2 New Reporting Rules for Obamacare in 2015
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The document outlines IRS reporting obligations under sections 6055 and 6056 for employers regarding minimum essential coverage (MEC) and applicable large employers (ALE) starting in early 2016. It details the types of entities required to report, reporting mechanisms, penalties for non-compliance, and deadlines for filing with the IRS and providing statements to employees. Additional information is provided on the forms used for reporting, the responsibilities of insurers, and resources for compliance.
2 New Reporting Rules for Obamacare in 2015
- 2. Today’s Presenters Kara Badyna Compliance Consultant Arthur J. Gallagher & Co. kara_badyna@ajg.com Jim Littlefield Solutions Engineer PeopleMatter jim.littlefield@peoplematter.com
- 3. Agenda ● Background ● Who is subject to a Section 6055 and/or 6056 reporting obligation? ● IRS Forms: ○ 1094-B and 1095-B ○ 1094-C and 1095-C ○ How to report minimum essential coverage, offers of coverage, full- time employee status and other essential elements of these forms ● When the forms must be filed with the IRS and sent to employees and administrative details for reporting in 2016. ● Action steps
- 4. PPACA created two significant IRS reporting obligations that will commence in early 2016: Background 6055 Internal Revenue Code Section 6055 requires insurers and sponsors of self-insured plans to prepare annual reports regarding “minimum essential coverage” (“MEC”). 6056 Internal Revenue Code Section 6056 requires “applicable large employer” members (“ALE” members) to prepare annual reports regarding the coverage offered to their employees.
- 5. Who is required to report?
- 6. Employers (of all sizes) who sponsor self-insured health plans that provide minimum essential coverage to any individual during the calendar year are required to report under Section 6055. Section 6055 (“MEC”) What if we sponsor a fully-insured plan? Your health insurance carrier will be responsible for Section 6055 reporting for that plan.
- 7. ● Eligible employer-sponsored plans ○ Both fully-insured and self-insured, regardless of employer size ○ This does not include excepted benefits ○ This does include even “low cost” plans or plans that do not provide minimum value ○ Reporting not required for coverage that supplements MEC ● Government-sponsored programs ● Insured plans offered in the individual market or group market What is MEC?
- 8. ● Applicable large employer members (both fully-insured and self- insured) must report information to the IRS about the health coverage, if any, that they offered to full-time employees. ● Such ALE members must also report information about whether the coverage was affordable and whether coverage was offered to dependents. ● Finally, this reporting is the mechanism in place for an employer to claim an exemption or delay in penalty exposure due to various forms of transitional relief. Section 6056 (“ALE”)
- 9. ● Applicable large employers are those with 50 or more full-time (FT) and full-time equivalent (FTE) employees ● Status as applicable large employer is based on the entire controlled group, but each ALE member reports separately for its employees Who is an ALE member? Note All ALE members remain subject to 6056 reporting for the 2015 calendar year, even if transitional relief delays their penalty exposure until later
- 10. ● Penalty for failing to offer coverage – 4980H(a) ○ An employer must offer “minimum essential coverage” to 95% (70% for 2015) of its full-time employees and their dependent children up to age 26 or risk a penalty equal to (i) $2,000 (indexed), multiplied by (ii) the number of full- time employees minus 30 (80 for 2015). ○ There is no requirement that the coverage be affordable or provide “minimum value” to avoid this penalty. ○ But… ESR Penalties: A Refresher
- 11. ● …there is a separate penalty for failing to offer coverage which is both affordable and provides minimum value – Section 4980H(b) ○ If the employer fails to offer coverage that is both affordable and provides minimum value to a full-time employee, it can risk a penalty equal to $3,000 (indexed) per year for that employee. ○ Penalty can only be triggered if a full-time employee goes to the marketplace and receives premium tax assistance. ESR Penalties: A Refresher
- 13. ● Used by plan sponsors of self-insured employer coverage if the employer is not an applicable large employer member. ○ In other words, this form is used by small, self-insured employers. ○ But note: applicable large employers may also be required to use these forms for covered non- employees (like COBRA qualified beneficiaries, retirees, and partners). ● Also used by insurance carriers for fully-insured coverage. Form 1095-B and 1094-B
- 14. 1095-B: Parts I, II and III
- 15. 1095-B: Part IV
- 16. 1094-B
- 17. ● Used by applicable large employer members, regardless of whether they are fully-insured or self- insured. ○ Employers that are fully-insured may leave part of the Form 1095-C blank (the portion dealing with covered individuals). ● Keep in mind the rules for who is an applicable large employer member. ○ Even if transitional relief delays potential penalties, the reporting obligation will apply for 2015. Form 1095-C and 1094-C
- 18. 1095-C: Parts I and II
- 20. 1094-C: Part I
- 21. 1094-C: Part II
- 22. ● Certifications of eligibility to provide simpler employee statements (A & B), eligibility for certain transition relief (C), or eligibility to avoid specifying the number of full-time employees (D): ○ A. Qualifying Offer Method ○ B. 2015 Qualifying Offer Method Transition Relief ○ C. Section 4980H Transition Relief ○ D. 98% Offer Method 1094-C: Parts II, Line 22
- 23. 1094-C: Part III
- 24. 1094-C: Parts IV
- 25. Type of Reporting Who Reports Transmittal Form 6055 Insurer 1094-B 1095-B 6056 Large Employer with Fully Insured Plan 1094-C 1095-C 6055 Small Employer with Self- Insured Plan 1094-B 1095-B 6055 Multiemployer Plans 1094-B 1095-B 6055/6056 Large Employer with Self- Insured Plan reporting employees 1094-C 1095-C 6055 Large Employer with Self- Insured Plan reporting non- employees 1094-B or 1094-C 1095-B or 1095-C Who reports what (revisited)
- 27. ● Mailing the forms to the IRS is permitted for employers with fewer than 250 Forms 1095-B or 1095-C in a calendar year. ● Can I submit the reports electronically? ○ IRS encourages all employers to file their forms electronically. ○ Employers that file at least 250 Forms 1095-B or 1095-C in a calendar year are required to file electronically. Other employers may file electronically, but are not required to do so. Method of IRS Reporting
- 28. ● How should I send out the statements? ○ Mail ○ Electronically (if employee has consented to electronic) ○ Posting to a website (an employer must separately notify the employee) ○ Employee can also request a paper copy ● Can we send out the employee statements with the W-2 forms? ○ Yes. Employers may include an employee’s statement with his or her Form W-2 mailing. Statements to Employees
- 29. Report/Disclosure Due date Section 6055 statement to employees 1/31 of each year (2/1/16) Section 6055 report to IRS 2/28 (or 3/31 if filed electronically*) Section 6056 statement to employees 1/31 of each year (2/1/16) Section 6056 report to IRS 2/28 (or 3/31 if filed electronically*) * Must file electronically if provide 250 or more “returns” Separate Return & Statement Deadlines
- 30. ● Failure to timely file complete and accurate returns to the IRS, or failure to timely furnish a correct statement to responsible individuals: ○ $100 per return with a maximum of $1,500,000 for a calendar year ○ Penalties may be reduced if corrective action is taken within 30 days and may even be waived if the failure to file timely or accurately is due to reasonable cause and not due to willful neglect. ● Penalty relief for reports filed in 2016 as long as “good faith” efforts to comply are made Penalties
- 31. Action Steps Collect data during 2015 regarding Who is covered by MEC Who are full-time employees Who was offered coverage Was coverage affordable Consider vendor options for data aggregation and reporting
- 32. Action Steps Request Social Security numbers for covered dependents Button-up compliance with employer shared responsibility rules Determine other controlled group and affiliated service group members
- 34. The intent of this presentation is to provide you with general information regarding the status of, and/or potential concerns related to, your current employee benefits issue. It does not necessarily fully address all your specific issues. It should not be construed as, nor is it intended to provide, legal or tax advice. Questions regarding specific issues should be addressed by the your organization's general counsel, tax advisor, or an attorney who specializes in this practice area. Thank you!
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- 38. Q&A Kara Badyna Compliance Consultant Arthur J. Gallagher & Co. kara_badyna@ajg.com Jim Littlefield Solutions Engineer PeopleMatter jim.littlefield@peoplematter.com
- 39. Program ID 238272 Credit hours awarded 1 Specified credit hours HR (General) HRCI