ACA Reporting Requirements for Large

EmployersCalifornia Association of Joint Powers Authorities (CAJPA) Annual Conference | September 17, 2015

Presented by: Heather DeBlanc

ACA Reporting Requirements

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Two Types of Annual Reporting

• Insurer Reporting – Self- insured plan sponsors / insurers

• Applicable Large Employer Reporting (Forms 1094C & 1095C)– Incl. employers that sponsor self-insured plans

• Both require written statement to Employee/responsible individual

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Purpose of the Applicable Large Employer Reporting Requirements

• Inform IRS of large employer compliance with Employer Mandate

• Determine eligibility for exchange subsidies (aka premium tax credits)

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Method/Deadline of Filing

• Data from prior year (2015 data reported in 2016 for first annual filing)

• More than 250 returns, must e-file:

– By Mar 31 (2016 first filing)

• Less than 250 returns, can:

– By Feb 28, hard copy filing; or

– By Mar 31, e-file (optional)

• Written statement to each employee reported on due on or before Jan 31 (first due 2016)

Who Must Report?

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Who Must Report?

• Health insurers and plan sponsors of self-insured plans must report coverage of enrolled individuals

• “Applicable large employers” as defined by the ACA must report offer of lowest cost coverage

• Plan sponsors that are also large employers must report both covered individuals and offer of lowest cost coverage

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Plan Sponsors of Self-insured Plans

• Sponsors of single employer plans– Employer must report

• Special rule for government employers– Written Agreement (employer with self-insured plan

and another related unit, agency, instrumentality)

– By Jan 31

– Designated agency is sponsor for reporting

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“Applicable Large Employers”

• Information reporting requirements only to large employers

• 50 or more full-time employees, including FT equivalents

• Must report even if taking advantage of 50 to 99 FT employee transition relief for 2015

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Applicable Large Employer (ALE)

• Each ALE member

• Special rule for government employers– Written Designation (signed by ALE member &

designee)

– Specific language required

– Designated by Jan 31

IRS Forms and the Reporting Process

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Required Returns

• A return is required each year for each full-time employee on whom reporting is required (Form 1095)

• Single transmittal to IRS of all returns for the year (Form 1094 = transmittal)

• Report information regarding type of coverage offered and applicable transition relief

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Reporting Penalties

• Failure to timely file correct return– Good faith compliance sufficient for 2016

– $250 per return (up to $3,000,000)

• Failure to timely provide correct written statement to employee– $250 per statement (up to $3,000,000)

• Intentional disregard of filing requirements– $500 per return (no calendar year cap)

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Determining Forms to File

Employer Description Applicable Forms

Applicable Large Employer Offering Fully-Insured Coverage

1094-C (entire form) and 1095-C (except Part III)

Applicable Large Employer Sponsoring Self-Insured Coverage

1094-C (entire form) and 1095-C (entire form)

Small Employer (non-ALE) Sponsoring Self-Insured Coverage

1094-B and 1095-B

Small Employer Offering Fully Insured Health Plans

Not Applicable

Form 1094-C

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IRS Transmittal Form 1094-C

• Transmittal form for employers filing 1095-C • Content

– Name and contact information of employer

– Total number of Forms 1095-C submitted

– Offered minimum essential coverage

– Number of full-time employees per month

– Total employees per month

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Form 1094-C – Parts I and II

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Designated Governmental Entity (DGE) – Lines 9-16

• Person or persons part of or related to the governmental unit that is the ALE Member

• File separate Forms 1095-C and 1094-C

• Must have written designation by Jan. 31 incl:– Category of employees responsible for reporting– Agreement/Certification of designation– Acknowledgment of responsibility– Identify ALE member as subject to penalties

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Authoritative Transmittals – 1094-C, Part II, Line 19

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DGE Example – Page 2 of Reporting Instructions

• County is an ALE • ALE Members: School District, Police

District, and County General Office. • School District designates the state to

report on behalf of the teachers and reports for itself for its remaining FT employees.

• The School District or the state must file Authoritative Transmittal

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Authoritative Transmittals

• Filing multiple Forms 1094-C permitted• Filed by each separate employer (aka

ALE Member)• Line 19 of 1094-C• Reporting aggregate employer-level data

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Authoritative Transmittal w/ DGE

• Designated Governmental Entity• Must also designate one of the multiple

Forms 1094-C as the authoritative transmittal and report the aggregate employer-level data for the government unit

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Line 20 – 1094-C, Part II

• Employer’s full-time employees that are filed with this transmittal

• To be filed with another transmittal filed by or on behalf of the employer

• Non-full-time employees who enroll in the employer’s employer-sponsored self-insured health plan

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Line 21 – 1094-C, Part II

• Employer’s full-time employees that are filed with this transmittal

• To be filed with another transmittal filed by or on behalf of the employer

• Non-full-time employees who enroll in the employer’s employer-sponsored self-insured health plan

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Line 22 – 1094-C, Part II

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Qualifying Offer Method (Box A)

• Qualifying Offer– Affordable under Federal Poverty Line safe

harbor Employee’s self-only premium contribution to

lowest cost plan option not more than 9.5% of the monthly Federal Poverty Line

– Offer of coverage to spouse and dependents

• Check if using for one or more full-time employees

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Qualifying Offer Made For Any Month

• If Qualifying Offer made for any month, Employer:– May report code 1A on Form 1095-C, line 14

instead of the dollar amount on line 15; can’t do both

– Can use code 1A for any single month or all 12 calendar months

• Check Box A if you are doing this

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Qualifying Offer Method (Box A)

• If Qualifying Offer for all 12 months, ER may provide simplified notice to employee:

ER name, address, EIN, contact name & info; Statement: For all 12 months the employee and

his/her spouse and dependents received a “qualifying offer” and is therefore not eligible for a premium tax credit.

Not available for self-insured reporting

• If Qualifying Offer NOT made for all 12 months, ER must provide copy of Form 1095-C unless Transition Relief applies

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Line 22 – 1094-C, Part II

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2015 – Qualifying Offer Transition Relief (Box B) – 2015 ONLY

To use, large employer must certify it made a Qualifying Offer:

–For one or more months

–To at least 95% of full-time employees

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Qualifying Offer Transition Relief (Box B) – 2015 ONLY

• Check if made qualifying offer for one or more months of 2015 to at least 95% of full-time employees

• For employees who do not receive Qualifying Offer for all 12 months, incl. those receiving no offer

• Simplified reporting permitted

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Qualifying Offer Transition Relief (Box B) – 2015 ONLY

• Employer name, address, and EIN• Contact name and telephone number at which the

employee may receive information about the offer of coverage (if any) and Form 1095-C filed with IRS

• Statement indicating employee and his or her spouse and dependents may be eligible for a premium tax credit for one or more months of 2015

• A statement directing the employee to see Pub. 974 for more information on eligibility for the premium tax credit

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Line 22 – 1094-C, Part II

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Section 4980H Transition Relief (Box C)

• Applicable large Employer with less than 100 FT ee (incl. FTE); or

• Calculation of Penalties (i.e. 70% as substantially all; less 80)

• To take advantage of these, check this Box & complete Form 1094-C, Part III, column (e)

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98% Offer Method (Box D)

• Certify on Form 1094-C that a “98% offer” was made– At least 98% of all employees (including part-

time) were offered affordable, minimum value coverage

• Affordable under any affordability safe harbor

• Not required to separately identify or report number of full-time employees in Part III, Column B of 1094-C (still must file 1095-C for each full-time employee)

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Form 1094-C – Part III

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Form 1094-C – Part III

Info to calculate Penalty A – not offering to substantially all FT employees

• (column a) Yes if offered to 95% or 70% of FT employees (as to ea. month or line 23)

(*No – red flag for penalty trigger)• (column b) Skip if using 98% Offer Method• (column b) Enter # FT ee’s (don’t include ee

in a Limited Non-Assessment Period)

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Limited Non-Assessment Period

• Not subject to penalties during the period• EE must be offered affordable MV coverage

by first day after end of period• New FT – first 3 full calendar months• Look Back Safe Harbor – Initial MP + Admin

period for new variable hour, seasonal, pt ee.– Change in status

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Form 1094-C – Part III

(column c) Total employee count – first or last day of month (consistent each month of year)

– include all whether in LNP, PT, FT

(column d) Penalty A is total # FT ee less 30 (80 in 2015). If this column is checked, the employer is related to a larger group and penalty calculation will be with regard to whole aggregate group. If enter X for any month, complete Part IV.

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Form 1094-C – Part III

(column e) Use if completed Box C on line 22 (4980H Transition Relief)

– Code A – 50-99 relief; OR

– Code B – 100 or more relief

Form 1095-C

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IRS Reporting Form 1095-C

• Who: Applicable large employers

• What: Report information regarding type of coverage offered and applicable transition relief

• How:– One Form 1095-C for each full-time employee– One Form 1095-C for any employee who enrolls

in coverage (if employer sponsors self-insured health plans)

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Form 1095-C

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Penalty Reminder – Reporting Trigger

Remember

IRS Potential Penalty, if do not OFFER:

•MEC (Minimum Essential Coverage)

•MV (Minimum Value)

•To substantially all full-time employees

– 70% (in 2015); 95% (2016 & beyond)

•AND dependents (i.e. children up to age 26)

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Form 1095-C – Part II

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Indicator Codes – Form 1095-C, Line 14 – Offer of Coverage

1A. MV MEC to FT ee affordable based on 9.5% FPL plus MEC to spouse & dependents

1B. MEC MV to ee only

1C. MEC MV to ee + MEC to dependents (not spouse)

1D. MEC MV to ee + MEC to spouse (not dependents)

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Indicator Codes – Form 1095-C, Line 14 – Offer of Coverage

1E. MEC MV to ee & MEC to dependents & spouse

1F. MEC NOT MV to ee, or ee + spouse or dep., or ee, spouse & dep.

1G.Offer to ee (not FT) & enrolled in self-insured coverage.

1H. No offer of coverage.

1I. Qualified Offer Transition Relief

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Line 15 – Form 1095-C

• Employee’s share of lowest cost monthly premium only for self-only minimum value coverage

• Complete only if Line 14 has Code 1B, 1C, 1D, or 1E– Complete if offered coverage

– Do not complete if coverage was not MEC

– Do not complete if coverage offered did not provide MV

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Line 16 – 1095-CApplication of 4980H Safe Harbor

2A. EE not employed during month

2B. EE not FT

2C. EE enrolled in coverage offered

2D. EE in Limited Non-Assessment period

2E. Multiemployer interim rule relief

2F. Form W-2 Safe Harbor

2G. FPL Safe Harbor

2H. Rate of Pay Safe Harbor

2I. Non-Calendar Year Transition Relief (2015)

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Multi-Use Indicator Codes – Form 1095-C, Line 16

• 2B– Not FT EE; did not enroll in MEC

– FT, but offer of coverage ended before last day of month because employee terminated employment during month

– Jan. 2015 if offered affordable MV coverage no later than first day of first payroll period beginning Jan 2015

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Multi-Use Indicator Codes – Form 1095-C, Line 16

• 2C– Use for any month in which employee enrolled

in MEC

• 2E– Multiemployer interim rule relief

– Use instead of 2D if both applicable

– Use instead of 2F-2H if both applicable

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Multiemployer Interim Relief

• Offered coverage & not penalized if:

• CBA requires ER contribution for that employee to multiemployer plan – (as defined by 26 USC 414(f)(1)(A) and (B))– that offers minimum value coverage &– that is affordable &– to those who satisfy plan’s eligibility conditions &– dependents (or is eligible for transition relief)

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Part III – Self-Insured Coverage

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Part III – Who to include?

• Name covered individuals who enrolled• For any individual who was an employee for

1 or more calendar months of year• Full-Time and Non Full-Time• Include covered family members

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Part III – Covered Non-Employees

• Councilmember, Director• Retiree who retired in previous year• Terminated employee in COBRA• Part II is completed using Code 1G

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Part III – Other Information

• Reasonable attempts required to obtain social security numbers

• Only enter DOB if cannot obtain SS #

• Column d – check if covered at least one day in every month of year

• Column e – check months covered

• If more than 6 covered individuals, use additional Forms 1095-C (Parts I & III only)

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Reporting Summary

• Determine method of reporting

• DGE applicable?

• Identify FT employees– Breaks in service

– Terminated employees

• Transition relief applicable?– Simplified reporting?

• Complete reporting forms for all employees on whom reporting required

Written Statements to Employees

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Written Statements

• Statement may be a copy of the IRS return, or a substitute containing same information

• May provide electronically only if meet certain requirements (affirmative consent to electronic receipt of statement).

• Due Jan 31 (annually)

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Written Statements

• Self-Insured - Phone # for reporting entity’s designated person and SS # for the responsible individual and each covered individual

• Applicable Large Employer – name, address, EIN of ER and info reported on

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Requirements to Furnish Electronically

1. Affirmative Consent

2. Disclosure Statement (see next slide)

3. Notice Statement“IMPORTANT TAX RETURN DOCUMENT AVAILABLE”

4. Access Period

5. Paper Statement provided after withdrawal of consent

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Disclosure Statement (electronic delivery)

• Paper statement available if no consent• Scope & duration of consent• Procedure re: post consent request for

paper statement• Withdrawal of consent provisions• Conditions re: termination• Change in employers contact info• Describe hardware/software re: access

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Questions?

Heather DeBlanc

Attorney | Los Angeles Office

310.981.2000. | hdeblanc@lcwlegal.com

www.lcwlegal.com/Heather-DeBlanc