Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher...

116
Presented by Edward Fensholt, JD Scott Behrens, JD Rory Akers, JD Compliance Services, Lockton Benefit Group Getting Ready for 2016 ACA Reporting: Because Some Things Are Too Much Fun to Do Only Once © 2016 Lockton Benefit Group Images © 2016 Thinkstock. All rights reserved. October 20, 2016 Click the Lockton logo to join the webcast

Transcript of Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher...

Page 1: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Presented by

Edward Fensholt, JD Scott Behrens, JD Rory Akers, JD Compliance Services, Lockton Benefit Group

Getting Ready for 2016 ACA Reporting: Because Some Things Are Too Much Fun to Do Only Once

© 2016 Lockton Benefit Group Images © 2016 Thinkstock. All rights reserved.

October 20, 2016

Click the Lockton logo to join the webcast

Page 2: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Please Note

The audio portion of this presentation will be broadcast through your PC.

Please DO NOT attempt to dial in to the webcast on your telephone.

2

Page 3: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Please make sure your computer is not muted and the volume bar on the Audio Broadcast Panel is all the way up.

If the volume is still low, please adjust your Master Volume Settings. To do this, double-click on the Volume Button on the lower corner of your tool bar, and make sure the volume is moved all the way up. If you are listening from a headset, please make sure the volume slider on the cord is turned all the way up.

Volume Too Low?

3

Page 4: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Haven’t Received Your Handouts Yet?

Some spam filters intercept messages sent from our group mail server. If

you have not yet received your handouts, please email Jayne

Ritzinger, and we'll send a copy of the handouts to you in an individual

email.

[email protected]

4

Page 5: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Questions?

You may submit questions using the Q&A box on your computer screen. Please wait until we near the end of the presentation—or leave the topic to which your question pertains—before submitting your question.

Questions? Ask them on Twitter: #LocktonClass Follow us on Twitter @LocktonComply and @LocktonBenefits

5

Page 6: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Presented by

Edward Fensholt, JD Scott Behrens, JD Rory Akers, JD Compliance Services, Lockton Benefit Group

Getting Ready for 2016 ACA Reporting: Because Some Things Are Too Much Fun to Do Only Once

© 2016 Lockton Benefit Group Images © 2016 Thinkstock. All rights reserved.

October 20, 2016

Page 7: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Agenda

Page 8: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Agenda

ACA Reporting Snapshot

Which Employers Must Report?

Who Are ALEs Reporting On?

Changes for 2016: Transition Relief

When to Report

How to Report: Form 1095-C – Part II, Line 14

How to Report: Form 1095-C – Part II, Line 15

How to Report: Form 1095-C – Part II, Line 16

How to Report: Form 1095-C – Part III

How to Report: Form 1094-C

Odds and Ends: COBRA and Transfers

Cleaning Things Up

8

Page 9: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

ACA Reporting Snapshot Ed Fensholt

Page 10: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

ACA Reporting Snapshot – Our Focus Today

Process largely unchanged from last year; this presentation will touch on the basics, and many of the slides address and include examples of the basics, but we will mainly focus on the new things, the nuances, and the common errors from last year

Due dates are accelerated

“Good faith effort” standard does not apply

Some transition relief expires, some lingers through all or part of the 2016 reporting year

New codes for Line 14, 1095-C

Line 15 remains deceptively complicated for wellness and opt-out incentives, and some HRA and flex credits; vendor programming shortcomings are likely going to manifest here

COBRA remains a mess, M&A remains a bit of a mystery

“Accepted with errors” messages…what to do and when to do it, especially about missing or erroneous SSNs, and how the IRS intends to provide additional clarity around errors on 2016 filings

10

Page 11: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

ACA Reporting Snapshot – A Quick Refresher

ACA reporting serves two functions (once you understand this, the reporting Forms – what

they’re asking for, and why – make more sense) :

Allows the IRS to verify individuals’ compliance with the individual mandate, and

Allows the IRS to verify “applicable large employer” (ALE) compliance with the employer mandate

The reporting forms are, with one exception, specific to the employee (like W-2)

11

Page 12: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

ACA Reporting Snapshot

Here’s the exception…ALEs also file Form 1094-C, which also serves multiple purposes

Transmittal document to accompany all the Forms 1095-C sent to the IRS, identifying the transmitter (the ALE)…similar to a W-3 in that regard

ALE also demonstrates compliance with the employer mandate’s “aggregate obligation”…the “Tier 1” obligation to offer coverage to at least 95% of FTEs and their children

ALE also identifies the other members of its controlled group, to facilitate IRS enforcement of the employer mandate between employer members of an ALE Group

12

Page 13: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Employer Reporting - Summary

Form Used by...

1095-B

Insurers to report actual coverage provided to primary insureds and their dependents; form is supplied to the covered primary insured, copy to IRS

Non-ALEs to report actual non-supplemental self-insured coverage provided to primary insureds and their dependents; form is supplied to the covered primary insured, copy to IRS

ALEs (at their option) to report actual self-insured coverage to non-employees (retirees, partners, outside directors, COBRA beneficiaries, contractors, etc.); form is supplied to the covered primary insured, copy to IRS

1094-B Insurers, non-ALEs and ALEs (as applicable) to transmit the individual Forms 1095-B to IRS

1095-C Parts I and III, and maybe II

ALEs to report self-insured coverage provided to primary insureds and their dependents; employer makes abbreviated entry in Part II if the primary insured was not an ACA full-time employee for at least a month during the year

Form is supplied to the primary insured, copy to IRS

1095-C Parts I and II, and maybe III

ALEs to report coverage offers to individual full-time employees, to demonstrate Tier 2 compliance

If the full-time employee is covered under insured coverage, or not covered under any coverage, the employer completes just Parts I and II; if covered under self-insured coverage, the employer completes Parts I, II and III

Form is supplied to the FTE, copy to IRS

1094-C ALEs to transmit the individual forms 1095-C to the IRS, and demonstrate Tier 1 compliance

13

Page 14: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Which Employers Must Report? Rory Akers

Page 15: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Which Employers Must Report?

Applicable Large Employers (ALEs):

In short, employers subject to the employer mandate…

…that is, employers that, together with controlled group and affiliated service group members, have an average of 50 or more full-time employees (including full-time equivalent employees…fictional full-timers made up of part-time hours) during the prior calendar year

Calendar year look-back; some employers confuse this look-back with their measurement periods for determining FTEs

Controlled groups: Generally, at least 80% common ownership

This is the only place where part-time hours or fictional full-timer employees matter; if the relevant numbers put the employer “in the boat” (i.e., if they subject the employer to the employer mandate), coverage offers are compelled only with respect to real flesh-and-blood FTEs

Small Employers Providing Non-Supplemental Self-Insured Coverage

Rare; we’ll speak no more about this

15

Page 16: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Which Employers Must Report?

There is an ALE Group (the green box) consisting of HoldCo, SubCo1 and SubCo 2

Each of these three entities is an ALE, subject to the employer mandate and reporting, even though considered separately none of them would be an ALE; SubCo3 is not an ALE

Even though HoldCo, SubCo1 and SubCo2 are all ALEs by virtue of their being part of an ALE Group, each of them applies Tier 1 and Tier 2 of the employer mandate separately, and reports separately…even though their employees might be covered under a single plan; this is EIN-by-EIN reporting, not plan-level reporting like the Form 5500

HoldCo, Inc. [EIN 12-3456789]

15 full-time employees

83%

SubCo 2, Inc. [EIN 34-5678912]

25 full-time employees

50%

SubCo3, Inc. [EIN 45-6789123]

10 full-time employees

100%

SubCo 1, Inc. [EIN 23-4567891]

35 full-time employees

16

Page 17: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Who Are ALEs Reporting On ? Scott Behrens

Page 18: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Who Are ALEs Reporting On?

18

Any person who had coverage for at least a day during the calendar year, under a self-insured plan offered through the employer

Can be a common law employee (FTE, part-timer, regular, temp, seasonal, per diem, etc.), non-common law employee (contractor, former employee, retiree, partner, outside director, COBRA enrollee or dependents of any of these)

OR

Any common law employee, who was an ACA FTE for at least a month during the calendar year, and who had cleared his or her “limited non-assessment period” (LNAP) before year end

Page 19: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Who Are ALEs Reporting On?

19

What’s a Common Law Employee?

Tax Code question

Not partners, independent contractors, outside directors

What about “temps”?

Is the employer hiring them, or obtaining them from a staffing firm?

Staffing industry takes the view that a staffing associate is a common law employee of the staffing firm

Factors: A bunch of them, key among them the right control what the individual does and how he/she does it; allow the employer to decide the common law employee question

Page 20: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Who Are ALEs Reporting On?

20

When is a Newly-Hired Employee an “ACA FTE”

The newly-hired FTE :

Is not an ACA FTE until the first day of fourth full calendar month, as long as coverage offered by then

Example: Employee hired in Sept. or later, gets a coverage offer by Jan. 1

What if the coverage offer comes earlier, and the employee enrolls?

Is literally measured month-to-month; even if employer applies look-back measurement method to determine FTEs, the newly hired FTE is measured month-to-month until employed through an entire standard measurement period (SMP), then FTE status depends on average hours over SMPs, as with everyone else

Those emerging from SMPs averaging 30+ hrs/week are ACA FTEs for the ensuing stability period (plan year)

Change from FTE to VH/PT/Seasonal before completing an SMP: Continue to measure month-to-month

Lockton clients: Ask your Account Team for our white paper titled, “Those Vexing Changes in Status”

Page 21: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Who Are ALEs Reporting On?

21

When is a Newly-Hired Employee an “ACA FTE”

The newly-hired variable hour/part-time/seasonal employee

Is not an ACA FTE until:

The first day of the Initial Stability Period or (if not then, because he or she averaged fewer than 30 hours of service per week over the Initial Measurement Period) then…

…The first day of the Standard Stability Period (plan year) following the first Standard Measurement Period in which he/she averages 30+ hrs/week

Changes from VH/PT/Seasonal to FTE during the initial measurement period (IMP): Treat as an ACA FTE on the earlier of two dates:

First day of the Initial Stability Period, if the employee averaged 30+ hrs/week over the IMP

First day of the fourth full calendar month following the change in status, as long as a coverage offer is made by then

Lockton clients: Ask your Account Team for our white paper titled, “Those Vexing Changes in Status”

Page 22: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Who Are ALEs Reporting On?

22

Determining FTEs: “Hours of Service”

Paid hours

NOT hours worked abroad

NO NEED to convert certain payments to hours: workmen’s comp, state-mandated disability leave payments, disability benefits funded by employees on an after-tax basis

Some unpaid leaves can’t hurt the employee, in an “average hours of service” calculation

Lockton clients: Ask your Account Team for our white paper detailing what hours must be taken into account, and what hours may be disregarded.

Page 23: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Who Are ALEs Reporting On?

23

What Are “Limited Non-Assessment Periods” and When Are They Cleared?

LNAPs include:

The first partial month of employment

An initial measurement and administrative period, for newly-hired variable hour, part-time or seasonal employees tracked via the look-back measurement method

To “claim” this as an LNAP, an employee emerging from the measurement period must be offered coverage for the ensuing stability period…it’s the timely coverage offer that “buys” the relief

The waiting period for newly-hired FTEs, as long as an ACA-compliant coverage offer is made not later then the first day of the fourth full calendar month of employment

Similar period following a variable hour, part-time or seasonal employee’s switch to full-time status during the initial measurement period

For employers first qualifying as an ALE because of growth in FTE/FTEq count for the prior CY), the first three months of the CY, with respect to employees not offered coverage at any point during the prior CY

Page 24: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Changes for 2016: Transition Relief Ed Fensholt

Page 25: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Changes for 2016: Transition Relief (A Quick Summary)

Had 50-99 FTEs/FTEqs in 2014: Free pass from the employer mandate for 2015 (but not reporting!)

If had non-CY plan relief, free pass from employer mandate through the end of the 2015-16 plan year; begin making adequate coverage offers by first day of PY beginning in 2016 or risk penalties

Employer mandate’s Tier 1 “aggregate obligation”: Make coverage offer to at least 70% of FTEs in the EIN, and their children

Becomes 95% for months in 2016 and later

For employers with non-CY plan relief, it remains 70% for months in 2016 through the end of the 2015-16 plan year1

Penalty calculation “Free 80” vs. the “Free 30” for “aggregate obligation” penalty calculations For employers with non-CY plan relief, it remains “Free 80” through the end of the 2015-16

plan year1

Multiemployer plan relief (employer bound to make contributions to a multiemployer plan (not MEWA) under a bargaining agreement; union supplies MV and affordable coverage, and offers coverage to children) Relief continues for 2016 reporting

1 Employers in a controlled group/affiliated service group with an employer that qualifies for non-CY plan relief can

also take advantage of it 25

Page 26: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

When to Report Rory Akers

Page 27: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

When to Report – 2016 Reports Due in 2017

Form Due Date How Extensions &

Waivers

1095-C Jan. 31 to FTEs, others

with self-insured coverage

On paper or electronically with

consent

May apply to IRS via letter for 30-day extension

1095-C 1094-C

Feb. 28 to IRS, unless e-filing, then March 31

Must e-file if submitting 250+ Forms 1095-C,

unless get waiver

Automatic 30-day extension via Form 8809; may apply for additional 30-

day extension

May apply for e-filing waiver on

Form 8508

27

Page 28: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 14 Scott Behrens

Page 29: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 14

Remember…

An employer only deals with Line 14 of Part II of Form 1095-C if it’s dealing with:

An employee who was an ACA FTE (i.e., common law employee, 30+ hours of service per week on average, cleared any LNAP etc.) for at least one month during the reporting year, OR

An individual (FTE or otherwise) with self-insured coverage for at least a day during the reporting year (very abbreviated entry…more on that in a minute)

29

Page 30: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 14

30

Generally, Line 14 tells the IRS whether the ALE offered coverage to the FTE for a given month or months……and if it did, whether the coverage was “Minimum Value” (MV), meaning at least 60% actuarial value (i.e., Bronze-level coverage) or merely “Minimum Essential Coverage” (MEC), and whether coverage was offered to the employee only, or family members too…

This is all described by the use of 1 of 10 codes, 2 are new and MUST be used if applicable

The reporting employer MUST ACCOUNT FOR ALL 12 MONTHS ON LINE 14

Only report a coverage offer for a month if offered for entire month…otherwise, report “No coverage” (1H) even if there’s a legit reason for no offer

Page 31: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 14 Codes

Line 14 Codes

Means…

1A Qualifying Offer for the month in question; a Qualifying Offer is an offer of MV coverage to the employee, with the employee’s cost for single coverage not in excess of 9.66% of the mainland single poverty level; at least MEC must be offered to spouse and children

1B Offered MV to e’ee only, for entire month

1C Offered MV to e’ee, at least MEC to kids (not spouse) for entire month

1D Offered MV to e’ee, at least MEC to spouse (not kids) for entire month; don’t use 1D if offer to spouse was conditional (use 1J)

1E Offered MV to e’ee, at least MEC to spouse and kids for entire month; don’t use 1E if offer to spouse was conditional (use 1K)

1F Offered MEC but not MV to e’ee or to e’ee and any combination of family unit, for entire month

1G E’ee was not a FTE for any month but covered under employer’s self-insured plan

1H No MV or even MEC coverage offered to e’ee, for one or more days of the month

1I Reserved by the IRS

1J Offered MV to e’ee, conditional offer of at least MEC to spouse (no offer to kids)

1K Offered MV to e’ee, at least MEC to kids; conditional offer of at least MEC to spouse

31

Page 32: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 14

32

Line 14…common situations

MV coverage offered to the employee and family for the entire month – 1E

Employer offers MV coverage to the employee for the entire month, at an employee cost less than 9.66% of the mainland poverty level, and offers at least MEC to the spouse and children – 1A

Employer offers MV coverage to employee and family, but coverage for spouse is conditioned on spouse NOT being eligible for coverage elsewhere, such as through his or her own employer – 1K

MEC but not MV coverage offered to the employee and family for the entire month – 1F

Coverage not offered, or offered for less than entire month, because the employee was hired mid-month – 1H

Coverage not offered, or offered for less than entire month, because the employee was in a waiting period – 1H

Coverage not offered, or offered for less than entire month, because the employee was in an initial measurement or initial administrative period – 1H

Page 33: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 14

33

Line 14…common situations

Coverage not offered for the entire month because the employee terminated mid-month, and coverage didn’t continue to month’s end – 1H

Employer didn’t offer coverage to the FTE, even including where the employer is bound by a bargaining or similar agreement to make contributions to a union-affiliated health plan on the employee’s behalf (and even where the employee was enrolled in that coverage) – 1H

Person was enrolled in self-insured coverage of the employer for at least a day (meaning employer must complete Part III of Form 1095-C) but the person was not a full-time employee for even a single month – 1G in the “All 12 months” box

Offer of COBRA coverage for all or part of the month, to a former employee – 1H

COBRA coverage actually supplied for all or part of the month to a former employee – 1H

Page 34: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 14

34

Line 14…Examples

Employer offers MV coverage to eligible employees and their spouses and children thru the month the children attain age 26.

The employee is an FTE and eligible for coverage the entire calendar year (whether enrolled or not is not relevant for Line 14 purposes…only the offer)

1E

Page 35: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 14

35

Line 14…Examples

Same coverage offer as on previous slide.

Employee joins the employer on March 10 as an FTE, and is offered coverage on June 1 (first of the month following 60 days) through the end of the year

1H 1H 1H 1H 1H 1E 1E 1E 1E 1E 1E 1E

Page 36: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 14

36

Line 14…Examples

Same coverage offer as on previous slide. Employee begins the year as an eligible FTE, and remains so through May 12, when he terminates.

What if eligibility had continued through May 31?

1E 1E 1E 1E 1H 1H 1H 1H 1H 1H 1H 1H

Page 37: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 14

37

Line 14…Examples

Same coverage offer as on previous slide. A variable hour employee joins the employer on July 10, 2015, completes an initial measurement period on July 9, 2016 and is offered coverage as an FTE effective August 1, 2016, through the end of the 2016 calendar year

1H 1H 1H 1H 1H 1H 1H 1E 1E 1E 1E 1E

Page 38: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 14

38

Line 14…Examples

Employer offers self-insured coverage to hourly employees, whether FTEs or PTEs. A part-time employee, who is not an FTE for even a single month during the year, enrolls in the self-insured coverage for all or even part of the year.

What if she had never enrolled?

What if the coverage had been fully insured and she had enrolled?

1G

If using 1G, put it in the “All 12 Months” box

Page 39: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 14

39

Line 14…Examples

Employer offers MV coverage to an FTE for the entire year; coverage is made available to the family. The eligibility of the spouse is conditioned on the spouse NOT being eligible for group coverage offered by another employer.

1K

If 1J or 1K applies, must use it!

Page 40: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 14

Key Takeaways – Line 14

Every month must be accounted for; leave no month blank!

Of course, if completing the “All 12 Months” box, no need to complete the rest of the line

Insert a code for a coverage offer ONLY if the coverage was available for the ENTIRE month

This is a different standard than under Part III, where coverage is listed for a month if the individual had coverage for merely a day

Generally, report coverage as having been offered for a month if the employee could have had it for that month, had he elected it (potential wrinkles here)

Watch conditional offers…new codes for 2016

Watch non-CY plan transition relief…

Don’t leave line 14 blank for the months prior to the first day of the 2016-17 PY, and

Don’t show 1H where there was actually a coverage offer made for the months prior to the first day of that PY, even though the employer wasn’t subject to the employer mandate

Use 1G on line 14, and don’t complete lines 15 and 16, where self-insured coverage is provided to someone who was not an FTE for even a single month

40

Lockton clients: Ask your Account Team for our white paper on Lines 14-16 of the Form 1095-C, updated for 2016!

Page 41: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 15 Ed Fensholt

Here is where your

vendor is most likely to err

Page 42: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 15

42

Line 15…

Only complete for a month if code 1B, 1C, 1D, 1E, 1J or 1K is on line 14 (the minimum value offers)…IRS doesn’t care about the affordability of MEC coverage

1A is also a MV offer, but it’s dealt with differently…1A on line 14 means NOTHING in line 15

Tells the IRS how much the FTE is asked to pay for the least expensive employee-only MV coverage option offered to him or her…this will often not be what the employee is actually paying!

Page 43: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 15

43

Line 15…

Include cents. If there is no e’ee contribution, insert $0.00…don’t leave blank for any month in which 1B, 1C, 1D, 1E, 1J or 1K is on line 14

This number can be an average of the monthly costs for the plan year (not the calendar year ); reflecting and average is easy for CY plans, little complicated for non-CY plans

E.g., April 1 – March 31 PY; average monthly cost for the 2015-16 PY could be placed in the Jan., Feb. and March boxes; average monthly cost for the 2016-17 PY could be placed in the boxes for April through December

See the definition of “Employee Required Contributions” on page 15 of the Instructions

0.00

Page 44: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 15

44

Line 15…

Qualifying Offers. If the employer makes a ”qualifying offer” to the employee and inserts code 1A on line 14 for one or more months, line 15 is NOT completed for those months

What’s a “qualifying offer”? An offer of at least MV coverage to the employee, and at least MEC to the spouse and children to age 26, where the employee would pay no more than 9.66% (for 2016) of the mainland poverty level for employee-only coverage

Why no entry on line 15? The actual cost of the offer is irrelevant because the employer is effectively claiming the poverty level safe harbor, for affordability purposes

1A

…Leave line 15 blank

If code 1A is in line 14…

Page 45: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 15

45

Line 15…

Opt-Out Incentives:

Include the value of an opt-out incentive in the employee’s cost on Line 15, unless the opt-out incentive is a “qualifying” incentive (or the incentive pre-dated Dec. 2015 – this grandfather rule goes away for 2017)

An incentive is qualifying if it’s not provided unless and until the employee attests he and his tax family (individual for which he expects to claim an exemption) have or will have other group coverage

Potential FLSA issues related to opt-outs

Here is where your

vendor is most likely to err

Page 46: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 15

46

Line 15…

Wellness Incentives and Penalties:

Adjust the line 15 coverage cost as follows, for wellness incentives and penalties:

Assume the employee failed to meet the criteria to win incentive/avoid penalty for non-tobacco-related components of a wellness program, i.e., don’t deduct the incentive amount, but add the penalty

Assume the employee met the criteria to win the incentive/avoid the penalty for tobacco-related components, i.e. deduct the incentive amount, but don’t add the penalty

Here is where your

vendor is most likely to err

Page 47: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 15

47

Line 15…

HRA Credits:

If they can be applied to pay premium (or premium and pay for OOP expenses), adjust the employee monthly cost by a monthly ratable portion of the HRA benefit for the year

If they can only be applied to reimburse OOP costs (and can’t be used to pay premium), do not adjust the employee cost on line 15 to account for any portion of the HRA benefit

Here is where your

vendor is most likely to err

Page 48: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 15

48

Line 15…

Flex Credits:

If the flex credit can ONLY be used to pay premium for medical coverage, apply the credits to reduce the employee cost on line 15

If the flex credit can also be taken as cash, or used to pay premiums for non-medical care (like a dependent care FSA), do not adjust the employee cost on line 15 to account for any portion of the flex credits

Here is where your

vendor is most likely to err

Page 49: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 15

49

Line 15…Examples…in most examples we’ll assume a CY plan, and full year’s eligibility…

Employer offers a single MV coverage option to eligible employees and their spouses and children under a calendar year plan.

The employee is an FTE and eligible for coverage the entire calendar year (whether enrolled or not is not relevant for Line 15 purposes…only the offer is relevant).

The cost to the employee, for e’ee-only coverage under the MV option, is $105.28 per month, and this rate stays in effect for all 12 months.

1E

105.28

Page 50: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 15

50

Line 15…Examples

Same facts, except the employee declines employee-only coverage, and enrolls in family coverage for $220.00 per month.

Same facts, except the employer also offers a second MV option that is slightly more expensive ($128.75 per month for employee-only coverage). The employee enrolls in the more expensive option.

1E

105.28

Page 51: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 15

51

Line 15…Examples: Non-CY Plan Year, Change in Cost

Employer offers MV coverage to eligible employees and their spouses and children under a plan with a July 1 – June 30 PY.

Employee is eligible all calendar year. The employer charges $105.10/mo for the least expensive e’ee-only coverage offer supplying minimum value for the 2015-16 PY, and $120.20/mo for that coverage for the 2016-17 PY

1E

105.10 120.20 105.10 105.10 105.10 105.10 105.10 120.20 120.20 120.20 120.20 120.20

Page 52: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 15

52

Line 15…Examples: Opt-Out Incentive

Same facts, except the employer offers a new (for 2016) $50/month opt-out incentive if the employee attests that he and his “tax family” have or will have other group coverage

What if no attestation were required?

1E

105.28

Page 53: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 15

53

Line 15…Examples: Wellness Programs

Employer offers a single MV coverage option to eligible employees and their spouses and children under a CY plan. The employee is an FTE and eligible for coverage the entire calendar year.

The cost to the employee, for e’ee-only coverage under the MV option, is $155 per month, and this rate stays in effect for all 12 months. The cost for family coverage is $260 per month. The employee enrolls in family coverage.

The employer offers a wellness program providing a $75/month incentive for employees whose weight and blood pressure are within range, and $50/month for tobacco non-users. The employee qualifies for the first, but as a tobacco user he does not qualify for the latter. His actual premium for family coverage is $185/month.

1E

105.00

Page 54: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 15

54

Line 15…Examples: Wellness Programs

How do we get $105.00?

1. Start with the cost to the employee, for e’ee-only coverage under the cheapest (in this case, only) MV coverage option available to the e’ee: $155 per month, not what the employee is actually paying

2. Even though the employee qualifies for the $75/mo. discount for weight and blood pressure, we have to assume he did not. We’re still at $155 per month

3. Even though the employee does NOT qualify for the tobacco incentive, we have to assume he does: $155 - $50 = $105.00

1E

105.00

Page 55: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 15

Key Takeaways – Line 15

Line 15 is rather straightforward, for most employers

Often, the amount on line 15 won’t be what the employee is paying

Adjustments for opt-out incentives (for new incentives in 2016, and for 2017 or later), wellness incentives, HRA credits and flex credits (same effective dates) are almost certainly going to be jacked up

Opt-outs: Key question is, “Is it a new incentive? If so, is it a qualified incentive?”

Wellness: Calculate deemed employee-only premium, assuming failure to meet non-tobacco standards, but assuming success in meeting tobacco standards

HRAs: Key question is, “Can the account balance be applied to premium?”

Flex credits: Key question is, “Can the credits be taken as cash or used to pay for non-medical coverage, or can they only be used to pay for medical coverage?”

1A on line 14 means no entry on line 15

COBRA is a mess; more on it later. Different results depending on nature of the employee’s qualifying event

55

Lockton clients: Ask your Account Team for our white paper on Lines 14-16 of the Form 1095-C, updated for 2016!

Page 56: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 16 Ed Fensholt

Page 57: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C -- Part II, Line 16

57

Line 16…tells the IRS, via 1 of 8 codes (if any are applicable)…

Whether a FTE was enrolled in employer-based coverage (MV or even MEC) for a given month

If the employer reports no coverage offer on Line 14 (1H), why the employer didn’t offer coverage (i.e., the “Exculpatory Codes”…that is, “I didn’t offer coverage but the IRS can’t fine me because I didn’t have to offer coverage”)

If the employee waived MV coverage, whether the employer offered the e’ee-only tier at a price point within an “affordability safe harbor”

Page 58: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 16 Codes

Line 16 Code Means…

2A E’ee not employed by the employer for a single day during the month

2B E’ee was employed during the month but was not a full-time employee for the month, or terminated before end of month and coverage lapsed before end of month

2C E’ee was enrolled in at least MEC for every day of the month Use this code if it and another 2-series code applies, except where 2E applies. Do not enter 2C on line 16: • If 1G is entered in the “All 12 Months” box (line 16 should be blank) • For terminated employees enrolled in COBRA (use 2A)

2D E’ee was not covered for the entire month, but was employed during the month but was in a limited non-assessment period for the month (first partial calendar month of employment, first three full calendar months of employment, initial measurement and administrative period, period following certain change in status during initial measurement period)

2E Multiemployer (union-affiliated) health plan relief rule applied to the employer for every day of the calendar month

2F E’ee not covered for the entire month, but was offered MV coverage that was affordable under W-2 safe harbor

2G E’ee not covered for the entire month, but was offered MV coverage that was affordable under poverty level safe harbor

2H E’ee not covered for the entire month, but was offered MV coverage that was affordable under rate of pay safe harbor

2I Reserved by the IRS

Trump Code!

58

Page 59: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C -- Part II, Line 16

59

Line 16…common situations

Employee enrolled in the employer’s MEC or MV coverage – 2C (“trump code”)

Employee received no offer of coverage for the entire month because he wasn’t even an employee at any point in that month – 2A

Employee received no offer of coverage for the entire month because she terminated employment during the month and lost coverage mid-month as a result – 2B

Employee received no offer of coverage for the entire month because it was his first month of employment, and he joined the employer other than on the first day of the month – 2D

Employee received no offer of coverage for the entire month because she was a newly-hired FTE and was in her waiting period (but not beyond the first three full months of employment) – 2D

Employee received no offer of coverage for the entire month because he was still in an initial measurement or administrative period – 2D

Page 60: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C -- Part II, Line 16

60

Line 16…common situations

Employee received no offer of coverage from the employer for the entire month but the employer was bound by a collective bargaining or similar agreement to make contributions to a union-affiliated health plan (that offers MV and affordable coverage to employees, and coverage to family members) on the employee’s behalf – 2E

The employee waived MV coverage but the price point, for e’ee-only coverage, was within one of the three affordability safe harbors – 2F, 2G, 2H

The employee waived a qualifying offer – 2G (optional)

Page 61: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C -- Part II, Line 16

61

Line 16 Examples: Full year of coverage

Employer offers MV coverage to eligible employees and their spouses and children under a CY plan. The employee is an FTE and eligible for coverage the entire calendar year and enrolled (whether enrolled or not IS relevant for Line 16).

The employer charges the employee $105.28 per month for e’ee-only coverage under its only MV option, for all 12 months.

1E

105.28

2C

Page 62: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C -- Part II, Line 16

62

Line 16 Examples: Full year of eligibility, employee declines coverage

Same facts, only the employee declined coverage for the year. Assume the offer of coverage was within the “rate of pay safe harbor.”

What if the offer had not been within any affordability safe harbor?

Can the employer pick and choose which safe harbor to apply?

1E

105.28

2H

Page 63: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C -- Part II, Line 16

63

Line 16 Examples: New employee eligible mid-year, enrolls

Employer offers MV coverage to eligible employees and their spouses and children.

Employee joins the employer on March 10 as an FTE, and is offered coverage on June 1 (first of the month following 60 days) through the end of the year. She enrolls in the coverage…what’s the coding for Jan-Feb, March, Apr-May, June-Dec?

1H 1H 1H 1H 1H 1E 1E 1E 1E 1E 1E 1E

Ignoring Line 15 for purposes of these examples

2A 2A 2D 2D 2D 2C 2C 2C 2C 2C 2C 2C

Page 64: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C -- Part II, Line 16

64

Line 16 Examples: New employee eligible mid-year, declines enrollment

Same facts. What if employee-only coverage was within a W-2 safe harbor, and the employee declined the offer of coverage? What’s the line 16 coding for Jan-Feb, March, Apr-May, and June-Dec?

1H 1H 1H 1H 1H 1E 1E 1E 1E 1E 1E 1E

Ignoring Line 15 for purposes of these examples

2A 2A 2D 2D 2D 2F 2F 2F 2F 2F 2F 2F

Page 65: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C -- Part II, Line 16

65

Line 16 Examples: Employee covered for part of year, terminates

Employer offers MV coverage to eligible employees and their spouses and children.

Employee is eligible and covered as an FTE January through May 12, when he terminates.

What’s the coding for Jan-Apr, May, June-Dec?

What if the employer offered COBRA due to the loss of coverage on account of employment termination? (more on this later)

1E 1E 1E 1E 1H 1H 1H 1H 1H 1H 1H 1H

Ignoring Line 15 for purposes of these examples

2C 2C 2C 2C 2B 2A 2A 2A 2A 2A 2A 2A

Page 66: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C -- Part II, Line 16

66

Line 16 Examples: Bargaining unit employee; coverage may be available through union

For all of 2016, the employer is bound by a bargaining agreement to make contributions to a union-affiliated plan (that offers affordable MV coverage, and treats family members as eligible) on the employee’s behalf. What’s the coding?

What if the employee is not enrolled in the union plan?

What if the employee is not even eligible under the union plan?

What if the union plan’s coverage is NOT MV or affordable? How would employer know?

1H

2E

Page 67: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C -- Part II, Line 16

67

Line 16 Examples: Waived Qualifying Offer

The employer makes a qualifying offer for all of 2016, but the employee waives the offer all year.

What goes on line 16, if anything? Is it optional?

1A

2G

Page 68: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C -- Part II, Line 16

68

Line 16 Examples: Non-FTE covered under self-funded plan

Employer offers self-insured coverage to hourly employees, including part-time employees. A part-time employee, who is not an FTE for even a single month during the year, enrolls in the self-insured MEC coverage for all or even part of the year.

What’s the coding for lines 14-16? Nothing goes on Lines 15 or 16

1G

Page 69: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part II, Line 16

Key Takeaways – Line 16

Use Code 2C when employee enrolls, except where 1G is on line 14 (never an FTE for a single month during the year) or for COBRA coverage following termination (more on COBRA later)

Where employee declines coverage, no requirement to put anything on line 16

Where employee declines coverage, and the coverage offer was within an affordability safe harbor, the employer may insert an affordability safe harbor code on line 16

Where the coverage offer was a “qualified offer” (1A on line 14) and the employee declines, the employer may use 2G on line 16 but is not required to

Line 16 (and line 15) are blank when self-insured coverage is provided to an individual who was not an FTE for even a single month during the year. Code 1G is placed on line 14, but the rest of Part II is left blank

69

Lockton clients: Ask your Account Team for our white paper on Lines 14-16 of the Form 1095-C, updated for 2016!

Page 70: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part III Ed Fensholt

Page 71: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part III

71

Part III is easy…

Only applies for self-insured coverage, MV or MEC

Check the box

Identify the covered person(s), listing employee (if applicable) first

Report coverage for anyone, not just employees, and not just full-time employees

Plug in their SSNs (or birthdates, for spouses and dependents, if no SSN)

Indicate months for which they had the self-insured coverage for at least a day…

If the primary insured shown on the form was not an FTE for at least a month during the reporting year, remember to insert code 1G on line 14

Page 72: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1095-C – Part III

Key Takeaways – Part III

ONLY completed to report self-insured coverage

Report self-insured coverage for anyone

Unlike in Part II, line 14, where the employer reports a coverage offer only if the offer would result in coverage for an entire month, in Part III the employer reports self-insured coverage for a month if it was in force for even a single day in the month

Insert code 1G on line 14 of Part II, if the primary insured reflected in Part III was not an FTE for even a single month during the reporting year. 1G should go in the “All 12 Months” box

72

Page 73: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1094-C Scott Behrens

Page 74: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1094-C

Remember…Form 1094-C serves four purposes:

Serves as a “transmittal form” to accompany the employer’s Forms 1095-C to the IRS

Proves compliance with Tier 1 of the employer mandate…the “aggregate obligation”

Identifies other members of the controlled group/affiliated service group

Claims certain relief (e.g., claim the “Free 30” for a Tier 1 violation, or the ability to skip a reporting step)

74

Page 75: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1094-C

Lines 1-17 are self-explanatory; basically, identifies the employer

Line 18: How many 1095-Cs accompany this 1094-C?

75

Page 76: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1094-C

Line 19:

Is this Form 1094-C the employer’s only 1094-C? If so, it is the “authoritative transmittal” and the employer should check the box

If this employer (this EIN) is submitting its 1095-Cs to the IRS in more than one batch, each batch must be accompanied by Form 1094-C. But the IRS only wants the rest of the Form completed just once. That one Form 1094-C is the “authoritative transmittal”

76

Page 77: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1094-C

Line 20: Will typically be the same as Line 18

Line 21: Was the employer a member of a controlled group or affiliated service group for at least part of the reporting year?

77

Page 78: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1094-C

Line 22:

An employer is NOT REQUIRED to check a box on line 22

An employer might qualify to check more than one box on line 22

78

Lockton clients: Ask your Account Team for our white paper on Line 22 of the Form 1094-C, updated for 2016!

Page 79: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1094-C

Line 22:

Check box “A” if the employer used code 1A (“qualifying offer”) on line 14 for one or more FTEs

A qualifying offer is MV coverage to employee, at least MEC to spouse and children; employee-only cost to the employee is within 9.66% of mainland poverty level ($95.64 for 2016)

Box “B” is reserved, for 2016

79

Page 80: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1094-C

Line 22:

Box “C” is rarely applicable; check box “C”only if:

Employer has a non-CY plan and qualifies for non-CY plan transition relief, and either

Employer had an average of 50-99 FTEs/FTEqs in 2014, so its relief lingers into 2016, through the end of the 2015-16 PY, or

Employer failed Tier 1 for some months in 2016 and is claiming the “Free 80” (instead of merely the “Free 30”) for the months in its 2015-16 PY that fall in 2016

Might also apply if Tier 2 penalties would exceed Tier 1, as Tier 2 penalties are capped at Tier 1

80

Page 81: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1094-C

Line 22:

Check box “D” only if the employer made an offer of MV and affordable coverage to at least 98% of its employees receiving a 1095-C – not just FTEs – and at least MEC to their children, for all months during the year that they were employees, except for when they were in an LNAP

What’s going on here? If coverage was offered that extensively, employer clearly met Tier 1, and gets to skip Part III, column (b), the month-by-month count of FTEs

81

Page 82: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1094-C

Part III…Tier 1 Compliance

Column (a)…was at least MEC offered to at least 95% of FTEs, and their biological and adopted children to age 26, for the entire month? Employers with non-CY plans and qualifying for non-

CY plan transition relief can check the “Yes” box for months in their 2015-16 PY falling in 2016 if they hit at least 70% for those months

Employer is deemed to have offered coverage to FTEs with respect to whom it claimed Code 2E (multiemployer plan relief) on line 16

DISREGARD employees in an LNAP…but they might still receive their own Form 1095-C if they had self-insured coverage for at least a day!

Take credit for an offer to an employee and children for the entire year if it was offered, even where employee enrolls in single coverage and only he/she is offered COBRA due to a reduction in hours

Most employers will check the “All 12 Months” box, under “Yes”

82

Page 83: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1094-C

Part III…Tier 1 Compliance

Column (b)…how many FTEs did the employer have, in its EIN?

We’re concerned with true FTEs, not the FTEqs we counted in determining whether the employer mandate applied

Again, DISREGARD employees in an LNAP

SKIP this column (b) in its entirety if the employer checked box “D” – “98% Offer Method,” on Line 22

83

Page 84: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1094-C

Part III…Tier 1 Compliance

Column (c)…how many total employees did the employer have, in its EIN?

INCLUDE EVERYONE

Full-timers

Part-timers

Seasonals

Employees in an LNAP

Make the count as of one of four dates each month (but use the same method for all 12 months)

First day of the month

Last day of the month

First day of first payroll period starting during the month

Last day of first payroll period starting during the month, but only if that day is in the same month that payroll period started

84

Page 85: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1094-C

Part III…Controlled Group/ Affiliated Service Group Disclosure

Column (d) is directly related to line 21 on the Form 1094-C; if the employer checked “Yes” on Line 21, indicate whether for all 12 months, or only some months, the employer was part of a controlled group or affiliated service group

Usually, if this applies, it will apply for all 12 months. But sometimes a single employer will make an acquisition during the year, or a two-company group will sell off one of its companies

If there are controlled group or affiliated service group members, identify them in Part IV

85

Page 86: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1094-C

Part III…Identifying Relief the Employer is Claiming via Box C on Line 22

Column (e)…rarely applicable

If the employer has non-CY plans and checked box “C” on Line 22, use code “A” or “B” here in column (e) to indicate what transition relief it’s claiming:

“A” - Claiming relief from the employer mandate under the “50-99 FTE/FTEq” rule for the months of the 2015-16 PY falling in 2016

“B” – Failed Tier 1 for one or more months in the 2015-16 PY falling in 2016, and claiming the “Free 80” for those months

86

Page 87: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1094-C

Part IV…Identifying Controlled Group/Affiliated Service Group Members

List controlled group or affiliated group members in descending order, starting with the member with the highest average monthly number of FTEs, and ending with the member with the lowest monthly average.

If there are more than 30 members, use the 30 with the highest average monthly number of full-time employees.

Common errors from last year:

Each entry must have a valid EIN. Use the name of the employer associated with that EIN, as registered with the IRS

DON’T include the reporting employer

87

Page 88: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

How to Report: Form 1094-C

Key Takeaways – Form 1094-C

Each reporting EIN must file its own 1094-C; no 1094-Cs are filed for controlled groups or affiliated service groups

Each reporting EIN must file a 1094-C with each batch (if more than one) of Forms 1095-C filed with the IRS

Where an EIN files more than one 1094-C, only one should be completed beyond Part I; that one 1094-C is the “authoritative transmittal”

Line 22 is widely misunderstood by employers and vendors

Employers are not required to check any boxes on line 22, but might qualify to check more than one

Box “A” will be more prevalent than you think

Box “C” will rarely be relevant

Many employers (those hiring predominantly only FTEs, and offering good coverage to them) will qualify to check box “D” (and thus skip column (b) in Part III, but don’t check the box

Part III, column (d) is related to line 21; column (e) is related to line 22, box “C”

88

Page 89: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Odds and Ends – COBRA Coverage Ed Fensholt

Page 90: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Odds and Ends – COBRA Coverage

90

1E 1E 1E 1E 1E 1H 1H 1H 1H 1H 1H 1H

105.10 105.10 105.10 105.10 105.10

Termination of employment

Report “no offer” on line 14 (1H) for full months after termination, and for month of termination if coverage ended mid-month

Use 2A on line 16 even if the former employee elected COBRA coverage and thus was enrolled in the employer’s plan…that is, DON’T use the Trump Code 2C

Example: Employee enrolled in family coverage under a CY minimum value plan, under which e’ee-only coverage cost to an employee is $105.10/mo; employee terminates on May 18, coverage ends May 31. Employee is offered COBRA coverage and accepts it

What if coverage had ended on May 18? 1H on line 14, 2B on line 16 for May

2C 2C 2C 2C 2C 2A 2A 2A 2A 2A 2A 2A

Page 91: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Odds and Ends – COBRA Coverage

91

1E 1E 1E 1E 1E 1E 1E 1E 1E 1E 1E 1E

311.17 105.10 105.10 105.10 105.10 105.10 311.17 311.17 311.17 311.17 311.17 311.17

Reduction in hours

Report the COBRA coverage offer on line 14 as any other coverage offer, and e’ee-only cost on line 15; use 2C on line 16 if the employee elected COBRA coverage

Example: Same employee enrolled in family coverage under a CY plan, suffers reduction in hours on May 18, loses eligibility on May 31. Is offered COBRA coverage and accepts it

What if the employee had declined family coverage but elected employee-only coverage effective Jan. 1, so that upon the qualifying event only the employee received the offer of COBRA coverage? What goes on line 14?

Instructions say use 1B for the COBRA offer, on line 14, for June-Dec…treat like a second coverage offer and report it differently, since only the employee received it

2C 2C 2C 2C 2C 2C 2C 2C 2C 2C 2C 2C

Page 92: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Odds and Ends – COBRA Coverage

Key Takeaways – Reporting COBRA Coverage

For Part II reporting, with respect to the employee affected by the qualifying event, the process differs depending on the qualifying event (termination vs. reduction in hours)

For Part III reporting, for years in which self-insured COBRA coverage being reported is supplied to an individual who was not an FTE for even single month, remember to add 1G on line 14

Treat retiree, severance and similar non-COBRA coverage, as applicable, like COBRA coverage, for reporting purposes

92

Page 93: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Odds and Ends – Employee Transfers Rory Akers

Page 94: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Odds and Ends – Employee Transfers

Transfers between divisions within the same EIN

All hours count

The EIN reports on coverage offers etc. in Part II and, for self-insured coverage, actual coverage in Part III, irrespective of division

94

Page 95: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Odds and Ends – Transfers

Transfers between EINs in a controlled group/affiliated service group

All hours count; no break in service

For whole months prior to the transfer, the transferor EIN “owns” the employee (will show coverage offers, etc. for those months; will show 1H/2A for full months after the transfer)

For whole months after the transfer, the transferee EIN “owns” the employee (will show coverage offers, etc. for those months; will show 1H/2A for full months prior to the transfer)

Who owns the employee for the month of the transfer?

The ALE member for whom the employee had the most hours of service for the month; if the hours of service are the same, the two ALE members can decide

95

Page 96: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Odds and Ends – Transfers

Key Takeaways – Transfers

ACA reporting applies on an EIN-by-EIN basis, so when an employee transfers between operating divisions or departments within the same EIN, that transfer is inconsequential for ACA reporting purposes

Where the transfer occurs between separate EINs in the same controlled group or affiliated service group:

The employee doesn’t have a break in service (because all hours of service in the controlled/affiliated service group are counted for FTE determinations)

The transferor “claims” the employee for reporting purposes for complete months prior to the transfer

The transferee “claims” the employee for reporting purposes for complete months after the transfer

For the month of the transfer, the employee “belongs” for ACA reporting purposes to the employer for whom he or she had the most hours of service during the month; if that number is the same, the two EINs decide the matter…

96

Page 97: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Odds and Ends – Mergers & Acquisitions Ed Fensholt

Page 98: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Odds and Ends – Mergers and Acquisitions

M&A activity raises many ACA questions, but the IRS has been largely silent about how to handle

Three main issues come up –

Determining ALE status

Determining full-time status for acquired employees

Reporting (related to the first two issues)

98

Page 99: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Odds and Ends – Mergers and Acquisitions

ALE Status:

Non-ALE Acquired by an ALE or ALE Group Mid-Year

Stock purchase: Safe play is to say that the newly acquired entity becomes an ALE immediately

Asset purchase: Acquired employees treated as new e’ees of buyer; treat as any other new hire

99

Page 100: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Odds and Ends – Mergers and Acquisitions

ALE Status:

ALE Acquired by a Non-ALE Mid-Year

Stock purchase: Same result for the non-ALE, arguably…immediately an ALE?

Asset purchase: Acquired employees treated as new e’ees of buyer; might affect the non-ALE’s ALE determination for following year; successor rules apply to make the non-ALE an ALE immediately?

100

Page 101: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Odds and Ends – Mergers and Acquisitions

ALE Status:

Two Non-ALEs Merge, Combined Company has 50+ FTE/FTEqs - Couple possibilities:

Treat like an entirely new ALE, esp. if new EIN; offers of coverage should go out by the first day of the fourth month following the transaction?

Treat one of the companies as the survivor (particularly where one EIN survives) and take the view that ALE status for next year will be determined based on this year’s FTE/FTEq count

101

Page 102: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Odds and Ends – Mergers and Acquisitions

ALE Status:

Spin-off from ALE group

Does the spun off employer maintain ALE status or is it looked at separately?

Probably best to play it conservatively; ideally the M&A lawyers will have thought through this

102

Page 103: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Odds and Ends – Mergers and Acquisitions

Determining FTE status for acquired employees

This is hard enough on its own, and combining separate systems adds additional complexity

Does transaction type matter?

Asset purchase: Can the buyer in an asset purchase treat newly acquired employees as they would new employees, or does some other rule apply? What if it is a “successor?”

Stock purchase: Different EINs within the same controlled group can have different MPs/APs/SPs, but what about employees who switch EINs or if they want to have a single system for administrative ease?

The general rule when employees transition from one set of rules to another is to not let the new rules negatively affect the employee. In short, proposed guidance says:

Employees in a SP: Maintain status under seller’s SP ends, then determine status in buyer’s SP using hours worked for both buyer and seller in seller’s MP

Employees in a MP: Employee is placed in buyer’s MP using hours worked for both buyer and seller

103

Page 104: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Odds and Ends – Mergers and Acquisitions

Reporting Implications of the M&A

Which entity reports what information will depend on the transaction type and the positions the parties take with respect to ALE and FTE status

The key is to have access to information (e.g., hours), especially if we represent the buyer

104

Page 105: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Odds and Ends – Mergers and Acquisitions

Reporting Implications of the M&A

In a stock deal, the newly acquired entity will have its own reporting responsibility (remember, reporting is EIN-by-EIN)

If it becomes an ALE on close, the acquired entity will still report for the entire year; currently there’s no Line 16 “excuse code” for “We weren’t an ALE for these months!”

If acquired company merges out of existence, it will still have a reporting obligation for the year, if it was an ALE for part of the year

Different controlled group information might need to be reported

105

Page 106: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Odds and Ends – Mergers and Acquisitions

Reporting Implications of the M&A

In an asset deal, both the buyer and seller might have a reporting obligation for the period of time they were employers

What happens if the seller ceases to exist? Is it buyer’s problem?

106

Page 107: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Odds and Ends – Mergers and Acquisitions

Key Takeaways – Mergers and Acquisitions

When an ALE client acquires a small, non-ALE mid-year in a stock purchase, the small non-ALE becomes an ALE upon the closing

Dealing with different MPs, APs and SPs between merged companies is complicated; as the client transitions everyone onto a consistent platform make sure employees get the better of two results: under the new periods, or under the periods they’re in at the time of the change

107

Page 108: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Cleaning Things Up Scott Behrens

Page 109: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Background

Employer is required to provide IRS with correct SSNs (or another TIN where SSN isn’t available) on the 1095-C

Failure can trigger penalties of up to $260 per form

Employers receive “Accepted with Errors” message…for self-funded employers issuing 1095-Cs with dependents in Part III, these messages don’t identify where the error occurred

Cleaning Things Up – Missing/Incorrect SSNs

109 109

Page 110: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

IRS won’t levy penalties until after it issues the employer Form 972CG, Notice of Proposed Civil Penalty

The common “Accepted with Errors” message is NOT a Form 972CG notice…so that message does NOT necessarily mean the employer will be penalized…

…Literally, the employer who receives the “Accepted with Errors” message doesn’t have to do or demonstrate anything (about getting to the bottom of the error message) until it receives Form 972CG…

…But the employer may want to take remedial steps earlier rather than later…

…It’s easier to solicit the SSN earlier rather than after receiving Form 972CG. If the employer waits to solicit the missing or correct SSN until after the 972CG shows up, the form and manner of the request is dictated by the IRS, and may be cumbersome

If the request is mailed, must include a return envelope

Special rules for electronic distribution

Must include a notice to the individual that failure to supply a correct SSN can result in $50 penalty to the individual

Cleaning Things Up – Missing/Incorrect SSNs

110

Page 111: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Employer Defenses to Incorrect/Missing SSNs

“Good Faith Effort”

Applies for 2015 reports only

Not clear if the employer loses that defense if it fails to try to get to the bottom of the problem after receiving the “Accepted with Errors” message

“Reasonable Cause”

Available for missing SSNs, and for incorrect SSNs, but the employer’s hurdles vary just a bit

Both situations require the employer to ask for the SSN up to 3 times, but at different times

Incorrect/missing SSNs for the employee are looked at separately from an incorrect/missing SSN for the spouse; ditto for other dependents

Cleaning Things Up – Missing/Incorrect SSNs

Page 112: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Incorrect SSNs – Establishing “Reasonable Cause” for the Error

Ask for SSN at initial enrollment (probably ok to have asked for it later, but prior to 1095-C submission)

Ask again by Dec. 31 following receipt of Form 972CG (Jan. 31 if the form comes in Dec.) if the employee is still employed

There’s the appearance of an anomaly here, because the Form 972CG will ask for a response within 45 days

Ask a third time by Dec. 31 of the year following the initial request if the employee is still employed

Employer has met its obligation – has a solid “reasonable cause” defense – once it makes the request at enrollment and the two requests following receipt of the 972CG (follow IRS procedures for the post-972CG requests!)

What if the employer obtains the correct SSN from the employee or dependent?

Does not appear to be an obligation to re-file…rather, use the correct SSN going forward

However, if the employer obtains the correct SSN before receiving a 972CG, voluntarily re-filing with the correct information makes it less likely the employer will receive a Form 972CG (i.e., stay off the IRS’s radar screen)

Cleaning Things Up – Missing/Incorrect SSNs

112

Page 113: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Missing SSNs – Establishing “Reasonable Cause” for the Error

Ask for SSN at initial enrollment or, if later, first OE period after September 17, 2015

If that date was missed, but the person was enrolled on July 29, 2016, this “first request” requirement is waived

Second requests should be made within 75 days of the initial request; this means someone/something should be evaluating the enrollment forms, alerting plan sponsor when no SSN is provided

For 2015 filings, where you’re already past the 75-day deadline, you get a “reasonable” amount of time—making the second request by Oct. 12, 2016 (see our Alert from late Sept.) is deemed reasonable; no need to solicit the SSN if employee is no longer employed

Ask a third time by Dec. 31 of the year following the initial request, if employee is still employed

Employer has met its obligation – has a solid “reasonable cause” defense – in response to Form 972CG, once it makes the three requests

What if the employer obtains the missing SSN?

Does not appear to be an obligation to re-file…rather, use the correct SSN going forward

However, if the employer obtains the missing SSN before receiving a 972CG, voluntarily re-filing with the correct information makes it less likely the employer will receive a Form 972CG (i.e., stay off the IRS’s radar screen)

Cleaning Things Up – Missing/Incorrect SSNs

113

Page 114: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

If the employer has received an “Accepted with Errors” message, and it’s not crazily burdensome to do so, try to run down the SSN before Form 972CG shows up (the employer can avoid having to comply with the IRS’s procedures)

If the Form 972CG shows up, and the problem is an incorrect SSN, make the additional requests as described on the previous slides, if the employee is still employed; comply with IRS procedures

For missing SSNs related to 2015 filings, make the effort before Oct. 12, 2016 (see our Alert from late Sept.) and – if the employer doesn’t receive the SSN – again at the following open enrollment, if the employee is still enrolled; if the Form 972CG has shown up, comply with IRS procedures

If the employer receives what it believes to be the missing or correct SSN, even before Form 972CG shows up, consider re-filing Form 1095-C voluntarily

The employer should keep records of all requests

If the problem is a missing SSN for a spouse or dependent, for Part III purposes, during and after the three-step process the employer can use spouse/dependent date of birth if the SSN on file remains missing

DOB does not appear to work for employees, in Part I of Form 1095-C

Cleaning Things Up – Missing/Incorrect SSNs: Recommendations

114

Page 115: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Questions

Page 116: Getting Ready for 2016 ACA Reporting - Lockton€¦ · ACA Reporting Snapshot – A Quick Refresher ACA reporting serves two functions (once you understand this, the reporting Forms

Our Mission

To be the worldwide value and service leader in insurance brokerage, employee benefits, and risk management

Our Goal

To be the best place to do business and to work

www.lockton.com

© 2015 Lockton, Inc. All rights reserved.

Images © 2015 Thinkstock. All rights reserved.