ACA Eligibility & Tracking
IRS Code Section 6055 & 6056
SEPTEMBER 2015
ACA Eligibility: The Basics
ACA Eligibility: Employee
Status Change to Full-time
ACA Eligibility: Employee
Status Change to Full-time
ACA Eligibility: Employee
Status Change to Part-time
ACA Eligibility: Re-Hire
ACA Eligibility: Leave of
Absence
ACA Eligibility: Initial
Measurement Period
A. Determine Length
◦ Recommend 11 or 12 month
B. Define Start Date of IMP
◦ Hire date
◦ First of month following hire date
C. Administration Period
D. Effective Date of Coverage
ACA Eligibility: Tracking
How are you tracking hours to determine if an offer of coverage is
required at the end of the Initial Measurement Period?
Did they average 30 hours per week/130 hours per month?
Have Adjunct Professors? What is the reasonable method you are
using? 2 ¼ hours of service per week for each teaching hour, this
method would credit 1 ¼ hours for activities such as class
preparation, office hours, grading papers and the like.
Have Coaches? Are you using the Session/Event Method? How does
Stipend Pay come into play?
ACA Eligibility: Tracking
You’ve Tracked, Now The
Reporting
6055 / 6056 Introduction
Final Regulations
◦ Section 6055 – information reporting on Minimum Essential Coverage (MEC)
◦ 79 Fed Reg. 13220 (March 10, 2014)
◦ Section 6056 – information reporting by Applicable Large Employers (ALE)
◦ 79 Fed Reg. 13231 (March 10, 2014)
Final Forms released February 11th
◦
◦
◦
◦
1095-B: Health Coverage
1095-C: Employer-Provided Health Insurance Offer and Coverage
1094-B: Transmittal of Health Coverage Information Return
1094-C: Transmittal of Employer-Provided Health Insurance Office and
Coverage Information Returns
Why?
Reporting rules used to enforce
◦ Individual mandate under IRC 5000A (penalty for no coverage)
◦ Employer mandate under IRC 4980H (penalty no MEV, Affordable)
◦ Premium tax credits under IRC 36B (subsidy eligibility)
◦ Agencies will be electronically connected and interface with software
programs to make determinations on the above mandates…………………….
◦ Anyone remember the little problem with Healthcare.gov ?!?
6055 MEC Reporting
Background
◦ Reports information about individuals with MEC
◦ Allows the IRS to assess the individual income tax penalty for those
individuals without MEC
◦ Similar to W-2 reporting, one copy to the individual, and another copy to the
IRS
6055 MEC Reporting
◦
◦
◦
◦
Insured Plans – insurer is responsible
Self-Insured plans – employer is responsible
Multi-employer plans – plan administrator is responsible
Affordable MEC reporting applies regardless of whether a ALE (Applicable
Large Employer) under 4980H (50-99 EMPLOYEES MUST REPORT)
What is MEC
◦ Major medical coverage including COBRA coverage and pre-65 retiree
coverage
What is not MEC
◦ Stand-alone dental and vision (in most cases)
◦ EAPs, Separate wellness arrangements, health FSAs
◦ HSAs
6055 MEC Reporting
Exceptions for Integrated HRAs
◦ No separate reporting is required for coverage that supplements other coverage, if the
primary and secondary coverage have the same plan sponsor. This is intended to exclude
the necessity of separate reporting requirements for integrated HRA’s.
SPOILER ALERT!!! The revised draft instructions released in August make the HRA not a
supplemental plan and therefore would be required to be reported separately from the health
insurance plan.
NOTE: If you have a “Stand-Alone HRA” in spend down you must report!
No Exceptions
◦ Pre-65 HRA coverage must be reported as MEC
◦ Any employee enrolled in MEC regardless of full time or not (if you offer coverage to under
30+ hour per week employees, must report on all employees that are covered regardless if
considered full time under ACA
◦ COBRA beneficiaries
◦ Any enrolled spouses and dependents of the above
◦ Self-funded plans will meet the 6055 reporting requirements using the 6056 1094-C
If you are self-funded and offering coverage to non-employees (for example, Board of
Directors) who enroll in coverage, you must complete a 1095-C for that individual even
though they are not a full time employee.
6056 FTE Reporting
Background
◦ Provides the IRS with documentation to determine the applicable 4980H
penalty to employers)
◦ Provides information to the employees to determine eligibility for premium
tax credits on the Exchanges
◦ Similar to W-2 reporting, one copy to the individual, and another copy to the
IRS
Entities required to report
◦ Any employer that is an ALE for purposes of 4980H (50 – 99 & 100+)
◦ If not a large employer (under *50 FTEs) then no reporting at all is required
◦ FTE is Full Time Equivalents, not Full Time Employees
6056 FTE Reporting
Controlled Groups
◦ For determining ALE, use total employee count among entire controlled
group – this can be difficult for family and brother-sister entities –corporate
council should be directly involved in this instance
◦ Each employer in the controlled group is responsible for reporting
◦ Reporting can be coordinated by a single entity of the control group *note:
single transmittal may be done under the control group ONLY if they file their
taxes that way*
6056 FTE Reporting
Multiemployer Plan / Union
On February 8, 2015, the Internal Revenue Service (IRS) published final Forms 1094-C and 1095-C and
instructions on the employer reporting requirements under Code Section 6056.
Although the Preamble to the Code Section 6056 final regulations indicated that the multiemployer
plan administrator may prepare the forms for the employees eligible for the multiemployer plan
(reporting information for both the plan and the ALE member), the instructions for the final forms do
not appear to provide any way for the plan administrator to do so, and thus, it appears that the ALE
member must report under Section 6056 for its full-time employees eligible for a multiemployer plan
and the ALE member is responsible for any penalties resulting from incorrect reporting.
ALE members must file one Form 1095-C for each employee who was a full-time employee for any
month of the calendar year, providing information regarding the offer of health coverage. In cases of
multiemployer arrangements, the ALE member is not directly making the offer, so details of any such
offers must be obtained from the coverage provider (i.e., the multiemployer plan). The Preamble to
the Code Section 4980H final regulations contains interim guidance for employers that contribute to a
multiemployer plan.
6056 FTE Reporting
Multiemployer Plan / Union
An ALE member relying on the interim guidance reports on the Forms
1094-C and 1095-C in the following manner:
Form 1094-C, Part III, column (a), which reports whether the employer
offered minimum essential coverage to at least 70% of its full-time
employees (95% after 2015), for the month(s) in which the employer is
eligible, employees for whom the employer is contributing to the
multiemployer plan should be treated as having been offered minimum
essential coverage (even if not actually offered coverage) for the
months in which the employer is eligible to use the interim guidance.
6056 FTE Reporting
Multiemployer Plan / Union
Form 1095-C, Part II, line 14 (detailing offers of coverage), ALE members should not
enter a code for health coverage the employer is treated as having offered (but did
not actually offer), even if the employee is included in the count of full-time
employees offered coverage on Form 1094-C, Part III, column (a). Rather, although
the language in the instructions is somewhat unclear it appears that line 14 must
reflect the coverage actually offered to the employee.
Form 1095-C, Part II, line 15 (Employee Share of Lowest Cost Monthly Premium for
Self-Only Minimum Value Coverage), it appears that the ALE must obtain the lowestcost self-only coverage premium amount applicable to each employee from the
multiemployer plan for Form 1095-C, line 15 reporting purposes.
ALE members that rely on this interim guidance for a full-time employee will
generally enter Code “2E” (multiemployer interim rule relief) on line 16 of that
employee’s Form 1095-C (Section 4980H Safe Harbor Codes and Other Relief for
Employers) unless the employee actually enrolled in the coverage offered, in which
case the ALE member will report Code “2C.”
6056 FTE Reporting
Individuals included
◦ All employees who are considered full time employees
- employees classified as “full time”
- “Safe harbor” employees – hours counted and determined to be full
time under 4980H
◦ All full time employees are reported regardless if coverage is offered or if
they are enrolled in coverage
6056 FTE Reporting
Information included in the report to the IRS
◦ Certification by month whether employer offered FTE’s and dependents an
opportunity to enroll in MEC
◦ Total number of FTEs each month
◦ Name, address, SSN for each FTE
◦ Months FTE was offered MEC
◦ FTE share of lowest cost employee only premium for coverage that provides
minimum value for each month
◦ Over 250 forms, must file electronically with the IRS, but how?
Affordable Care Act Information Returns (AIR) Program - Did You Know?
Registering to Electronically File Information Returns Through AIR
Each Software Developer, Transmitter and Issuer/Payer (Submitter) must first complete the e-Services Registration to obtain login credentials
and then login within 28 days to confirm registration and activate IRS user account.
The following steps, specific to AIR, will be available at a later date:

Each Software Developer, Transmitter and Issuer/Payer (Submitter) must complete the ACA Information Return Transmitter Control Code
(TCC) Application and receive a TCC in the mail prior to electronically filing Affordable Care Act Information Return (AIR) Forms 1094-B,
1094-C, 1095-B and 1095-C.
o
An Issuer/Payer would only need a TCC if they are acting as a transmitter and submitting the information returns to IRS directly.
Issuers/Payers using an authorized e-file Provider to transmit their information returns do not need to register for a TCC.

If a Software Developer plans to transmit submissions, they must apply for a TCC as both a Software Developer and Transmitter.

AIR forms can be transmitted to IRS using either the Application to Application (A2A) channel or the ACA Web Browser User Interface (UI)
channel in Extensible Markup Language (XML) format.

An A2A Transmitter must complete the Automated Enrollment Process to obtain a certificate prior to transmitting returns to IRS.
Electronically Filing Through AIR

The AIR System will be available for Production in the fall of 2015.

ACA information returns are subject to Regulation 301.6011-2, which requires filers of 250 or more of any one type of information return to
file electronically.

Publication 5165, Affordable Care Act (ACA) Information Return (AIR) Guide for Software Developers and Transmitters, which outlines the
communication procedures, transmission formats, business rules and validation procedures for ACA Information Returns filed electronically,
will be published in the summer of 2015.

Transmissions to AIR must be comprised of only one type of ACA information return and its associated transmittal, for example, a
transmission must only contain:
o
Form 1094-B and Form 1095-B or
o
Form 1094-C and Form 1095-C.
o
The form types cannot be combined.

Each transmission must contain at least one Transmittal, either Form 1094-B or Form 1094-C.

Original and corrected submissions cannot be combined in the same transmission file.
o
Only original submissions can be submitted in the same transmission
o
Only correction submissions can be submitted in the same transmission

The data file size limit for a single transmission filed through AIR is 100MB
o
The 100MB limit applies to ACA Assurance Testing and Production.
o
The 100MB limit applies to A2A and UI channels.

The XML Schemas for Forms 1094-B, 1094-C, 1095-B and 1095-C include elements designed to uniquely identify AIR transmissions,
submissions within the transmission, and records within the submission. Transmitters must generate these IDs and maintain them along
with their associated transmissions.

A Receipt ID will be generated for each transmission. The Receipt ID will either be returned in the SOAP Response when using A2A or on a
web page in the Web Browser when using UI.

The Receipt ID is the key piece of information required when requesting the acknowledgement for that transmission from the IRS. The
Receipt ID is not proof that the transmission was accepted or rejected.

The IRS will return one of the following processing statuses for each transmission: In Processing, Accepted, Accepted with Errors, or
Rejected.

The IRS will create an Error Data File, when applicable, that includes record information, error code and description and the xpath content
for each error in the transmission.
6056 FTE Reporting
Information included in the report to the FTE
◦ Name, address, EIN of employer
◦ Name and contact individual at the employer
◦ Name, address and SSN of the FTE
◦ Months which FTE was offered MEC coverage
◦ Months FTE was enrolled in MEC, FTE share of lowest cost employee only
premium for coverage that provides minimum value (60%) for each month
6056 FTE Reporting
Reporting timeline
◦ Individual – send individual copy of Form 1095-C to the FTE by January 31 of
each year starting with 2015 reporting year so first forms to employees by
January 31, 2016 for 2015 tax year
◦ IRS – send Form 1095-C along with 1094-C (employer transmittal) to IRS by
March 31 each year, first file due March 31, 2016 for 2105 tax year
Penalties
◦ Same as 6055 penalties, not combined, each has separate penalties
assessed.
Penalty
Old Amount
New Amount
Failure to file/furnish an annual IRS return or provide individual statements
to all full-time employees
$100
$250
Annual cap on penalties
$1,500,000
$3,000,000
Failure to file/furnish when corrected within 30 days of the required filing
date
$30
$50
Annual cap on penalties when corrected within 30 days of required filing
date
$250,000
$500,000
Failure to file/furnish when corrected by August 1 of the year in which the
required filing date occurs
$60
$100
Cap on penalties when corrected by August 1 of the year in which the
required filing date occurs
$500,000
$1,500,000
6056 FTE Reporting
Alternative Reporting #1
◦ If FTE receives qualifying offer for all 12 months, then only the name,
address and SSN of the FTE are reported along with a special code (1A)
◦ Only applies if 95% of who is reported on 6055 receives “qualifying” offer on
fully insured. 95% of who is reported on 6056 receives a “qualifying” offer
on self funded
◦ For Example: 100 FT and 100PT employees who are covered, the employer
would have to make a qualifying offer to 95% of the total 200
◦ What is a “Qualifying” offer?
Offer to an employee of Minimum Value Coverage to employee that
costs the employee no more than 9.5% of the FPL for single coverage
AND an offer of MEC to spouse and dependents
6056 FTE Reporting
Alternative Reporting #2
◦ Employer must offer affordable minimum value MEC to at least 98% of
employees included in 6056 reporting
◦ Only if you meet the above, employer is not required to identify which
employees are FTEs or total number of FTEs
This would be useful for larger self-funded plans that offer to employees under
30 hours, for example Part Time employees working 20+ hours per week.
What Happens After Reporting
Employer penalty
◦ IRS calculates penalty for each separate employer
◦ IRS sends penalty notice to employers ($2,000/$3,000)
◦ Employer will have ability to appeal (no guidance on how/when)
◦ Timeframe is late in year i.e.: September 2016 for 2015 tax year
Individual penalty
◦ Some individuals will have received “advances” of the tax credits during year
◦ Either way, individuals claim tax credits and calculate the full amount of the
credit on Form 1040. The IRS has released Form 1095-A.
What to track
•Name
•Company/Division
•Location
•Employment Status
•Pay Frequency
•Benefit Status
•Hours Worked
•Pay Rate
•W2-Wages
•Birthdate
•Hire Date
•Rehire Date
•Full Time/PT/ Seasonal Indicator
•Benefits Eligibility Date
•Dependent Data (Name, DOB, SSN, Address etc.)
•Coverage Begin Date
•Coverage End Date
•Waivers
•Indicator if Employee is on LOA (STD, FMLA, WC)
•Verification each month employee was covered even if only 1 day
•Indicator Code for Employee Offer of Coverage
A few codes to review
Line
#14 &
15
Offer for the month only if offered for everyday of the month!
•1A
•1B
•Qualifying offer, MEC, providing MV self-only 9.5% FPL
•Minimum essential coverage providing minimum value offered to employee only
•1G
•Offer of coverage to employee who was not a full time employee for ANY month
of the calendar year and enrolled in for one or more months
•1I
•Qualifying Offer Transitional Relief 2015: employee (and spouse or dependents)
received no offer of coverage, received an offer that is not a qualifying offer, or
received a qualifying offer for less than 12 months
Qualifying Offer: Offer of MV that costs no more than 9.5% of FPL for single
coverage
Line #15 ONLY complete if Line #14 code is 1B, 1C, 1D or 1E
A few codes to review
Line #16
If more than one code applicable, specific ordering rules for which code to
use must be followed!
•2A
•Employee was not employed on any day that month
•2B
•Employee is not a full time employee
•2C
•Employee enrolled in coverage
•2D
•Employee is Limited Non-Assessment Period *Note if employee is in initial
measurement period, use 2D and NOT 2B
A total of 8 codes to choose from to populate Line #16
1095-C: Example #1
Bob is employed by ABC on April 15, 2015. Bob is hired into a full-time
position.
ABC’s health plan imposes a 60 day waiting period on full-time
employees. If Bob enrolls, his coverage will be effective June 15, 2015.
Bob is offered the following coverage:
◦ HDHP health plan with an employee contribution for self only
coverage is $92.00 per month. The HDHP provides minimum value.
Coverage for the spouse and dependent children (if any) is also
offered. (9.5% FPL Offer of Coverage Method)
◦ Bob does not enroll in the health plan.
IH – No offer of coverage
Bob is in his waiting period
2A – Bob was not an
employee of ABC Company
1095-C EXAMPLE 1
1A - Qualified Offer was
made with MEC, MV and
Affordable.
When 1A code is applicable,
Line 15 is not populated
2D – Bob is in his waiting
period. Even though in this
example Bob is eligible on
July 15th, if there is not a full
month of coverage, then no
coverage offered for that
month
1095-C: Example #2
Bob is employed by ABC on April 15, 2015. Bob is hired into a full-time
position.
ABC’s health plan imposes a 60 day waiting period on full-time
employees. If Bob enrolls, his coverage will be effective June 15, 2015.
Bob is offered the following coverage:
◦ HDHP health plan with an employee contribution for self only
coverage is $100.00 per month. The HDHP provides minimum value.
Coverage for the spouse and dependent children (if any) is also
offered.
ABC uses the W-2 affordability safe harbor.
Coverage is “affordable” for Bob under the W-2 safe harbor.
1E – Bob was offered MEC
and MV and at least MEC
offered to dependent(s) &
spouse
Line 15 – Complete ONLY if
code 1B, 1C, 1D or 1E is used
in line #14
1095-C EXAMPLE 2
2F – ABC company is using
Form W-2 Safe Harbor
1095-C: Example #3
John was employed by ABC Company as a full-time employee and then
terminated employment on June 15, 2015
John was a full-time employee of ABC Corporation and received an offer
of coverage providing minimum value for an employee, spouse and
dependents (family coverage) under the ABC Corporation health plan.
ABC Corporation is an ALE and its health plan is a self-insured health
plan.
John enrolled in family coverage under the ABC Corporation health plan
effective January 1, 2015. On June 15, 2015, John terminated
employment with ABC Corporation and received an offer of
continuation coverage under COBRA but did not enroll in the coverage
January thru May.
Line 14 is code 1E MEC
providing MV to employee and
at least MV to the spouse &
dependents.
Line 15 lowest cost self only
coverage as an active employee
Line 16 is code 2C employee
enrolled in coverage.
June is the month John
terminated employment.
Line 14 is code 1H, no offer of
coverage (he wasn’t covered for
the full month)
Line 15 is blank
Line 16 is code 2B, employee is
not a full time employee
Type info in here – copy and
paste for more boxes
Sample 1095-C Term EE offered COBRA
July thru December.
Line 14 is code 1H, no offer of
coverage
Line 15 is blank
Line 16 is code 2A, John is no
longer an employee in those
months
1095-C: Example #4
An ALE member making an offer of COBRA continuation coverage to an ongoing
employee who loses eligibility for non-COBRA coverage due to a reduction in hours
(for instance, a change from full time to part time status resulting in loss of
eligibility under the plan) should report the offer of COBRA coverage as an offer of
coverage in Part II.
James was a full-time employee of ABC Corporation and received an offer of
coverage under the ABC Corporation health plan providing minimum value,
including an offer of minimum essential coverage to his spouse and dependents.
James enrolled in self-only coverage offered from January 1, 2015 through October
31, 2015. The required employee contribution for the lowest cost self-only
coverage option under the plan was $150 per month. On November 1, 2015, James
transferred to a part-time position and was no longer eligible for coverage under
the terms of the ABC Corporation health plan. James received an offer of COBRA
continuation coverage on account of the transfer to the reduced-hours position
(using the 3 month exception rule), with a COBRA premium of $250 per month for
self-only coverage. James elected to enroll in the COBRA continuation coverage for
the months of November and December, 2015.
Type info in here – copy and
paste for more boxes
January thru October.
Line 14 is code 1E, MEC
providing MV offer to
employee and at least
MEC offered to spouse
& dependents.
Line 15 is $150, lowest
cost self-only coverage.
Line 16 is code 2C,
employee enrolled in
coverage offered
November and December
Line 14 is code 1E, MEC providing MV offer to
employee and at least MEC offered to spouse &
dependents.
Line 15 is $250, the lowest cost COBRA premium
coverage available
Line 16 is code 2C, employee enrolled in coverage
offered
SAMPLE 1095-C Reduction in Hours elected COBRA
1094-C: Example #1
ABC Company is a member of a controlled group of corporations that
qualifies as an ALE. The other ALE Members in the same controlled group
are:
◦ 123, Inc.
◦ XYZ Company
◦ Acme Inc.
During 2015, ABC had 1,000 total employees each month except for
November and December, when ABC had 1200.
During 2015, ABC offered coverage to only 80% of its full-time employees
each month.
ABC sponsors a self-insured medical plan (“Plan”).
In 2015, ABC made a qualifying offer under the Plan to one or more fulltime employees.
In total, ABC had 500 full-time employees.
In addition, ABC had 200 part-time employees who enrolled in the Plan.
The contract person must be
knowledgeable regarding the
1094-C and 1095-C form
completion and the
companies employees. This
is the individual the IRS, DOL,
HHS or even CMS will be
calling.
500 FT at ACA 30+ hrs. &
200 PT who enrolled in
the plan = 700
ABC Company is filing as the
ALE including the other
members of the controlled
group.
Qualifying Offer Method ABC
Company for all months during the
year in which the employee was full
time, made a qualifying offer to at
least one employee and their
dependents & spouse
1094-C EXAMPLE 1
Section 4980H Transitional Relief ABC
Company offers coverage to 80%
(Transitional relief for employers 50-99
employees, 100+ employees 70% test)
Minimum Essential Coverage
was not offered to 95% of
full time employees for all 12
months of the calendar year
TIP 
If the employer offered to all
but five of its full time
employees and their
dependents and if five is
greater than 5% of the
number of full time
employees, the employer
may report “yes”.
Example: offered to 75 of its
80 full time employees and
their dependents
1094-C EXAMPLE 2
Column C is the total
number of ALL employees
per month. Employer can
use either the first or last day
of the month, whichever
they choose must use the
same for the following
months counts
Since the employer did not
qualify for the 98% Offer
Method, Column B is
required to be completed
per month. If employer
qualifies for 98% offer,
column B completion is not
required
Box C on line 22 was
selected (Section
4980H Transition
Relief) so enter code B
in (E)
Enter the names and EIN’s
for all members of the ALE
member group (control
group) from largest to
smallest. DO NOT include
the control group member in
this listing. In this example
ABC Company is
authoritative ALE
You can only file as a control
group entity if the taxes for
the control group are also
filed together.
1094-C EXAMPLE 3
Thank You
Lisa C. Allen, CHRS, CAS, CFC
Vice President, Regulatory Affairs
[email protected]
800-836-0026 x230
585-415-0448