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Affordable Care Act FAQ

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Employer Mandate & Plan Requirements

What is the employer mandate?

All applicable large employers (ALEs) must offer health coverage to substantially all of their full-time employees and dependents or pay a penalty if any full-time employee receives a government subsidy for health coverage through an insurance exchange. Coverage offered must be affordable and meet minimum value requirements.

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What must be included in employee health plans for them to be ACA compliant?

Employee health plans must include the following (not all-inclusive):

  • Free preventive care
  • Expanded preventive care services for women
  • No annual limits for essential health benefits
  • Waiting periods cannot exceed 90 days
  • No exclusion for pre-existing conditions
  • Coverage for clinical trial participants
  • Limits on cost sharing

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Eligible Employers

Who is required to complete ACA reporting?

All applicable large employers (ALEs) and organizations with self-funded health care plans must complete ACA reporting in 2016.

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Applicable Large Employers (ALEs)

How do I know if my organization is an applicable large employer?

The IRS defines an applicable large employer as any organization with at least 50 full-time or full-time equivalent employees for the previous calendar year. For help determining whether your organization qualifies and must report, visit this IRS webpage or take a look at our helpful infographic.

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What is a full-time equivalent employee?

According to the IRS website, a full-time equivalent employee is determined through the following steps:

  1. Combine the number of hours of service of all non-full-time employees for the month, but do not include more than 120 hours of service per employee
  2. Divide the total by 120

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Reporting Requirements and Deadlines

What are the reporting deadlines?

Employee statement forms 1095-C or 1094-C must be provided to employees annually by January 31st. IRS returns must be filed by February 28th if mailed in or March 31st if filed electronically.

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What are the reporting requirements?

The following reporting is required for ALEs and sponsors of self-insured plans effective 1/1/2015:

  • Compliance with IRC Sections 6055 and 6056
  • Reporting for calendar year regardless of plan year
  • Applicable Large Employers (ALEs) must file Forms 1094-C and 1095-C
  • Sponsors of self-insured plans of non-ALEs must file Forms 1094-B and 1095-B (Insurers also file these forms)
  • Employee statement (1095-C or 1095-B) must be provided to employees by January 31st
  • IRS returns must be filed by February 28th (March 31st if filed electronically)

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What are the required forms?

  • Applicable Large Employers (ALEs) must file Forms 1094-C and 1095-C
  • Sponsors of self-insured plans of non-ALEs must file Forms 1094-B and 1095-C (Insurers also file these forms)
  • Employee statement (1095-C or 1094-B) must be provided to employees

Current IRS forms 1094-B, 1095-B, 1094-C and 1095-C are now available on the IRS website, along with instructions for the forms.

Still have questions? Take a look at our reporting requirements flowchart.

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What information must be reported?

For Applicable Large Employers:

  • Who was a full-time (or full-time equivalent) employee for each month
  • Total employee counts for each month
  • Name, address and other identifying information for both the employer and each employee
  • What health care coverage was offered for each month, if any
  • The employee share of the monthly premium for lowest-cost self-only minimum value coverage
  • Which months each employee was in enrolled in your coverage
  • Which months your organization met affordability safe harbor requirements (see the IRS website for more information, specifically question 19)
  • If you offer a self-insured plan, information about the covered individuals in each plan

For non-ALE self-insured plan sponsors:

  • Name, address and other identifying information for both the employer and each employee
  • Name, SSN and months of coverage for each covered individual

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What employee notices are required?

Employers must issue the following notices to employees as applicable:

  • Statement of grandfathered status
  • Notice of patient protections and selection of providers (annually)
  • Summary of Benefits and Coverage (SBC) – annually and to new enrollees
  • Notice of marketplace exchange (2013) and to new hires
  • 60-day notice of plan changes outside of regular open enrollment periods
  • Notice of rescission

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Penalties

What are the penalties for noncompliance?

Penalties may be assessed for noncompliance in several areas:

Compliance Area Penalty
For Applicable Large Employers (ALEs) not providing health care coverage for employees (triggered by any employee who receives a premium tax credit through the exchange) $2,000 per employee per year (calculated on a monthly basis).Take the number of full-time employees (minus 80 in 2015; minus 30 in subsequent years) times $166.67 for each month.
For ALEs who provide coverage but it is not affordable or does not meet minimum value requirements (triggered by the employee who receives a premium tax credit through the exchange) $3,000 per employee per year who obtains coverage through the exchange (calculated on an monthly basis)
For any employer not complying with general ACA requirements $100 per employee per day
For any employer not complying with information reporting requirements $250 per employee per day; capped at $3 million
Double for not reporting to IRS and to employees

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Additional Questions

If my organization has a self-funded plan but less than 50 full-time employees, do we still need to file information returns?

Yes. All organizations with self-funded health care plans are required to complete ACA reporting. Refer to our flowchart to determine which form(s) you need to complete.

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Do all organizations need to file electronically?

Organizations are required to file electronically if they have more than 250 returns. They will need to use Affordable Care Act Information Returns (AIR) Program to file. For more information, visit the IRS website here.

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Which coverage code should I use on form 1095-C?

Use this table to determine the proper coverage code to use for line 14 of form 1095-C:

Code Explanation
1A Qualifying offer: MEC providing MV offered to FT employee with employee contribution for self-only coverage =< 9.5% of single federal poverty line & at least MEC offered to spouse and dependents
1B MEC providing MV offered to employee only
1C MEC providing MV offered to employee and at least MEC offered to dependent(s) (not spouse)
1D MEC providing MV offered employee and at least MEC offered to spouse (not dependent(s))
1E MEC providing MV offered to employee and at least MEC offered to dependent(s) and spouse
1F MEC NOT providing MV offered to employee, or employee and spouse or dependent(s) or employee, spouse and dependent(s)
1G Offer of coverage to employee who was not a FT employee for any month of the calendar year and who enrolled in self-insured coverage for one or more months of the calendar year
1H No offer of coverage (employee not offered any health coverage or employee offered coverage that is not MEC)
1I Reserved
1J MEC providing MV to employee, and conditional offer of MEC to spouse (but not dependents)
1K MEC providing MV to employee, and dependents, and conditional offer to MEC to spouse.
  MEC = Minimum Essential Coverage
MV = Minimum Value

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Which safe harbor code should I use on form 1095-C?

Use this table to determine the proper safe harbor code to use for line 16 of form 1095-C:

Code Explanation
2A Employee not employed during the month
2B Employee not a full-time employee
2C Employee enrolled in coverage offered
2D Employee in a limited non-assessment period
2E Multiemployer interim rule relief
2F Section 4980H affordability Form W-2 safe harbor
2G Section 4980H affordability federal poverty line safe harbor
2H Section 4980H affordability rate of pay safe harbor
2I Reserved

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Disclaimer

Information in this document has been obtained by Allen, Gibbs & Houlik, L.C. from sources believed to be reliable. However, AGH does not guarantee the accuracy nor completeness of any information. This communication does not and is not intended to provide legal, accounting or other professional advice or opinions on specific facts or matters, and accordingly, AGH assumes no liability whatsoever in connection with its use. Nothing in this communication can be used to avoid penalties that may be imposed by a governmental taxing authority or agency.

For more information about the Affordable Care Act, contact Carrie Cox or Sonia Phillips using their information below.

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Carrie Cox, PHR, SHRM-CP
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Carrie Cox, PHR, SHRM-CP

Senior Organizational Development Consultant
Organizational Development & Family Business Services

Carrie has experience in a variety of human resource functions, including labor laws, compensation structures, employee classification, benefits administration, performance management, and human resource best practices. She has served clients in a number of industries including manufacturing, construction, banking, and not-for-profits. Carrie is a member of the national and local chapters of the Society of Human Resource Professionals (SHRM) and serves on the Wichita chapter board of directors. She is a certified practitioner for the Myers-Briggs Type Indicator® and the Hay Group’s Emotional and Social Competency Inventory. Her additional certifications include Professional in Human Resources (PHR) from the Human Resource Certification Institute and SHRM-CP designated by the Society for Human Resource Management.

 

 

 

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Sonia Phillips
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Sonia Phillips

Payroll Senior Manager
Outsourcing Services

Sonia and her team handle payroll processing, reporting and tax filings for multi-state and multi-site companies. An AGH employee since 1991, Sonia has expertise in both technology and employee benefits consulting as well as payroll. She has helped develop a variety of operational, management and executive information systems projects within and outside the employee benefits industry. Before joining the outsourcing services group, Sonia managed the technology infrastructure and plan processing systems for AGH’s employee benefits services division. She worked with internal and external clients to accurately assess their information system needs and managed the projects designed to satisfy these needs, as well as any necessary integration.