplyee shifts frm full-time t variable hur status. General Rule: As a general rule, an emplyee wh is determined t be a 30+ hur full-time emplyee during a measurement perid is lcked-in as a 30+ hur emplyee during a stability perid. Hwever: IF the emplyee was ffered minimum value cverage by the first day f the calendar mnth fllwing three full calendar mnths f emplyment, the emplyer is allwed t take the emplyee ut f the stability perid Emplyee must average less than 30 hurs per week during each f the 3 full calendar mnths fllwing the status change Starting with the first day f the furth full calendar mnth fllwing the status change, the emplyer is allwed t start applying the mnthly measurement methd t the emplyee The mnthly measurement methd wuld cntinue thrugh the end f the first full measurement and administrative perid that wuld have applied if the emplyee remained under the Lk Back Measurement methd Hw is COBRA handled? If the plan dcuments include the special rule, cverage is lst by the first day f the furth mnth fllwing the status change and COBRA wuld be ffered at that time IF the plan dcuments merely refer t eligibility as an hurly requirement and the emplyee ges belw the hurly requirement, COBRA is ffered at the time f the reductin in hurs + the lss f cverage If the ESR status change rules are nt included in plan dcuments there is a discnnect between eligibility requirements and emplyer may have a penalty expsure if ESR requirements are nt fllwed COBRA based n ur reductin in hurs is cnsidered an ffer f cverage and therefre the penalty A risk is lw
Penalty B: Individual penalty still a risk if the emplyee des nt have affrdable/valuable cverage fr the 3 mnths fllwing the status change Vluntary Drp f Cverage By Emplyee Histrically allwed by plan, nt allwed by Sectin 125 rules September 2014 regulatins allw fr emplyees t revke electins IF the emplyee ges belw the 30 hur threshld and wants t revke cverage t enrll in anther plan OR If the emplyee wants t enrll in Marketplace cverage. (must amend plan t allw) IF the emplyees allwed t revke their electins enrll in ther cverage, subsidies wuld nt be available and therefre the penalty risk wuld be lw N ffer f COBRA Nn-Payment f Premium by Emplyee Emplyers will nt be penalized fr failing t ffer any FT emplyee the pprtunity t enrll in minimum essential cverage fr emplyees whse cverage is terminated during the cverage perid due t nn-payment f premium. The emplyer must prvide the apprpriate amunt f time fr payment as allwed under COBRA rules. Leave f Absence (nn FMLA) r lay-ff Eligibility requirements dictate that the emplyee is n lnger eligible fr active emplyee cverage. Emplyers shuld ffer COBRA In this situatin an emplyer wuld nt be at risk fr Penalty A because the ffer f COBRA is cnsidered an ffer f cverage. Hwever, if the emplyer des nt cntribute t the COBRA premium, the cverage wuld mst likely be unaffrdable and the emplyer is at risk fr Penalty B.
Sectin 4: IRS Reprting Requirements & Scenaris The newest element f the Affrdable Care Act is the implementatin f new IRS Reprting Requirements. This requirement fr large emplyers (50+ FTEs) is the shared respnsibility reprting requirement under Sectin 6056 f the ACA. In additin, emplyers with self-funded plans have additinal reprting bligatins under Sectin 6055 f the ACA. Starting in 2016 fr 2015 ffers f cverage, large emplyers will file reprts with the IRS which identify the number f full-time/full-time equivalent emplyees they emplyed during the prir year and which emplyees received an ffer f minimum value/affrdable cverage. Emplyers must als prvide an annual statement t their emplyees with the infrmatin that the emplyer prvided t the federal gvernment abut their ffer f health insurance ffer. This sectin cvers the new IRS Reprting Requirements, the cdes that the IRS is using fr the reprting and a number f scenaris. Our gal is t simplify this new reprting requirement fr yu and yur rganizatin. The infrmatin abve is a summary f laws and regulatins regarding prvisins relating t prvisins in the Patient Prtectin and Affrdable Care Act (PPACA). The infrmatin shuld nt be cnstrued as legal r tax advice. In all cases, emplyers shuld be advised t cnsult with their accuntant r legal cunsel fr assistance.
IRS Reprting Requirements & Scenaris Overview f IRS Emplyer Reprting Requirements Starting in 2016, the Internal Revenue Service (IRS) requires all large emplyers (50+ FTEs) reprt infrmatin abut the number f full time/full-time equivalent emplyees they emply during the previus year and which emplyees received an ffer f minimum value cverage. The fllwing are the cre cmpnents f the requirements: Frms. The IRS is very prescriptive abut the frms that will be used fr reprting purpses. There are tw basic versins f the frms that emplyers shuld be aware f: B-Frms. The B-Frms are designed t reprt whether the emplyer is ffering minimal essential cverage. The frms are: Frm 1094-B: This is essentially a cver sheet used by insurance prviders when they transmit their reprt t the IRS. The 1094-B is a brief frm that takes up less than ne page. Frm 1095-B: This frm is a health insurance tax frm which reprts the type f cverage an individual enrlled in, dependents cvered in a plan which ffered MEC. In mst cases this frm will g directly t an emplyee frm the health insurance carrier. C-Frms. The C-Frms are designed t reprt whether the emplyer is meeting their respnsibilities under the Emplyer Shared Respnsibility prtin f the Affrdable Care Act. The frms are: Frm 1094-C: This is essentially a cver sheet used by emplyers when they transmit their reprt t the IRS. The 1095-C is an verview f the cverage ffered by the emplyer. Frm 1095-C: This frm is cmpleted by all Applicable Large Emplyers (ALEs) wh have at least 50 r mre full-time/full-time equivalent emplyees. This frm is filled ut by the emplyer fr all individuals wh are ffered cverage and sent t the emplyee and the IRS. If the emplyer is self-funded, the emplyer will als reprt MEC in Part III f the frm. Emplyer Requirements. Fr purpses f the reprting requirements, emplyers have different requirements based upn their size (small r large) and hw their health insurance plan is funded (fully insured r self-funded). The breakdwn f respnsibilities is as fllws: Large Emplyers; Fully insured health plan. These emplyers have emplyed fifty (50) r mre fulltime emplyees/equivalents during the previus year and have a fully-insured health plan. They must: Emplyer will cmplete the 1094-C and 1095-C fr every full-time (30+ hur) emplyee. Must cmplete Parts I & II f thse frms. Insurance Carrier will cmplete a 1095-B fr all cvered individuals. N entity will cmplete Part III f the 1095-C. Emplyees will receive a 1095-C and 1095-B.
Large Emplyers; Self-funded health plan. These emplyers have emplyed fifty (50) r mre fulltime emplyees/equivalents during the previus year and have a self-funded health plan. They must: Emplyer will cmplete the 1094-C and 1095-C fr every full-time (30+ hur) emplyee. Must cmplete Parts I & II f thse frms. Emplyer will cmplete Part III f the 1095-C fr all cvered individuals. Emplyees will receive a 1095-C. If the emplyer has lwer eligibility requirements than the standard 30+ hurs per week, the emplyer can either fill ut a 1095-C fr thse emplyees, indicating in Part II that the emplyee is PT using Cde 1G r cmplete 1095-Bs fr cvered emplyees wrking fewer than 30 hurs per week. Small emplyers (under 50 emplyees); fully insured. These emplyers have emplyed fewer than fifty (50) emplyees/equivalents during the previus year and have a fully insured health plan. They must: Emplyer has n reprting bligatins. Insurance carrier will fill ut a 1095-B fr every cvered individual. Emplyees will receive a 1095-B frm the carrier. Small emplyers (under 50 emplyees); self-funded health plan. These emplyers have emplyed fewer than fifty (50) emplyees/equivalents during the previus year and have a self-funded health plan. They must: Emplyer will need t cmplete a 1095-B fr every cvered emplyee and include cverage infrmatin fr every cvered individual. Emplyees will receive a 1095-B frm the emplyer. (Cntinued)
Filing Deadlines. The fllwing dates are the deadlines fr filing all frms: January 31: Frm 1095-C and 1095-B statements must be prvided t emplyees. Emplyee statements can be delivered electrnically based n existing requirements fr W2 electrnic distributin. Emplyer MUST btain the cnsent frm the emplyee. February 28: All frms must be filed with the IRS annually if mailed. March 31: All frms must be filed with the IRS if filing electrnically thrugh the Affrdable Care Act Infrmatin Returns (AIR) system. Electrnic filing is required if an emplyer will file mre than 250 C r B frms.
Frm 1094-C Transmittal Frm This transmittal frm will be filled ut by emplyers as a majr part f the IRS Reprting Requirements. The frm is belw and a summary f the key areas fllws. Emplyer Infrmatin: Much f the infrmatin n the frm is standard infrmatin such as lcatin f emplyer and cntact infrmatin. The fllw areas are very imprtant fr emplyers t fill ut prperly: Line 18 Ttal number f 1095-Cs transmitted. Line 19 Yes/N Questin. Only Check Yes if this 1094-C is the authritative transmittal which is reprting aggregated data. If NO, then leave the remainder f the frm (lines 20-22 f Part II and all f Parts III and IV blank). If nly ONE emplyee is reprting, this will be the authritative transmittal. If several emplyers are reprting under a cntrlled grup s that all FT emplyees are nt reprting under ne 1094-C transmittal, ne f the Frms 1094-C must reprt aggregate emplyer level data and be identified as the Authritative Transmittal. Line 20 Only fill in number f ttal frms if this is the authritative transmittal. Line 21 Aggregated grup indicatr (see instructins)
Certificatins f Eligibility fr Reprting Relief (Line 22) Line 22 f the 1094C actually ffers applicable large emplyers (ALEs) t certify if they are eligible fr tw different types f relief. Each area f relief has different requirements and different utcmes. Nt all emplyers will qualify fr an area f relief. The fur areas are: A: Qualifying Offer Methd. This methd may simplify health cverage reprting n Frm 1095-C fr an emplyer that certifies that, fr all mnths during the year in which an emplyee was a full-time emplyee fr whm a Sectin 4980H emplyer shared respnsibility payment culd apply, the emplyer made a Qualifying Offer. T meet this eligibility an emplyer must: Offer f minimum essential cverage (MEC) prviding minimum value All mnths during the year that an emplyee was a full-time emplyee Cst t emplyee fr self nly cverage is n mre than 9.5% f Federal Pverty Level (FPL) MEC als made available t spuse and dependents, if any If Relief Type A is met: Qualifying Offer Methd Emplyee Statements can include: An emplyer that uses the Qualifying Offer methd may, rather than furnishing a cpy f Frm 1095-C t its full-time emplyees (wh received a Qualifying Offer fr all 12 mnths), instead prvide a statement cntaining the fllwing infrmatin: Emplyer Name, Address and EIN Cntact name and telephne number A statement indicating that, fr all 12 mnths f the year, the emplyee and his r her spuse and dependents, if any, received a Qualifying Offer and therefre are nt eligible fr a premium tax credit.
B: Reserved: Nt Applicable C: Reserved: Nt Applicable Relief Type D: 98% Offer Methd. This methd may simplify health cverage reprting n Frm 1094-C fr an emplyer that certifies that it ffered, fr all mnths f the calendar year, affrdable health cverage prviding minimum value t at least 98% f its emplyees and their dependents fr whm it is filing a Frm 1095-C emplyee statement. Affrdable is based n the emplyer mandate final regulatins safe harbrs. Fr this purpse, any 4980H affrdability safe harbr applies Upn an IRS request, the emplyer may later be required t identify whether specific emplyees were full-time, by mnth
IRS Cdes fr Frm 1095-C: Line 14 Cde 1A 1B 1C 1D 1E 1F Descriptin Qualifying Offer: MEC + MV ffered t FT emplyee, Federal Pverty Level utilized t determine affrdability and MEC ffered t spuse and dependents MEC + MV ffered t emplyee nly MEC + MV ffered t emplyee; MEC ffered t dependents (nt spuse) MEC + MV ffered t emplyee; MEC ffered t spuse (nt dependents) MEC + MV ffered t emplyee; MEC ffered t spuse and dependents MEC (n MV) ffered t emplyee; emplyee + spuse r dependents; emplyee + spuse and dependents 1G 1H 1I 1J Offer f cverage t nn-ft emplyee fr any mnth f the calendar year and wh enrlled in self-insured cverage fr ne r mre mnths f the calendar year N ffer f cverage (nt ffered r emplyee ffered cverage that is nt MEC MEC + MV ffered t emplyee; MEC cnditinally ffered t spuse; MEC nt ffered t dependents MEC + MV ffered t emplyee; MEC ffered t dependents; MEC cnditinally ffered t spuse Line 15: Input $ amunt f emplyee s share f lwest cst single cverage ONLY if 1B, 1C, 1D r 1E is used n line 14. IRS Cdes fr Frm 1095-C: Line 16 Cde 2A 2B 2C 2D 2E 2F 2G 2H Descriptin Emplyee nt emplyed during the mnth. Only use if the emplyee was nt emplyed n ANY DAY f the calendar mnth. D NOT use fr the mnth in which the emplyee terminates. Emplyee nt a FT emplyee. Use if emplyee was nt a FT emplyee fr the mnth and did NOT enrll in MEC if ffered. Als use if emplyee is FT and whse ffer f cverage ended befre the last day f the mnth due t terminatin f emplyment. Emplyee enrlled in cverage ffered. Enter this cde regardless f whether any ther cdes (ther than 2E apply) might apply. D nt use fr COBRA cverage. (Use 2A) Emplyee in a Limited Nn-Assessment Perid. If the emplyee is in an Initial Measurement Perid, enter 2D rather than 2B (nt FT emplyee). If multi-emplyer interim relief applies, enter 2E and nt 2D. Multiemplyer interim rule relief use this cde fr any mnth in which the multiemplyer arrangement interim guidance applies fr that emplyee regardless f if any ther Series 2 cde applies. W-2 Affrdability Safe Harbr applies Federal Pverty Level Safe Harbr applies Rate f Pay Safe Harbr applies
Reprting Scenari #1 Situatin: Emplyer ffers health plan cverage t all emplyees wh are scheduled t wrk 20 hurs per week. The plan prvides Minimum Value, therefre is cnsidered Minimum Essential Cverage and is prvided by a lcal health plan carrier. Emplyer has ver 100 emplyees based n the preceding calendar year. Affrdability: Emplyer charges $50/mnth fr the lwest cst single cverage ptin. Therefre, Emplyer is able t utilize the Federal Pverty Level (FPL) safe harbr fr affrdability. Emplyee Example: Amy One is a full-time emplyee f Emplyer. She is eligible fr cverage every day in 2016 and was enrlled in cverage every day in 2016. Her 1095-C will lk as fllws: Ntes: Line 15 is BLANK. Yu will nly fill in Line 15 if Cde 1B, 1C, 1D r 1E is used.
Reprting Scenari #2 Situatin: Emplyer ffers health plan cverage t all emplyees wh are scheduled t wrk 20 hurs per week. The plan prvides Minimum Value, therefre is cnsidered Minimum Essential Cverage and is prvided by a lcal health plan carrier. Emplyer has ver 100 emplyees based n the preceding calendar year. Affrdability: Emplyer charges $50/mnth fr the lwest cst single cverage ptin. Therefre, Emplyer is able t utilize the Federal Pverty Level (FPL) safe harbr fr affrdability. Emplyee Example: Bb Tw is a full-time emplyee f Emplyer and he was ffered cverage fr all f 2016. Bb waives cverage fr all f 2016. His 1095-C will lk as fllws: Ntes: Line 16 is nly left blank if the cverage ffered was nt affrdable. Emplyers shuld use the affrdability safe harbr cdes (2F, 2G r 2H) when an emplyee waives cverage and the ffer was affrdable.
Reprting Scenari #3 Situatin: Emplyer ffers health plan cverage t all emplyees wh are scheduled t wrk 20 hurs per week. The plan prvides Minimum Value, therefre is cnsidered Minimum Essential Cverage and is prvided by a lcal health plan carrier. Emplyer has ver 100 emplyees based n the preceding calendar year. Affrdability: Emplyer charges $50/mnth fr the lwest cst single cverage ptin. Therefre, Emplyer is able t utilize the Federal Pverty Level (FPL) safe harbr fr affrdability. Emplyee Example: Dug Three is hired as a new full-time emplyee n April 15, 2016. His waiting perid runs frm April 15- May 30. He enrlls in cverage frm June December 2016. His 1095-C will lk as fllws: Ntes: Dug is cded as a 1H (n ffer), 2A (nt emplyed) fr Jan-Mar. He started wrk with Emplyer in April, but he was in a waiting perid s cded as 1H (n ffer), 2D (limited nn-assessment perid). He is ffered cverage effective June 1 (1A) and enrlls (2C) fr the remainder f the year. N dllar amunt is needed n Line 15 due t cde 1A.
Reprting Scenari #4 Situatin: Emplyer ffers health plan cverage t all emplyees wh are scheduled t wrk 20 hurs per week. The plan prvides Minimum Value, therefre is cnsidered Minimum Essential Cverage and is prvided by a lcal health plan carrier. Emplyer has ver 100 emplyees based n the preceding calendar year. Affrdability: Emplyer charges $50/mnth fr the lwest cst single cverage ptin. Therefre, Emplyer is able t utilize the Federal Pverty Level (FPL) safe harbr fr affrdability. Emplyee Example: Claudine Fur starts with Emplyer n January 10, 2016 as a variable hur emplyee. She is prmted t full-time status n August 1, 2016 and is ffered insurance n August 1. She enrlls in cverage effective August 1. Her 1095-C will lk as fllws: Ntes: Claudine is hired as a Variable Hur Emplyee and is therefre in a limited nn-assessment perid (she is in her Initial Measurement Perid) frm January July and is cded fr thse mnths as 1H (n ffer), 2D (limited nn-assessment perid). She is ffered cverage and enrlls effective August 1 1A, 2C. N dllar amunt is needed n line 15 due t 1H and 1A.
Reprting Scenari #5 Situatin: Emplyer charges mre than the FPL x 9.5% ($93.18/mnth) fr the lwest cst single cverage. Emplyer ffers Minimum Essential Cverage (MEC) with Minimum Value (MV) t emplyee, spuse and dependents. The cst fr single cverage is $300 per mnth and family cverage is $500 per mnth. Emplyee Example: Zack Five is a full-time emplyee f Emplyer. Emplyer ffers Zack cverage. The plan perates n a July 1 renewal date. Zach des nt take cverage frm July 1, 2015-June 30, 2016. Hwever, in July f 2016 Zach decides he needs cverage and enrlls in family cverage. His 1095-C will lk as fllws: Ntes: Zach was ffered cverage frm Jan June, but did nt enrll in cverage. Because the emplyer des nt use the Federal Pverty Line (FPL) t determine affrdability, 1E is used rather than 1A. The use f 1E requires the emplyer t put the dllar amunt f the lwest cst single cverage n Line 15. Even thugh Zach enrlls in family cverage in July, the $300 amunt is used fr the entire year. Zach waived cverage frm Jan June s Line 16 is blank because the ffer was nt affrdable. When he enrlls in July, Line 16 will be cded with a 2C.
Reprting Scenari #6 Situatin: Emplyer ffers health plan cverage t all emplyees wh are scheduled t wrk 20 hurs per week. The plan prvides Minimum Value, therefre is cnsidered Minimum Essential Cverage and is prvided by a lcal health plan carrier. Emplyer has ver 100 emplyees based n the preceding calendar year. Affrdability: Emplyer charges $50/mnth fr the lwest cst single cverage ptin. Therefre, Emplyer is able t utilize the Federal Pverty Level (FPL) safe harbr fr affrdability. Emplyee Example: Remember Amy One frm Scenari #1? What if Amy decided t terminate her emplyment as f June 12, 2016 t g wrk fr anther emplyer? Amy is ffered COBRA. Her 1095-C will lk as fllws: Ntes: The 2016 Instructins simplify the reprting fr ffers f COBRA cverage in the case f terminated emplyees. An ffer f COBRA cverage made t a frmer emplyee upn terminatin f emplyment is n lnger reprted as an ffer f cverage n Line 14. Instead, series-1 cde 1H (N ffer f cverage) must be entered fr any mnth fr which the ffer f COBRA cntinuatin cverage applies. Als the instructins prvide that series-2 cde 2A is t be used fr any mnth in which a terminated emplyee is enrlled in COBRA, nt cde 2C.
Reprting Scenari #7 Situatin: Emplyer ffers health plan cverage t all emplyees wh are scheduled t wrk 20 hurs per week. The plan prvides Minimum Value, therefre is cnsidered Minimum Essential Cverage and is prvided by a lcal health plan carrier. Emplyer has ver 100 emplyees based n the preceding calendar year. Affrdability: Emplyer charges $50/mnth fr the lwest cst single cverage ptin. Therefre, Emplyer is able t utilize the Federal Pverty Level (FPL) safe harbr fr affrdability. Emplyee Example: What if instead f terminating, Amy One had a reductin f hurs and lses her eligibility status n June 12, 2016? The reductin is a COBRA qualifying event, but Amy is ffered COBRA, but elects t enrll in her spuse s plan and ultimately declines COBRA cverage. Her 1095-C will lk as fllws: Ntes: Fr a reductin in hurs, the ffer is reprted even if nt enrlled in COBRA. S, fr mnths June-December, the cde 1E is reprted. On line 15, the lwest cst self-nly COBRA rate is reprted; were COBRA elected, cde 2A wuld be used. On line 16, the mnths withut COBRA cverage wuld be blank because the COBRA ffer is nt affrdable.
Reprting Scenari #8 Situatin: Emplyer ffers health plan cverage t all emplyees wh are scheduled t wrk 20 hurs per week. The plan prvides Minimum Value, therefre is cnsidered Minimum Essential Cverage and is prvided by a lcal health plan carrier. Emplyer has ver 100 emplyees based n the preceding calendar year. Affrdability: Emplyer charges $50/mnth fr the lwest cst single cverage ptin. Therefre, Emplyer is able t utilize the Federal Pverty Level (FPL) safe harbr fr affrdability. Emplyee Example: Recall frm the riginal scenari, that Emplyer ffers health plan cverage t all emplyees wh are scheduled t wrk 20 hurs per week. Emily Emplyee wrks 25 hurs per week as a classrm aid, and elects cverage fr herself and is cvered fr the entire calendar year. Her 1095-C will lk as fllws: Ntes: Emily is nt cnsidered a full-time emplyee within the ACA s definitin, nr did she average 30 hurs a week during her measurement perid. Hwever, the emplyer s eligibility starts at 20 hurs and abve. As a result, Line 14 is cded with cde 1G (Offer t nn-ft emplyee). Lines 15 and 16 are left blank. This cding wuld lk the same fr any emplyees wh elect cverage and fall between 20-30 hurs as nn-aca full-time emplyees. A 1095-C culd be prvided nly if the emplyer has self-funded cverage.