GASBO Legal Issues Update November 5, 2015 Presented by: Brian C. Smith Cory O. Kirby Harben,...

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GASBOLegal Issues Update

November 5, 2015

Presented by:Brian C. SmithCory O. Kirby

Harben, Hartley & Hawkins, LLP

Gainesville, Georgia

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AFFORDABLE CARE ACTREPORTING REQUIREMENTS

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What must be reported?

• Districts must file two documents with the IRS:– A “return” to the IRS for each full-time

employee. • Form 1094-C

– A “statement” to each individual who is listed in the return filed with the IRS.• Form 1095-C

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Penalties

• Two different penalties for not offering coverage to full-time employees

• A big penalty for not offering coverage to 95% of an employer’s full-time employees and their dependents.

• A smaller penalty when a full-time employee receives a premium tax credit.

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Calculating Big Penalty

• Applies when an ALE does not offer coverage to 95% of full-time employees (and their dependents) AND at least one full-time employee receives the premium tax credit.– 70% threshold for 2015 only.

• Payment equal to the number of full-time employees employed for the year (minus up to 30), multiplied by $2,000.– Calculated separately for each month, if

applicable– Subtract 80 for 2015 only if 100+ full-time

employees

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Calculating Lesser Penalty

• Applies when ALE offers coverage to at least 95% of full-time employees (and their dependants) AND at least one full-time employee receives a premium tax credit.– 70% threshold for 2015 only

• Calculated monthly: number of full-time employees who received a premium tax credit for that month multiplied by 1/12 of $3,000.

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Who gets a statement?

• Any employee who was considered “full-time” under the ACA during any month of the calendar year.

• Full-time: employed an average of 30 hours of service per week

• Two methods for determining full-time status:– Monthly Measurement Method– Look-Back Measurement Method

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Substitute Employees

• Substitute employees are considered “temporary” and are therefore not eligible for SHBP.

• If substitutes become “full-time” you will not be in compliance with the ACA for those employees.– You cannot offer SHBP coverage to

substitutes who work full-time.– Only options: potential penalty or

private market insurance.

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• Line 14: Enter code for correct Offer of Coverage for each calendar month (or just for “All 12 Months” if all are the same code).

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“Offer of Coverage”

• An employer offers health coverage for a month only if it offers health coverage that would provide coverage for every day of that calendar month.

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Line 14 Codes – Most Likely Used

• 1A. Qualifying Offer: Minimum essential coverage providing minimum value offered to full-time employee with employee contribution for self-only coverage equal to or less than 9.5% mainland single federal poverty line and at least minimum essential coverage offered to spouse and dependent(s).– SHBP should provide minimum

essential coverage and minimum value.

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Line 14 Codes – Most Likely Used

• 1H. No offer of coverage (employee not offered any health coverage or employee offered coverage that is not minimum essential coverage, which may include one or more months in which the individual was not an employee).

• 1I. Qualifying Offer Transition 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.

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• Line 15: Only used if code 1B, 1C, 1D, or 1E is entered anywhere on Line 14.

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• Line 16: Safe-Harbor Codes• Sometimes, more than one code may

apply in a given month– Only one code may be used per month– Code 2C trumps all others, where applicable

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Line 16 Codes – Most Likely Used

• 2A. Employee not employed during the month.– Not employed on any day of the

calendar month.• 2B. Employee not a full-time

employee.– Employee not full-time for the month

and did not enroll in minimum essential coverage, if offered for the month; or

– Employee full-time for month, but offer of coverage ended before last day of month due to termination;

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Line 16 Codes – Most Likely Used

• 2C. Employee enrolled in coverage offered.– Used for any month the employee

enrolled in health coverage offered by the employer for each day of the month.

– Use regardless of any other applicable Series 2 Code.

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Line 16 Codes – Most Likely Used

• 2D. Employee in a section 4980H(b) Limited Non-Assessment Period.– First Calendar Month of Employment (if

not first day of calendar month).

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Line 16 Codes – Most Likely Used

• IF employee offered coverage by first day of month following end of period:– MMM Waiting Period: Period beginning with

first full calendar month otherwise eligible for coverage and ending no later than two full calendar months after the end of that first calendar month.

– LBMM Initial Measurement Period and Administrative Period (if variable hour/seasonal/part time).

– LBMM Waiting Period (when reasonably expected to be full time): begins on start date, ends no later than third full calendar month of employment.

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Example: Ongoing Teacher

• Qualifying Offer for all 12 months of year

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Example: New Teacher

• Line 14: No offer of coverage through September; Qualifying Offer beginning in October

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Example: New Teacher

• Line 16: Not employed any day of month through June; July-Sept is Limited Non-Assessment Period – Work began during month of July and two full

calendar month Waiting Period under Monthly Measurement Method;

– OR Waiting Period under Look Back Measurement Method ending no later than end of third full calendar month of employment.

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Example: Substitute Teacher

(Monthly Measurement Method)

• Never offered coverage• Didn’t work any days in June, July, or

December• Worked part-time every other month

except March.• March will result in penalty

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Part 3

• Only used when employer provided self-insured coverage. School Districts do not.

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Authoritative Transmittal

• There must be only one Authoritative Transmittal filed for each employer, which reports the aggregate employer-level data for the employer. Requires completing Parts II, III, and IV to the extent applicable

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• Line 20: Total number of 1095-C forms that will be filed by employer– Includes those filed with this

transmittal and for any filed with a separate transmittal

• Line 21: Aggregated ALE Group?– No. Everyone is employed by the same

Board of Education.

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Line 22: Certifications of Eligibility

• When eligible, each may provide some varying “relief” from some reporting or notification requirements.

• May be eligible for more than one.

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A. Qualifying Offer Method

• Employer certifies that a qualifying offer was made to one or more full-time employees

• Qualifying offer must:– Be an offer of minimum essential

coverage providing minimum value at an employee cost for employee-only coverage not exceeding 9.5% of the mainland federal poverty level, and

– Include an offer of at least minimum essential coverage to the employee’s spouse and dependants, if any.

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A. Qualifying Offer Method

• For those employees for whom a qualifying offer was made for all 12 calendar months, the employer may do simplified reporting– Form 1094-C with employer level data– A Form 1095-C with an indicator code

to show a qualifying offer was made– A copy of Form 1095-C or a statement

furnished to the employee with information that the employee and his or her spouse and dependants are ineligible for a premium tax credit for the calendar year, plus contact information for the ALE member’s contact.

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B. Qualifying Offer Method Transition Relief

• For 2015 only, full reporting will not be required for employees who do not receive a qualifying offer for all 12 calendar months if the ALE member:– Certifies it made a qualifying offer to at least

95% of its full-time employees;– Files Form 1094-C; and– Files Form 1095-C using an indicator code to

report that the employee who did not receive a qualifying offer (or received no offer) may be entitled to the premium tax credit for one or more months and the employer may provide the employee with a letter with the same information, including contact information for the ALE member’s contact person, or a copy of Form 1095-C.

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C. Section 4980H Transition Relief

• Different relief available for ALEs with 50-99 full-time employees or those with 100 or more full-time employees

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D. 98% Offer Method

• ALE Members are still required to report for all full-time employees

• If the employer does not want to determine who their full-time employees are per month:– The employer can certify that it offered

coverage to at least 98% of the employees for whom it is filing a 1095-C

– Coverage must be minimum essential coverage providing minimum value, and providing minimum essential coverage to dependents.

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• (a) Minimum Essential Coverage Offer Indicator– If minimum essential coverage offered

to at least 95% of full-time employees and dependants for entire calendar year, then “Yes” for “All 12 Months”

– If offered to 95% only for certain calendar months, check each “Yes” or “No,” as applicable

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• (b) Full-Time Employee Count for ALE Member– Not required if eligible for 98% Offer

Method– Otherwise, for every month, enter total

number of full-time employees (not counting those in Limited Non-Assessment Period).

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• (c) Total Employee Count for ALE Member– Total number of full-time and non-full-

time employees and employees in a Limited Non-Assessment Period, for each month

– Must choose which day to determine number of employees per month:• First day of each month• Last day of each month• First day of the first payroll period that

starts each month• Last day of the first payroll period that

starts each month

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• (d) Aggregated Group Indicator– Only if “Yes” checked on Line 21 in Part

II• (e) Section 4980H Transition Relief

Indicator– If applicable, “A” for 50-99 full-time

employees, and “B” for 100 or more full-time employees

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Not Applicable

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QUESTIONS?