ACA 6055 and 6056 Reporting Richard Stover, FSA

Richard.Stover@Xerox.com

Bruce Gillis

Bruce.Gillis@Xerox.com

Agenda

• ACA 6055 and 6056 reporting – Overview of reporting requirements

– Forms 1095-C and 1094-C

– Alternative reporting methods

– Q&As

• ACA update – Health plan identifier (HPID)

• November 5th deadline

– Transitional reinsurance program

• November 17th deadline

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What is the purpose of reporting?

Section 6055 reporting Section 6056 reporting

What is primary purpose of reporting?

Administer the individual shared responsibility provision (“individual mandate”) by reporting minimum essential coverage (MEC).

Administer the employer shared responsibility provision (“employer mandate”) and used in determining eligibility of individuals for the Marketplace premium tax credits.

To which employers does reporting apply?

All size employers who offer MEC. Applicable large employer (ALE) – employed an average of at least 50 full-time or full-time equivalent employees on business days during prior calendar year. (Note that for 2015 reporting is required for employers with 50 to 99 employees, even though the shared responsibility provision is delayed to 2016.)

Each member of a controlled group must separately comply with these requirements. While reporting can be coordinated by one party, each member of the controlled group has the reporting obligation. Until further guidance is issued, governmental entities and churches may apply a reasonable, good faith interpretation of the controlled group.

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Who is responsible for reporting?

Section 6055 reporting Section 6056 reporting

Self-insured group plans

Employer Employer

Insured group plans

Insurer Employer

Multiemployer plans

Board of trustees, association, committee, or other similar group

Employer; but administrator can report on behalf of contributing employers

Government employer

Employer for self-funded plans Employer

A government unit may appropriately designate another person or persons to report on its behalf, and furnish statements. The designated person must agree that it is the appropriately designated person and that it is responsible for the information reporting under section 6056 and is subject to the information reporting penalties.

Small business health insurance options program (SHOP) plans sold in marketplaces

Insurer Not applicable, unless an applicable large employer

4

Which individuals are reported?

Section 6055 reporting Section 6056 reporting

Which individuals are included in reporting?

All individuals enrolled in MEC:

Full-time employees

Part-time, temporary and any other non-full-time employees

Other enrolled individuals, whether or not an employee

Pre-Medicare retirees*

COBRA beneficiaries

Dependents (children and spouses) of above, and dependents of Medicare* individuals (retirees and disableds)

*Note: No reporting is required under section 6055 for additional or supplemental benefits that are minimum essential coverage if the primary and supplemental coverages have the same plan sponsor, or the coverage supplements government-sponsored coverage such as Medicare.

Full-time employees regardless of whether or not they were offered MEC. (If an employee was full-time for one or more months of the year, the employee must be reported for the full year, including pre- and post-employment.)

Note: For the 6056 reporting, full-time employee status must be based on the ACA definition of full-time employee, not the employer definition. Generally, a full-time employee is an employee who, for a given calendar month, either averages at least 30 hours of service per week or has worked at least 130 hours of service during that month.

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What coverage is reported?

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Section 6055 reporting Section 6056 reporting What coverage (MEC) is subject to reporting?

MEC reporting includes:

Employer-sponsored active and retiree health coverage, whether insured or self-insured, including:

− COBRA coverage, severance

− Retiree coverage, including standalone retiree-only health reimbursement accounts (HRAs)

Non-employer sponsored MEC includes:

Coverage purchased in the individual market

Self-funded health coverage offered to students by universities for plan or policy years that begin on or before Dec. 31, 2014. (For later years, sponsors of these programs may apply to HHS to be recognized as MEC)

Government-sponsored health programs such as Medicare, Medicaid, CHIP and TRICARE

MEC reporting includes:

Employer-sponsored active health coverage, whether insured or self-insured

What coverage is not reported?

Section 6055 reporting Section 6056 reporting

What coverage is not subject to 6055 reporting?

MEC does not include excepted benefits:

Coverage consisting solely of excepted benefits, such as: − Stand-alone vision care or

dental care − Most health FSAs − Critical illness and fixed

indemnity plans On-site medical clinics

Employee assistance programs (EAPs) that don’t provide significant medical benefits

Reporting is not required for arrangements that provide benefits in addition or as supplement to MEC: Coverage that supplements a

primary plan of employer

Health reimbursement accounts (HRAs) integrated with a health plan

Wellness programs integrated with a health plan

Coverage that supplements Medicare or other government-sponsored coverage

Not applicable

7

What are the reporting forms?

Section 6055 reporting Section 6056 reporting

What reporting forms are used?

Individual Statement – Form 1095-B

IRS Transmittal - Form 1094-B

Entities reporting as health insurance insurers, sponsors of multiemployer plans, and self-insured group health plans that are not applicable large employers, will report under section 6055 on Forms 1094-B and 1095-B.

Employee Statement – Form 1095-C

IRS Transmittal - Form 1094-C

Applicable large employers (ALEs) are required to file a combined statement for all reporting under sections 6055 and 6056. For self-insured plans, employer will provide both 6055 and 6056 information on Form 1095-C. For insured plans the insurer will provide section 6055 information on Form 1095-B and the employer will provide section 6056 information on Form 1095-C. While an ALE can submit multiple 6056 transmittals, there must be a single authoritative transmittal aggregating the ALE data.

Draft 2014 forms and instructions have been provided with a comment period through November 3, 2014. A substitute statement that conforms with the guidance under both sections 6055 and 6056 is permitted.

8

What are the delivery requirements?

Section 6055 reporting Section 6056 reporting

What is the due date for filing the return with the IRS?

A transmittal form with the individual statements is due to the IRS by the March 31 immediately following the reporting calendar year, if filed electronically. Electronic filing is required if 250 or more individual Forms 1095-C (February 28 if not electronic filing).

For what year is reporting first required?

The first year of reporting is for the 2015 calendar year. Voluntary reporting is encouraged by the IRS for 2014.

Calendar year reporting is required, including for non-calendar year plans.

What is the due date for furnishing individual statements?

A statement under section 6055 to the primary insured and under section 6056 to the full-time employee is required by the January 31 immediately following the reporting calendar year. Reporting entities showing good cause can apply for an extension of time not exceeding 30 days to furnish statements. Only one statement is required per address. Reporting entities that fail to timely furnish corrected statements when information changes may be subject to penalties.

How must the individual statement be delivered?

Mailed to last known address. Electronic delivery is permitted, but only if the individual affirmatively consents to electronic furnishing of this specific statement. The requirement that electronic distribution of the statements follow requirements similar to providing the Form W-2 electronically will likely make this of limited use.

Who must receive the individual statement?

Responsible individual, generally employee or former employee through whom coverage obtained.

Full-time employee. There must be only one statement for each full-time employee for the ALE.

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What are the penalties for non-compliance?

Section 6055 reporting Section 6056 reporting

What penalties apply for failure to provide to IRS or individuals?

Generally $100 per return, with a maximum of $1.5 million under Code sections 6721 and 6722. Applies separately to Code sections 6055 and 6056 reporting. The IRS will not impose penalties on reporting entities that can show that they have made good faith efforts to comply with the reporting requirements. Specifically relief is provided from penalties for returns and statements filed in 2016 to report 2015 coverage, but only for incorrect or incomplete reported information, including TINs or dates of birth.

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Polling Question

How are you planning to address the reporting requirements?

1. Payroll provider

2. Benefit outsourcer

3. Third party vendor

4. Internal resources

5. Not a clue yet

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Forms 1095-C and 1094-C

Forms 1094-C and 1095-C • Form 1095-C – Employee statement to individual and IRS

– A full-time employee must receive a single Form 1095-C from the employer

for each calendar year

– A full-time employee who works for more than one employer that are

members of the same Aggregated ALE Group (controlled group) must

receive a separate statement from each employer

– A substitute form can be used

• Form 1094-C – Transmittal of employer-provided health insurance to

IRS – Each employer (including member of Aggregated ALE Group (controlled

group)) has its own reporting obligation (must file its own Form 1094-C)

– An employer can submit multiple Forms 1094-C (for example for different

divisions) but must submit one “Authoritative Transmittal” reporting

aggregate data for all full-time employees of the employer

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Section 6055 and 6056 Reporting Form 1095-C – Individual statement; For use by employer

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Section 6055 and 6056 Reporting Form 1095-C – Part I, Employee

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Section 6055 and 6056 Reporting Form 1095-C – Part I, Applicable Large Employer

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Section 6055 and 6056 Reporting Form 1095-C – Part II, 6056 Reporting

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Form 1095-C – Part II, Line 14 Offer of Coverage

Code Full-time Employee Spouse Dependents

(Children)

1A Qualified Offer: Offered minimum value (MV) MEC to

employee; Employee contribution for self-only coverage equal

to or less than 9.5% of mainland single federal poverty line.

Offered at

least MEC

Offered at

least MEC

1B Offered MV MEC Not offered Not offered

1C Offered MV MEC Not offered At least MEC

1D Offered MV MEC At least MEC Not offered

1E Offered MV MEC At least MEC At least MEC

1F Offered non-MV MEC to employee, employee and spouse or dependents, or employee , spouse

and dependents

1G Offered MEC to employee who was not full-time in any month

and who enrolled in self-insured coverage for one or more

months. Enter “1G” in “All 12 Months” box only.

N/A N/A

1H Not offered any health coverage or MEC N/A N/A

1I Qualified Offer Transition Relief 2015: Employee (and spouse and dependents) received no

offer of coverage, received an offer of coverage that is not a Qualified Offer, or received a

Qualified Offer for less than all 12 months.

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Only one code can apply to an employee for each calendar month; code must be included in each month.

Only one code can apply to an employee for each calendar month; if no code applies leave blank.

Code Full-time Employee

2A Employee not employed for any day during the month

2B Employee not a full-time employee and did not enroll in MEC

2C Employee enrolled in coverage offered regardless of any other codes that may apply.

2D Employee in a section 4980H(b) limited assessment period. For employee in an initial

measurement period enter 2D and not 2B. If the employer is also eligible for the

multiemployer interim rule relief enter code 2E and not 2D.

2E Multiemployer interim rule relief. While an employer may also use one of the affordability

safe harbors, and employer eligible for multiemployer relief should enter 2E.

2F Section 4980H affordability Form W-2 safe harbor used for month. To use this safe

harbor it must be used for all months of the calendar year for which the employee is

offered coverage.

2G Section 4980H affordability federal poverty line safe harbor used for month

2H Section 4980H affordability rate of pay safe harbor used for month

2I Non-calendar year transition relief applies to this employee for month

Form 1095-C – Part II, Line 16 Applicable Section 49080H Safe Harbor

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Section 6055 and 6056 Reporting Form 1095-C – Part III, 6055 Reporting

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Reasonable Effort to Collect TINs

Three requests required:

• Initial solicitation when the relationship is started

• Then there needs to be two annual solicitations

– The first has to be done by December 31 of the year the relationship began

(January 31 of the following year if the relationship started in December)

– The second annual request has to be made by December 31 of the following

year

• Oral, written or electronic requests appear to be allowed

Practical approach for 2015 reporting (by Jan 31, 2016):

• Request now; Request during next two open enrollment periods

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Section 6055 and 6056 Reporting Form 1095-C – Part III, 6055 Reporting

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Timing Challenges

Forms 1095C must be produced/distributed by January 31, 2016. • For employers using the look-back method:

– New employee data and new enrollee in health plan data for months through December

2015 may not be completed before forms must be printed

– Data hand-offs will be time-challenged; Consolidation of eligibility and enrollment data for

COBRA, Retiree, and Active HW benefits, plus employee service hours data.

• For employers using the monthly measurement method: – Hours data must be received for periods through December 2015, calculations performed,

quality reviewed, and forms produced and reviewed to distribute prior to January 31, 2016

– Data hand-offs will be time-challenged; Consolidation of eligibility and enrollment data for

COBRA, Retiree, and Active HW benefits, plus employee service hours data.

• COBRA/New Hire populations have a retroactive enrollment that could

mandate reprints

• High seasonal print volumes, and short turn-around time

• Call center support requirements, for all employers, will be concentrated

within a 2-3 week period.

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Section 6055 and 6056 Reporting Form 1094-C – Employer Transmittal Form

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Section 6055 and 6056 Reporting Form 1094-C – Employer Transmittal Form – Part I

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Section 6055 and 6056 Reporting Form 1094-C – Employer Transmittal Form – Part II

26

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Section 6055 and 6056 Reporting Form 1094-C – Employer Transmittal Form – Part III

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Section 6055 and 6056 Reporting Form 1094-C – Employer Transmittal Form – Part IV

Polling Question

Which reporting method are you intending to use?

1. General Reporting Method

2. Qualifying Offer Method

3. Qualifying Offer Method Transition Relief

4. 98% Offer Method

5. Not a clue yet

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Alternate Reporting Methods

Alternate Reporting Methods

• Reporting Methods

– General Reporting Method

– Qualifying Offer Method

– Qualifying Offer Method Transition Relief

– 98% Offer Method

• Alternative methods likely of more value to small employers who offer

benefits to most/all employees

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Qualifying Offer Method

• If a full-time employee received a Qualifying Offer the employer can

satisfy the requirement to provide a Form 1095-C to the employee by

providing a statement containing the following information:

– Employer name, address, and EIN

– Contact name and phone number

– Statement indicating that, the employee, spouse and dependents (if any)

received a Qualifying Offer and therefore are not eligible for a premium

tax credit

• To use this method the employer coverage must:

– Satisfy the 60% minimum value

– Satisfy the affordability requirement with the employee contribution for

employee-only coverage being no more than 9.5% of the mainland federal

poverty line

– Offer minimum essential coverage to the employee’s spouse and children, and

– Offer coverage to the full-time employee for all 12 months of the year

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Qualifying Offer Method (cont.)

• In addition to providing the statement the employer must still:

– Prepare and distribute the 1095-C to other employees, including those who

work less than 12 months of the year

– Apparently still provide a 1095-C to the IRS for the full-time employees with a

qualifying offer

• Not clear what advantage this approach has because employer must:

– Identify which employees satisfy the qualifying offer method

– Produce a full 1095-C for the IRS by March 31 for those employees, and

– Produce a full 1095-C for all other employees

33

Qualifying Offer Method Transition Relief

• Transition rule is only for 2015 reporting

• If a full-time employee received a Qualifying Offer for less than 12

months the employer can satisfy the requirement to provide a Form

1095-C to the employee by providing a statement containing the

following information:

– Employer name, address, and EIN

– Contact name and phone number

– Statement indicating that, the employee, spouse and dependents (if any) may

be eligible for a premium tax credit for one or more months of 2015.

• Employees who receive a Qualifying Offer for all twelve months would

receive the statement under the “Qualifying Offer Method.”

• Employer must also certify that it made a Qualifying Offer for one or more

months of calendar year 2015 to at least 95% of its full-time employees

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Qualifying Offer Method Transition Relief (cont.)

• In addition to providing the statement the employer must still:

– Prepare the alternative statement for employees who receive a Qualifying Offer

for all 12 months of the year

– Apparently still provide a 1095-C to the IRS for the full-time employees with a

qualifying offer

– Prepare and distribute the 1095-C to other employees where this relief does not

apply

• Not clear what advantage this approach has because employer must:

– Identify which employees satisfy each of the Qualifying Offer Methods

– Produce a full 1095-C for the IRS by March 31 for those employees, and

– Produce a full 1095-C for all other employees

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98% Offer Method

• Under the 98% Offer Method the employer is not required to identify

which of the employees for whom it is filing are full-time employees

• To use this method the employer must:

– Employer must certify it is offering affordable, minimum value coverage to at

least 98% of employees and dependents for whom it is filing a Form 1095-C

• Affordability can be based on any of the 4980H affordability safe harbors

– All full-time employees must be included in the reporting

– Must satisfy this requirement for each month of the year

• This reporting method likely only viable for employers who use monthly

measurement method and offer coverage to virtually all employees and have

limited numbers of non-eligible employees like part-timers, interns, seasonal, and

temporary employees.

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98% Offer Method (cont.)

Example:

• An applicable large employer has 100 employees

– 60 are clearly full-time employees,

– 30 employees who worked 27 hours per week, but could potentially exceed the 30-hour threshold (i.e., variable hour), and

– 10 clearly part-time (clearly under 30 hours each week)

• An employer could report on the 60 full-time and 30 variable hour employees, if it offered affordable, minimum value coverage to 98% of the 90 employees (i.e., the full-time and variable hour) without identifying full-time employees

• The 10 clearly part-time employees can be excluded from the reporting

• Reporting is completed to the IRS without identifying or specifying the number of full-time employees

• Reporting must include all full-time employees

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Next Steps

• Finalize ACA methodology for determining full-time employees

• Establish process for good faith collection of SSNs

• Review options for 6055/6056 reporting

• Xerox can assist in:

– Developing the measurement and reporting strategy

– Reviewing reporting options

– Providing reporting services for Xerox HR Solutions clients

– Selection of 3rd party vendor for reporting or development of internal system for

non-Xerox Solutions clients

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Contact information

Richard Stover, FSA, MAAA

Richard.Stover@Xerox.com

Principal and Consulting Actuary

Knowledge Resource Center

Buck Consultants, LLC, A Xerox Company

201-902-2684

Bruce Gillis

Bruce.Gillis@Xerox.com

Practice Leader, Health & Wellness

HR Outsourcing & Solutions

Xerox HR Solutions, LLC, A Xerox Company

502-608-4851

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Questions?

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