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Employer Shared Responsibility Provisions and
Information Returns for Tax Year 2015
Main Line Association for Continuing Education
Penn State Great Valley Conference Center
October 22, 2015
Richard G. Furlong, Jr.
Agenda
• Introduction
• Employer Shared Responsibility Provisions
– Determining Applicable Large Employer Status (ALE)
– Defining Full-Time Employees
– Shared Responsibility Payment (§4980H)
– 2015 Transition Relief
• Information Reporting
– Employer Reporting (§6056)
– Insurance Issuer (§6055)
• Summary
• Resources2
What Employers Need to Know
• Impacts Applicable Large Employer’s (ALEs) - those with 50 or more full-time or full-time equivalent employees – Fewer than 50 – §4980H does not apply
• Employer Shared Responsibility Provisions (§4980H)
• ALE Information Reporting (§6056)
• Health Coverage Information Reporting (§6055)
3
The Employer Shared Responsibility Provisions (§4980H)
• In general, ALEs must either:
– Offer health coverage that is affordable and that provides minimum value to their full-time (FT) employees (and their dependents), or
– May be subject to an employer shared responsibility payment
• Effective beginning January 1, 2015
• 2015 transition rules for eligible ALEs with less than 100 full-time employees (including full-time equivalent employees)
4
Determining ALE Status
• Average number of employees and their hours of service in preceding year determines ALE status for the current year
• Full time employees are defined as 30 hours/week or 130 hours/month
• Definition of full-time equivalent employee
• Seasonal worker exception
• Common ownership and controlled groups
• Transition rule for 2015 ALE determination5
ALE Example: Subject to ESRP
• Company X had 40 full-time employees and 20 part-time employees at 60 hours each month– The 20 part-time employees = 10 full-time-
equivalent employees – 40 FT plus 10 FTE = ALE (50 FT/FTE)
• Company X is subject to the employer shared responsibility provisions
6
ALE Example: NOT Subject to ESRP
• Company Y had 20 full-time employees and 20 part-time employees at 60 hours each month– The 20 part-time employees = 10 full-time-
equivalent employees – 20 FT plus 10 FTE = 30 FT/FTE
• Company Y is NOT subject to the employer shared responsibility provisions
7
Common Owner ALE Example
• For all of 2015 & 2016, Corp A owns 100% of Corp B and Corp C
• Number of 2015 FT employees:
Corp A – None
Corp B – 40
Corp C – 60
-------------------------------------
Total – 100
• Corp A + B + C is an ALE for 2016
• Corps B & C are each an ALE member8
Determining Full-Time Employee Status
• FT = 30 hours/week or 130 hours/month
• Two measurement methods– Monthly– Look-back
• Defining an hour of service– Hour for which paid or entitled to be paid– Special rules
9
Employer Shared Responsibility
• Generally, liability exists if employer:
– Does not offer coverage to at least 95% of FT employees (and their dependents) and at least one FT employee receives the PTC, OR
– Does offer to at least 95% of FT employees (and their dependents), but at least one FT employee receives the PTC because, for that full-time employee, coverage was
• not offered
• unaffordable, or
• did not provide minimum value
• 2015 Transition relief10
Definition of Affordability and Minimum Value
• Affordability
– Affordable if employee’s share of lowest cost self-only coverage does not exceed 9.5% of household income
• Three employer “safe harbors”
• Minimum value
– Coverage is considered to provide minimum value if the plan covers at least 60% of the total cost of benefits and covers substantial in-patient hospital and physician services
11
Employer Shared Responsibility Payment
• Offer to less than 95% (70% for 2015*) – Payment of 1/12 of $2,000 per FT
employee, above 30 threshold (per month)
• Offer to at least 95% (70% for 2015*)– Payment of 1/12 of $3,000 per PTC-
receiving FT employee, (per month), subject to limitation
* 2015 Transition Relief 12
Additional 2015 Transition Relief
• Eligible employers with 50-99 FT + FTE employees (requires certification)
• Dependent coverage
• Non-calendar year plans
• First payroll rule (January 2015)
• Multiemployer plans
13
Shared Responsibility – Assessment and Payment
• Employer will not make a payment with a return
• IRS will determine amount and notify employer
• Employer will have opportunity to respond before assessment
• IRS will send a notice and demand after assessment
14
ALE Information Reporting (§6056)
• Requires ALEs to file an information return to report health care coverage offered to the employer’s full-time employees for the calendar year– Applies to employers who are subject to the
employer shared responsibility provisions (4980H)
• Information is used to (1) administer the employer shared responsibility provisions (4980H) and (2) to determine an employee’s eligibility for the premium tax credit
• Effective 2015; first returns due 2016
15
ALE Reporting Methods
• General Reporting Method– Full reporting for all full-time employees– Reporting on a month-by-month basis
• Alternative Reporting Methods– Qualifying Offer Method– 98% Offer Method
16
ALE Forms
• Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns– Transmittal of employer level data
• Form 1095-C, Employer–Provided Health Insurance Offer and Coverage
–Employee statement
• Due Dates– Furnished to Employee by January 31– Filed with the IRS by February 28 (March 31 if
filed electronically) 17
Form 1094-C (page 1 of 3)
18
Form 1094-C (page 2 of 3)
19
Form 1094-C (page 3 of 3)
20
Form 1095-C
21
Health Coverage Information Reporting (§6055)
• Requires all health insurance issuers, self-insured employers, certain government agencies, and other entities, that provide minimum essential coverage to an individual during a calendar year to report certain information to the IRS
• Information is used to verify months covered by MEC to satisfy the individual shared responsibility requirement (5000A)
• Effective 2015; first returns due 201622
Minimum Essential Coverage
• Government-sponsored programs
– Medicare part A, most Medicaid programs, CHIP, most TRICARE, most VA programs, Peace Corps, DOD Non-appropriated Fund Health Program
• Employer-sponsored coverage
– Insured or self-insured group health plans
– Excludes coverage that is solely excepted benefits
– Grandfathered Plans
– Cobra Coverage
• Individual market coverage
– Qualified health plans enrolled in through Marketplace
– Other individual coverage
• Miscellaneous MEC
– Other health benefits coverage recognized by HHS as MEC23
Who is an MEC provider?
• All insured coverage– Issuer or carrier (i.e., the insurance company)
• Government-sponsored coverage– Medicare: Medicare, including for part C (Medicare
Advantage)– Medicaid, CHIP: State agency administering
program– Tricare, VA, Peace Corps, Non-appropriated fund
program: agency sponsoring the program
• Misc. MEC– Sponsoring entity 24
Who is an MEC provider? (continued)
• Self-insured coverage
• Plan sponsor must report. Plan sponsor is:– Employer– Multiemployer plan (as defined in ERISA) –
association, committee, joint board of trustees, similar body that establishes and maintains the plan
– MEWAs – each participating employer for that employer’s employees
– Union plans – the employee organization– Others – person identified as sponsor or
administrator25
Health Coverage Forms
• Form 1094-B, Transmittal of Health Coverage Information Returns
– Transmittal of Individual Data
• Form 1095-B, Health Coverage
– Information return and recipient statement reporting Minimal Essential Coverage
• Due Dates
– Furnished to taxpayers by January 31
– Filed with the IRS by February 28 (March 31 if filed electronically)
26
Form 1094-B
27
Form 1095-B
28
Combined Information Reporting
• Applies to ALE members that sponsor self-insured group health plans
• Combined reporting on Form 1095-C for both §6056 and §6055 – Benefit to ALE
• Only one form provided to each employee
• Only one form submitted to IRS
29
Electronic Filing Requirements
• Must electronically file if submitting 250 or more information returns– Note: Do not aggregate with Forms W-2 to determine if 250
threshold applies
• Information Return Filing Preparation:
1. Responsible Officials and Contacts complete e-Services Registration Process (if not completed previously)
2. Complete and sign online ACA Information Return Application for Transmitter Control Code (TCC)
3. Receive TCC through the mail (also available online)
4. Participate in ACA Assurance Testing (AATS) or Communication Testing
5. File information returns electronically30
Summary
• Applicable Large Employer (ALE) defined
• Employer Shared Responsibility Provisions (§4980H)
• ALE Information Reporting (§6056)
• Health Coverage Information Reporting (§6055) 31
Affordable Care Act Resources
32
Affordable Care Act Resources
33
