ACA Reporting for Employers

Certain employers are required to report information related to their employee’s health coverage in 2015. This letter will briefly outline the information required to be reported to the IRS.

Beginning in 2015, certain employers with 50 or more full-time employees (“applicable large employers” or ALEs) will use Forms 1094-C and 1095-C to report the information about offers of health coverage and enrollment in health coverage for their employees. Specifically, an ALE will use Form 1094-C to report summary information for each employee and to transmit Forms 1095-C to the IRS. A separate Form 1095-C is used to report information about each employee. In addition, Forms 1094-C and 1095-C are used in determining whether an employer owes payments under the employer shared responsibility provisions (sometimes referred to as the “employer mandate”). Under the employer mandate, an employer can be subject to a penalty if it does not offer affordable minimum essential coverage that provides minimum value to substantially all of its full-time employees (and their dependents). Form 1095-C is also used in determining eligibility of employees for premium tax credits.

Using Form 1095-C (Part II), ALEs have to report the following information for each employee who was an ALE’s full-time employee for any month of the calendar year:
• the employee’s name, social security number (SSN), and address,
• the employer contact and Employer Identification Number (EIN), including the contact person’s name and phone number,
• description of the health insurance coverage offered by month, if any,
• the months each full-time employee was enrolled in your coverage,
• each full-time employee’s share of the cost for coverage under the lowest-cost, minimum-value coverage offered by the employer, by calendar month, and
• months the employer met an affordability safe harbor with respect to an employee and whether any other exception applies to an employee for the employer’s shared responsibility or employer mandate penalty.

If an ALE offers health coverage through an employer-sponsored self-insured plan, the ALE also has to report more information on Form 1095-C (specifically, in Part III). For this purpose, a self-insured plan also includes a plan that offers some enrollment options as insured arrangements and other options are under self-insured options. In Part III, the ALE reports the name, SSN (or date of birth if SSN isn’t available), and coverage information about each individual (including any full-time employee and non-full-time employee, and any employee’s family members) covered under the employer’s health plan. If an individual was covered for some but not all the months of the year, an ALE has to indicate the months for which these individuals were covered in Part III.

If an employer provides health coverage in another manner, such as through an insured health plan or a multiemployer health plan, the issuer of the insurance or the sponsor of the plan providing the coverage will provide the information about the health coverage to any enrolled employees, and the employer should not complete Form 1095-C, Part III, for those employees. An employer that provides employer-sponsored self-insured health coverage but is not subject to the employer mandate, is not required to file Forms 1094-C and 1095-C and reports instead on Forms 1094-B and 1095-B for employees who enrolled in the employer-sponsored self-insured health coverage.

On Form 1094-C, an employer can also indicate whether any certifications of eligibility for relief from the employer mandate apply.

You should be aware that these reporting requirements may be more complex if the employer is a member of an aggregated ALE group (multiple companies owned by the same individual(s)) or if the coverage is provided through a multiemployer plan.
The above is a very simplified explanation of the reporting requirements. If you are required to file any of the forms discussed above, we are prepared and available to assist you in fulfilling your compliance with the required filings.

Please contact us if you have questions about the above or if we can assist you in complying with these requirements.

SUMMARY OF FILING REQUIREMENTS

All employers who are NOT applicable large employers who provide no health insurance or health insurance only through a fully insured plan are NOT required to file Forms 1094-B or 1094-C or provide Forms 1095-B or 1095-C to their employees.

All applicable large employers (ALEs) are required to file the following forms:

1. Form 1094-C Transmittal of Employer Provided Health Insurance Offer and Coverage Information Returns. Form 1094-C is filed with the IRS by February 28, 2016 (for the 2015 year) as a transmittal document for Forms 1095-C. It provides a summary to the IRS of employer-level data. The IRS uses the Form 1094-C to determine if the employer is subject to an employer shared responsibility payment (penalty). Employers may be subject to the penalty if they did not offer coverage to 70% of their full-time employees for 2015. After 2015 this threshold increases to 95%.

2. Form 1095-C Employer-Provided Health Insurance Offer and Coverage. The ALE is required to provide every employee who was a full-time employee for any month of the year or any em-ployee who was enrolled in employer sponsored self-insured coverage for any month of the year. The employer is required to provide the Form 1095-C to each employee by January 31.

All other employers (non-ALEs) who provide self-insured employer health insurance coverage are required to file the following forms:

1. Form 1094-B Transmittal of Health Insurance Information Returns. Form 1094-B is filed with the IRS by February 28, 2016 (for the 2015 year) as a transmittal document for Forms 1095-B.

2. Form 1095-B Health Coverage. Form 1095-B is used to report information to the IRS and to taxpayers about individuals who are covered by minimum essential coverage and therefore are not liable for the individual shared responsibility payment (penalty).

Insurance carriers will provide a Form 1095-B, Health Coverage to all covered individuals for all insured employer coverage. Insurance carriers will also provide Form 1095-B to all individuals covered by indi-vidual health insurance plans. Employees who work for an ALE that provides fully insured health insurance will receive a Form 1095-C from the employer and a Form 1095-B from the insurance company.

GLOSSARY

APPLICABLE LARGE EMPLOYER (ALE) is any company that employed an average of at least 50 full-time employees, including full-time equivalents, during the preceding calendar year. For example, your 2014 employee count determines if you’ll be required to track employee and health coverage information in 2015 to report in 2016. A special rule applies for 2015 for determining if you are an applicable large employer. Under this special rule you may use any consecutive six-month period during 2014, rather than being required to use all 12 months of 2014.

FULL-TIME EMPLOYEE is an employee who is employed on average at least 30 hours of service per week (or at least 130 hours of service in a calendar month).

FULL-TIME EQUIVALENT EMPLOYEE is a combination of employees, each of whom individually is not a full-time employee (has fewer than 30 hours of service per week), but who, in combination, are equivalent to a full-time employee.

TRANSITION RELIEF is available to employers in several forms. Employers with fewer than 100 full-time employees (including full-time equivalents) may be eligible to delay the application of the employer shared responsibility payment until 2016. Transition relief may apply to grandfathered health insurance plans, fiscal year plans and coverage and benefit requirements as well.

SEASONAL WORKERS. When determining if an employer is an ALE there is an exception for seansonal workers. An employer is not considered to have more than 50 full-time employees (including full-time equivalent employees) if both of the following apply: 1) The employer’s workforce exceeds 50 full-time employees (including full-time equivalent employees) for 120 days or fewer during the calendar year, and 2) The employees in excess of 50 employed during such 120-day period are seasonal workers. A seasonal worker is generally defined for this purpose as an employee who performs labor or services on a seasonal basis. For example, retail workers employed exclusively during holiday seasons are seasonal workers.

AGGREGATED GROUP is a commonly owned or otherwise related or affiliated employers, who must combine their employees to determine their workforce size.

AFFORDABLE COVERAGE is the lowest cost self-only health plan is 9.5% or less of your full-time em-ployee’s household income then the coverage is considered affordable. Because you likely will not know your employee’s household income, for purposes of the employer shared responsibility provisions, you can determine whether you offered affordable coverage under various safe harbors based on information available to the employer.

MINIMUM ESSENTIAL COVERAGE means coverage under an employer-sponsored plan. It does not include fixed indemnity coverage, life insurance or dental or vision coverage.

MINIMUM VALUE COVERAGE is an employer-sponsored plan that covers at least 60 percent of the total allowed cost of benefits that are expected to be incurred under the plan.
Under existing guidance, employers generally must use a minimum value calculator developed by HHS to determine if a plan with standard features provides minimum value. Plans with nonstandard features are required to obtain an actuarial certification for the nonstandard features. The guidance also describes certain safe harbor plan designs that will satisfy minimum value.

PREMIUM TAX CREDIT is a tax credit for eligible individuals and families with low or moderate incomes. The credit offers premium assistance to help them afford health insurance purchased through the Health Insurance Marketplace.

EMPLOYER SHARED RESPONSIBILITY PAYMENT, also referred to as the Employer Mandate or Em-ployer penalty, applies to employers for 2015 and after, who employ at least a certain number of em-ployees (generally 50 full-time employees or a combination of full-time and part-time employees that is equivalent to 50 full-time employees) will be subject to the Employer Shared Responsibility provisions under section 4980H of the Internal Revenue Code (added to the Code by the Affordable Care Act).

Under the Employer Shared Responsibility provisions, if these employers do not offer affordable health coverage that provides a minimum level of coverage to their full-time employees (and their dependents), the employer may be subject to an Employer Shared Responsibility payment if at least one of its full-time employees receives a premium tax credit for purchasing individual coverage on one of the new Affordable Insurance Exchanges, also called a Health Insurance Marketplace (Marketplace).

INDIVIDUAL SHARED RESPONSIBILITY PAYMENT, or also referred to as the Individual Mandate or Individual Penalty, requires each taxpayer, their spouse, and dependents to have qualifying health insur-ance for the entire year, report a health coverage exemption, or make a payment when they file their indi-vidual income tax return.