This UBA Employer Webinar Series
is brought to you by United Benefit Advisors
in conjunction with Jackson Lewis
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[email protected]
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Represents management exclusively in every aspect of
employment, benefits, labor, and immigration law and
related litigation.
750 attorneys in 55 locations nationwide.
Current caseload of over 6,500 litigations and
approximately 415 class actions.
Founding member of L&E Global.
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This presentation provides general information regarding its subject and explicitly may not be
construed as providing any individualized advice concerning particular circumstances. Persons
needing advice concerning particular circumstances must consult counsel concerning those
circumstances. Indeed, health care reform law is highly complicated and it supplements and
amends an existing expansive and interconnected body of statutory and case law and
regulations (e.g., ERISA, IRC, PHS, COBRA, HIPAA, ADA, GINA, etc.).
The solutions to any given business’s health care reform compliance and design issues
depend on too many varied factors to list, including but not limited to, the size of the employer
(which depends on complex business ownership and employee counting rules), whether the
employer has a fully-insured or self-funded group health plan, whether its employees work full
time or part time, the importance of group health coverage to the employer’s recruitment and
retention goals, whether the employer has a collectively-bargained workforce, whether the
employer has leased employees, the cost of the current group health coverage and extent to
which employees must pay that cost, where the employer/employees are located, whether the
employer is a religious organization, what the current plan covers and whether that coverage
meets minimum requirements, and many other factors.
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Review some key ACA issues
Working with Forms 1094-B/1095-B and 1094C/1095-C
o The Why, When, What and How to file and furnish
o Working with the Forms
o Tasks for getting ready
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Full-time = employed on average for 30 hours of service
per week (130 hours per month)
Calculation of “hours of service”
o Hour of service: each hour employee is paid or entitled to
payment
o Includes hours for which no services are performed, but payment
is owed by employer (i.e., on-call or paid leave time)
Hourly – count actual hours
Non-hourly – count actual hours or use equivalency rules
o Daily – any time during a day equals 8 hours
o Weekly – any time during a week equals 40 hours
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Measurement period approach – look-back v.
monthly measurement periods
o On-going employees, new employees
o Changes in employment status or position
o Special leaves of absence – FMLA and USERRA
o 13-week Break in Service
o Special rules for education organizations
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Parent-subsidiary group – an entity has an 80% or more controlling
interest in another entity
Brother-sister group – same 5 or fewer people (or trusts/estates)
together own at least 80% of each entity and, taking into account the
ownership interest of each owner only to the extent identical with
respect to each entity, the owners hold more than 50% of each entity
Affiliated service group – service organizations (e.g., medical
practice, architectural firm) where one performs services for the
other or management function group
Attribution rules apply
Reasonable, good faith interpretation by churches and governmental
entities
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EE must have effective opportunity to accept coverage at least once
per year (offer of coverage by employer must be reasonable)
If coverage is not affordable or does not meet minimum value, EE
must also have had effective opportunity to decline coverage
Offer is effective for a given month only if coverage is effective for
full month if EE accepts offer
Offers for “temporary” or “staffing” employees
Offer not negated by EE waiver of coverage or employer dropping
EE’s coverage for nonpayment of premium
Documenting of waiver is not required, but good practice if practical
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Why do we have to report?
o Verify individuals met individual mandate through “minimum
essential coverage” or “MEC” – Section 6055
o Enforce the employer shared responsibility under 4980H –
Section 6056
o Confirm eligibility for premium tax credits – Section 6056
When do we have to start reporting?
o Requirement begins for 2015; 2014 optional
o Transition rules do not delay reporting for smaller ALEs –
between 50 and 99 FT employees
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When are the returns/statements due?
o Returns: February 28 of the following year (March 31, if filed
electronically)
o Statements: January 31 of the following year (February 1, 2016)
Can someone else do the filing for us?
o Yes. A third party, including another ALE member of the same
controlled group, may complete the filing
o A name and telephone number needs to be provided for the
agent of the ALE member doing the reporting
o Special rules for governmental filers
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Do we have to file electronically?
o Yes, if you file 250 or more returns for during the calendar year,
the returns have to be filed electronically
o Statements may be furnished electronically under rules similar
to those applicable to W2s presently. In general:
• Affirmative consent
• Change in hardware/software
• Required disclosure (prior to or at time of consent)
• Required format
• Rules for posting on website
• Required access period
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What forms are used for reporting?
o 1094-B/1095-B
• Used by providers of MEC – insurers, some
employers, others
• 1094-B Transmittal – Identifies the filer
• 1095-B Report – Identifies responsible individual,
type of coverage, employer sponsor of insured
coverage, coverage provider, and enrollment of
covered individuals
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What forms are used for reporting? (ctd.)
o 1094-C/1095-C – Applicable Large Employers
(ALEs)
• 1094-C Transmittal
– Cover page for 1095-Cs, which may be submitted in groups
– But, must have one “Authoritative Transmittal”
– Used to demonstrate
aggregate basis
ESR
(4980H)
compliance
on
– Covers application of certain transition rules
– Controlled group participation
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What forms are used for reporting? (ctd.)
o 1094-C/1095-C – Applicable Large Employers
(ALEs)
• 1095-C Report/Statement
– Part I – Identifies common law employee of ALE
– Part II – Confirms whether ALE met ESR with respect to
employee in Part I – focuses on coverage offered.
– Part III – Reporting for self insured coverage – will show
whether employee and dependents had coverage for any
day in each month.
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Forms in practice
Situation
Employer
Insurer
FT employee covered by
insured plan
1095-C – showing
months coverage is
offered
1095-B – showing
months covered
Non-FT employee covered
by insured plan
No reporting required 1095-B – showing
months of covered
FT employee covered by
self-insured plan
1095-C – showing
months covered and
offer of coverage
N/A
Non-FT employee covered
by self-insured plan
1095-C – showing
months covered,
offer info not needed
N/A
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Forms in practice
Situation
Employer
Insurer
FT employee declines offer
of insured coverage
1095-C – showing
months coverage is
offered
N/A
Non-FT employee declines
offer of insured coverage
No reporting required N/A
FT employee declines offer
of self-insured coverage
1095-C – showing
months coverage is
offered
Non-FT EE declines offer of
self-insured coverage
No reporting required N/A
N/A
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Let’s take a look at Form 1094-C
o Lines 23-35
• Col. (a) – MEC: Check yes or no; check yes if you
meet the 70% transition rule.
• Col. (b) – # of FT EEs
• Col. (c) – # of all employees
• Col. (d) – Controlled group for the month
• Col. (e) – Application of certain transition rules
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Let’s take a look at Form 1095-C – Part II
o Line 14 – Offer of Coverage
• Use the appropriate indicator code from Code Series 1. See
Instructions p. 7
o Line 15 – EE Share of Cost of Coverage
• Complete only if Code 1B, 1C, 1D or 1E entered on Line 14 (MEC is
offered, but not Qualifying Offer)
• Enter the lowest, monthly, self-only premium, even if employee
elected more expensive coverage
o Line 16 – Safe Harbor/Relief Codes
• Use the appropriate indicator code from Code Series 2. See
Instructions p. 7-8
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Let’s take a look at Form 1095-C – Part III
o Complete only for self-insured coverage in which an
individual is enrolled.
o Include enrolled employees, whether FT or not FT.
o Include family member, covered on same form as
employee
o Check box (d) for a line if the person was covered at
least one day in every month in the year
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The draft instructions said to report selfinsured coverage for non-employees on
Form 1095-B, is that still true?
o No. The ALE member could report the non-employee covered
under the self-insured plan on Form 1095-C.
o “Non-employees” include – COBRA participants, non-employee
directors, partners, and retirees.
o Reporting is made in Part III for any non-employee that was not
an employee for any calendar month in the year. Part II must be
completed using Indicator Code “1G” for all 12 months.
o All covered family members must be reported on same Form
1095-C, or 1095-B.
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What if one of our ALE members has no EEs
or EEs with no hours of service?
o No reporting is necessary for that ALE member.
We contribute to a multiemployer plan?
o These ALE members will be deemed to satisfy the ESR mandate
with respect to FT employees on whose behalf it is making
contributions (even if EE is not eligible for the coverage), so long
as the multiemployer plan is offering MV, affordable coverage.
o ALE member enters Line 2E on Line 16, Form 1095-C; Fund
sends Form 1095-B to employee.
o ALE member and Fund have to coordinate about when coverage
commences.
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Do we have to report SSNs of our employees
and their dependents?
o Forms 1095-C furnished to employees may be truncated – only
last 4 digits; not permitted for Forms filed with IRS
o For self-insured plans, Part III requires SSNs of employee
dependents, unless ALE either (i) exhausts reasonable collection
efforts, (ii) or meet certain requirements for limited reporting.
o ALE can use dependent’s date of birth, only if no SSN after
“reasonable efforts”: no SSN after an initial attempt, and two
subsequent attempts.
o ALE should be taking steps during the year, and documenting
those efforts.
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What are the penalties if we fail to comply?
o Section 6721 penalizes failure to (i) file timely information
returns, (ii) include all the required information, and (iii) include
correct information on the return.
o Section 6722 penalizes failure to (i) timely furnish the statement,
(ii) include all the required information, or (iii) include correct
information on the statement.
o $100 for each return with respect to which such a failure occurs,
up to calendar year maximum - $1,500,000
o For 2015, IRS will not impose penalties under sections 6721 and
6722 on ALE members that can show that they have made good
faith efforts to comply with the information reporting
requirements.
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Qualifying Offer Method. “Qualifying Offer”:
o Offer the employee MEC providing minimum value at a self-only cost
not in excess of 9.5% of the Federal Poverty Level, AND
o Offer MEC to the employee’s family (spouse and children)
ALE member that extends Qualifying Offer for a month need not
include the cost of the least expensive option for MV coverage.
ALE member that extends Qualifying Offer for all 12 months, ALE
member need not furnish Form 1095-C to those who did not
enroll, but must provide statement that employee received
Qualifying Offer and is not eligible for premium subsidies.
BUT must furnish 1095-C, Part III to those employees who enrolled
in self insured coverage
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Qualifying Offer Transition Relief for 2015. ALE
member that extends Qualifying Offer for some but not
all 12 months:
o Still must furnish Form 1095-C unless ALE member satisfies
conditions for Qualifying Offer Transition Relief for 2015
o Conditions for Qualifying Offer Transition Relief for 2015 are met
if ALE member makes Qualifying Offer to at least 95% of FT
employees for one or more months in 2015.
o If satisfied: (i) Qualified Offer relief; (ii) for employee that does
not receive a Qualifying Offer for the year, send statement to that
employee (rather than 1095-C) stating that individual may qualify
for premium tax credit.
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98% Method. ALE member offers minimum value,
affordable coverage for all months during the year to
98% of employees for whom it is filing 1095-C, including
offering MEC to dependents:
o Still must complete Form 1095-C for FT employees and PT
employees with self insured coverage.
o When completing 1094-C, ALE member need not report FT
employee counts for each month of the year.
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Thank you for your participation
in the UBA Employer Webinar Series
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follow-up question, you can email the presenters today or tomorrow at:
[email protected]
www.UBAbenefits.com
www.jacksonlewis.com
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