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The Affordable Care Act: Running the ACA Reporting Maze National Association of State Comptrollers March 12, 2015.

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Presentation on theme: "The Affordable Care Act: Running the ACA Reporting Maze National Association of State Comptrollers March 12, 2015."— Presentation transcript:

1 The Affordable Care Act: Running the ACA Reporting Maze National Association of State Comptrollers March 12, 2015

2 Russell Chapman Special Counsel Littler Mendelson, P.C. Dallas Office Prepared by: 2

3 Agenda ACA: Where are we now? ACA Reporting Requirements: An Overview Reporting Requirements: Comments from Missouri and Massachusetts Discussion: Specific Issues Q&A 3

4 THE AFFORDABLE CARE ACT: WHERE ARE WE NOW? 4

5 Affordable Care Act The Timeline – as of Now * 2015 * * Small Business Tax Credits Funding for Small Business Wellness Programs Summaries of Benefits and Coverages FSA LimitsNo Annual Limits Play or Pay Reporting Cadillac Tax Adult Dependent Coverage Medical Loss Ratio Rebates Medicare Tax Increase Reinsurance Fee No Lifetime Limits No Part D Deduction 90-Day Max Waiting Period Restrictions on Annual Limits PCORI FeeIndividual Mandate No Rescissions Except Fraud Insurance Exchanges Individual Subsidies No Pre-Existing Conditions for Children Community Rating No OTC Reimbursement from FSA, HSA Guaranteed Issue Enhanced Wellness incentive/Penalty Auto-Enrollment for Large Plans (delayed) External Review Procedures Nondiscrimination in Insured Plans (delayed) Full Coverage of Preventive Benefits Out-of-Pocket Limits 5

6 Pay or Play: The Basics No Healthcare Coverage Offered Healthcare Coverage Offered That is Not Affordable or Does Not Provide Minimum Value “A” PENALTY = $2,000 * (Total Number of Full-Time Employees – 30 Full Time Employees (80 in 2015) *Penalty imposed if large employer does not offer at least 95% (70% in 2015) of full-time employees (and their children) an opportunity to enroll in minimum essential coverage and at least one of employer’s full-time employees received federal assistance to purchase insurance via an Exchange. “B” PENALTY = The lesser of: (a)$3,000 for each full-time employee receiving federal assistance to purchase health insurance through an Exchange or (b)$2,000 * (Total Number of Full-Time Employees – 30* Full-Time Employees under the “B” Penalty: (80 in 2015) *Penalty imposed if the coverage offered is either (i) unaffordable because the employee’s required contribution is more than 9.5% of their W-2 wages for self-only coverage (or other safe harbor); or (ii) the actuarial value of the employer’s plan is less than 60%, meaning that the plan pays for less than 60% of the covered healthcare expenses. 6

7 ACA REPORTING REQUIREMENTS: AN OVERVIEW 7

8 ACA Reporting Requirements New tax reporting requirements are the foundation of IRS enforcement of various tax provisions of the ACA –Individual mandate (IRC section 5000A) –Employer mandate (IRC section 4980H) –Premium tax credits (“PTCs”) (IRC section 36B) Reporting requirements largely focus on different ACA provisions –IRC section 6055 – Individual mandate (coverage) –IRC section 6056 – Employer mandate (offer of coverage) 8

9 Overview Final rules on reporting were issued March 5, 2014 Reporting is effective 2016, for data accumulated in 2015 Final Forms and Instructions for 2015 reporting year issued Feb. 4,

10 Reporting Requirements: Section 6055 MEC Reporting Purpose: To enforce individual mandate Applies to: Health insurance issuers and self- insured employers who provide “minimum essential coverage”* Forms: –1094-B Transmittal –1095-B Health Coverage *Self-insured ALEs combine 6055/6056 reporting on Form 1095-C 10

11 Section 6055 (Forms 1094-B/1095-B) Effective Date: –Beginning for 2015 calendar year –Must furnish a copy of 1095-B to the person identified as the responsible individual by January 31 of the year following the calendar year the coverage is provided –Must file Form 1094-B Transmittal and 1095-B Reports with IRS by February 28 (March 31 if filed electronically) of the year following the calendar year of coverage –Dates are the same for calendar year and non- calendar year plans 11

12 6055 Reporting Provides employees and IRS with information regarding MEC (minimal essential coverage) and whether the INDIVIDUAL satisfies the individual mandate Applies to: – Insurers – Self-funded medical plans (regardless of the number of employees) 12

13 6055 Reporting Data to ReportData Not to Report Name, address and EIN of reporting entity Name, address and SSN of “responsible individual” If the “responsible individual” is not enrolled in the plan, no need to report SSN Name and SSN of each covered individual Months the individual was coveredDon’t have to report exact dates, just months For insured plans, the EIN of employer sponsoring the plan No need to add portion of premiums paid by employer 13

14 6055 Exceptions Employers participating in a fully insured arrangement (insurer is responsible for issuing) HSAs, HRAs Coverage in connection with government programs Wellness plans if part of MEC 14

15 6055 Reporting Each entity in a controlled group must report separately, BUT One member can report for the whole group (must identify each employer separately) Third party may report, but liability is with employer MEWA – each participating employer must report their own data Funds – likely the same, however, funds may take on obligation 15

16 6055 Reporting Must file electronically if reporting entity has at least 250 individuals File on Form B/1095-B Draft Forms and instructions are available now Individual statements to participants (no requirement to provide statements to spouses, dependents) Electronic delivery permitted BUT must have affirmative consent from participant; otherwise, paper copy via 1st class mail (Q: hand-delivery?) Permit truncated SSN 16

17 6055 – Penalties Very generally, $100/return with a maximum of $1.5 million Waiver of penalties available if failure is due to reasonable cause Penalties reduced if corrected by 8/1 17

18 Section 6056 – Employer Reporting Purpose: To enforce employer mandate Applies to: Applicable large employers (ALE)* Forms: –1094-C Transmittal –1095-C Employer Provided Health Coverage Offer and Coverage * Self-insured ALEs combine 6055/6056 reporting on Form 1095-C 18

19 Section 6056 Employer Reporting (Forms 1094-C/1095-C) ALE must file one Form 1095-C for each of its full-time employees Self-insured ALEs also complete Part III for any individual (including any full-time employee, non- full-time employee, employee family members, and others) who enrolled in the self-insured health plan ALE must give copy of Form 1095-C to each applicable employee (alternative method may apply) 19

20 Section 6056 (Forms 1094-C/1095-C) Effective Date: –Beginning for 2015 calendar year –Must furnish a copy of 1095-C to employee by January 31 of the year following the calendar year the coverage is provided –Must file Form 1094-C Transmittal and 1095-B Reports with IRS by February 28 (March 31 if filed electronically) of the year following the calendar year of coverage 20

21 6056 Reporting “ALE Reporting” –Applicable large employer On average employs 50 or more full time employees 2015 – 100 or more full time employees Reporting obligation still applies even if “pay or play” rules do not – Applies to each ALE member – even though ALE determination is made on the aggregate Dual Purpose: – Employer mandate – Subsidy eligibility 21

22 6056 Reporting Report: –Name, address, employer EIN, –Name telephone number of the ALE contact person –Calendar year for which information is reported –Certification as to offer- by month Report: – Each FT employee’s share of the lowest cost premium for self- only coverage by calendar month – Number of FT employees for each month during the year – SSN for each FT employee offered coverage 22

23 6056 Reporting Alternative Filing Methods: –“Qualifying Offers” – offer of MEC for all months of the year, MV and 9.5% of federal poverty line to FT employee, spouse and dependents –98% Offers – (Qualifying Offer to all employees, regardless of F/T status) –Between FT employees (2015 only) –100 or more FT employees (2015 only) –2015 Transition Relief: Qualifying Offers made to at least 95% of FT employees 23

24 Combined Reporting (6055/6056) Self-funded ALEs can combine Use Form 1095-C only and complete both section 6055/6056 Non-employees covered under self-insured arrangement: Form 1094-B/1095B reporting required 24

25 Governmental Entities Governmental Unit, Agency or Instrumentality –Includes Government of the US, any State, political subdivision, and includes an Agency or Instrumentality. Entity may use reasonable good faith interpretation of existing rules to determine its status for Federal tax purposes. Aggregated ALE Group Membership –Governmental entities may use reasonable good faith interpretation of Code Sec. 414 rules pending further guidance. 25

26 Governmental Entities Designated Governmental Entity (DGE) –Unlike private employers, Governmental entities that re ALE Members may delegate reporting responsibilities to a DGE for some or all of its employees for reporting –One authoritative transmittal filed by the DGE –DGE must agree that it is the responsible reporting party and is responsible for any penalties –ALE member remains responsible for 4980H 26

27 TPAs and Multiemployer Plans ALE Member may contract with TPA or Multiemployer Plan to provide reporting on behalf of the entity ALE Member remains responsible for reporting penalties Authoritative transmittal requirement still applies 27

28 Approaches to ACA Reporting Requirements Stacy Neal Director of Accounting, Missouri Kathy Sheppard Deputy Comptroller, Massachusetts 28

29 Milestone 1 70% Threshold TY 2015 Report JAN 2014 JAN 2015 JUNAPRJUL OCT JAN 2016 FEB 2016 Overview of the MA ACA Implementation Meeting Monthly Setting Goals Defining Terms Final Review of all earnings codes for proper use Meeting Quarterly Review of Look Back HR/CMS Upgrade to PS 9.2 Tax Forms & ReportingTesting Department Exception reporting Live: Data Review & Monthly ee FT Summary 1094 / 1095 Tax Form Deadline 2016 SEPT 2013 OCT ACA LIVE 95% Threshold Timeline Milestones Ongoing : Payroll and HR Department/Agency Staff and Employee Communications We Are Here 29

30 ACA – Who Is Taking The Lead? Overall Lead Communication Lead Reporting Lead Insurance Coverage Lead Technical Lead Human Resources Office of the Comptroller 2142 Group Insurance 2114 Administration Division of Finance 2111 Information Technology 14 Payroll 12 Employees Retirement System 1 Joint 1122 Not Determined Yet other 11 30

31 Questions? 31

32 The Affordable Care Act: Running the ACA Reporting Maze March 12, 2015 Russell Chapman Special Counsel Littler Mendelson, P.C. Dallas Office


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