Employee Benefits After the Affordable Care Act ~ NHRMA 2015 Conference & Tradeshow October 6, 2015 With Iris Tilley, Barran Liebman LLP
MEASUREMENT AND STABILITY PERIODS
Shared Responsibility Payment No OFFER of minimum essential coverage for 95% fulltime employees (and dependents) (70% for 2015) and at least one employee obtains subsidized exchange coverage (No offer) $2,000 annually ($166.67 per month) per total number of full-time employees Exclude first 30 FT Employees (2015+) Excludes first 80 employees (2015) Applicable large employer $3,000 annually Employer offers minimum essential coverage but employee still obtains subsidized exchange coverage because contribution deemed unaffordable (Bad Offer) ($250 per month) per each full-time employee That receives premium tax credit/ cost-sharing reduction from an exchange
Variable Hour & Seasonal Employees Two Options: Continue to look at them on a month-by-month basis to determine coverage May measure hours over a longer period of time to determine if average hours are sufficient to require coverage Measurement & Stability Periods Definition of seasonal is still up in the air
Variable Hour & Seasonal Employees: Determining Full-Time Status Employers may use measurement period of 3-12 months to determine full-time status Employers also may have administrative period of up to 90 days to enroll variable-hour employees who are full-time Initial measurement and administrative periods combined can t require more than one full month wait after one-year anniversary
Variable Hour & Seasonal Employees: The Stability Period If variable-hour employee is full-time, coverage must be provided for stability period of greater of: 6 months, or Length of measurement period If employee terminates and is rehired, the employee may be treated as a new employee if the break was less than 26 consecutive weeks
Example New Hire Administrative Period (2 mos.) April 1, 2016 May 31, 2016 Initial Measurement Period (11 mos.) May 1, 2015 March 31, 2016 Initial Stability Period (11 mos.) June 1, 2016 April 30, 2017 2015 2016 2017 Standard Measurement Period (12 mos.) Nov. 1, 2015 Oct. 31, 2016 Standard Stability Period (12 mos.) Jan. 1, 2017 Dec. 31, 2017 Ongoing Employee Administrative Period (2 mos.) Nov. 1, 2016 Dec. 31, 2016 Barran Liebman LLP
Using Measurement & Stability Periods Cannot be used to delay coverage to otherwise full-time employees Used where employer does not know if employee will be full time Most strategically useful for seasonal employees
Measurement and Stability Periods Tricky Little Rules Employees in a single category must be treated consistently: Hourly Salaried Collectively Bargained Noncollectively Bargained Employees covered by different collective bargaining agreements Special rules apply where an employee s status changes
ACA REPORTING
ACA Reporting: Who Cares? Employers with 50+ full-time equivalent employees Employers with self-insured health plans Health insurers Individuals The IRS
A Diversion: Counting Employees Calculation of Hours Number of full time employees + All hours worked by part-time employees that month /120 hours = Number of full-time equivalents (FTEs) Is this number greater than or equal to 100? 50? Members of a controlled group are aggregated
Two Types of Reports Insurer-Provided Health Coverage Report (the B Forms ) Employer-Provided Health Insurance Offer and Coverage Report (the C Forms )
The B Forms HEALTH COVERAGE REPORT
Health Coverage Report Purpose: Enforce the individual mandate Provided by: Health insurer Deadline: 1/31/16 for 2015
Health Coverage Report Filing Requirements: Two Forms: 1095-B 1094-B Transmittal Form Reports months an individual had health insurance coverage under a particular plan IRS will use this information to see who didn t have coverage for the full year
The C Forms EMPLOYER PROVIDED HEALTH INSURANCE AND OFFER OF COVERAGE REPORT
Employer Pay or Play Reporting This information is used: To determine if employers are liable for penalties To determine if individuals are eligible for subsidies Who files? All employers with 50 or more full-time equivalent employees (ALEs) No report is generally due if an ALE has no employees for any months in a reporting year
But I Participate in a Multiemployer Plan! Multiemployer plan participation does not eliminate reporting obligations Interim relief for shared-responsibility penalties Can agree with multiemployer plan for plan to do C-Form reporting IRS has stated that penalty for failure to report remains with the employer
REPORTING: THE DETAILS
What Employers Need to Do Now Determine reporting obligations Keep track of hours worked: Definitively full-time employees are easy Hourly employees should be pretty easy Part-time salaried employees can pose a challenge Keep track of offers of coverage: Best practice is to have employees who waive coverage sign a waiver form An offer of COBRA coverage to an employee losing coverage due to a reduction in hours would be reported
What Employers Need to Do Now (cont.) Determine who will be completing your forms: Payroll provider? Other third-party vendor? Determine if or how you plan to comply
Reporting Obligations 50+ Employers Sponsoring Self-Insured Plans: Form 1094-C & Form 1095-C 50+ Employers Sponsoring Insured Plans: Form 1094-C & Part of Form 1095-C Smaller Employers Sponsoring Self-Insured Plans: Form 1094-B & 1095-B Smaller Employers Sponsoring Insured Plans: None. The insurer will complete all reporting
1094-C Transmittal Form Each member of a controlled group needs to complete its own form
1094-C Transmittal form
1094-C (Cont.)
If or How You Plan to Comply Qualifying Offer: Offer a minimum value plan to all 30+ hour per week employees & their spouses and dependents Qualifying Offer (transitional): Permissible dependents are excluded 4980 Transitional Relief Employers with 50-99 Employees 98% Offer Method This is the simplified reporting I mentioned earlier
Form 1095-C This is the form employers use to report an actual offer of coverage One form for each employee Draft 2015 forms have been released
Non-Calendar Year Plans
Alternative Methods of Reporting Simplified methods of reporting available to certain employers: Certification of qualifying offers Report not identifying full-time employees
Certification of Qualifying Offers Employer must certify that for all months in the calendar year that the employee was full-time, the following was true: The employer offered the employee a minimum value plan The annual cost to the employee for employee-only coverage did not exceed 9.5% of the federal poverty level for a single individual Employer offered minimum essential coverage to the employee s spouse and children, if any For 2015, if employer made a qualifying offer to 95% of full-time employees, spouses and children Report for employees receiving a qualifying offer for all 12 months will include Employee Name, SSN and Address along with code that qualifying offer was made
No Individualized Reporting Employer offers minimum value coverage: 60% actuarial value + affordable To 98%+ of its full-time employees Employer is not required to identify each fulltime employee
Distributing Reports to Employees Follows W-2 deadlines regardless of plan year Mail to employee s last-known address Electronic distribution permitted if employee consents
Filing with the IRS File with IRS by Feb. 28 for paper returns; March 31 for electronic returns Limited filing extensions of 30 days permitted Employer must show good cause Electronic reporting is required for employers filing 250 or more returns, but any employer can file electronically
Penalties for Noncompliance Up to $100 per return with a cap of $1,500,000 per calendar year (2015) Up to $250 per return with a cap of $3,000,000 per calendar year (2016+) We anticipate negotiation room in the first years of compliance DOL has staffed up, so expect audits
Questions? ~Thank You~ Iris Tilley itilley@barran.com 503-276-2155