1. Association of Government Accountants Tax Seminar December 4, 2015
2015 Affordable Care Act Provisions for Individuals, Families, and Business
Richard G. Furlong, Jr. Senior Stakeholder Liaison
Small Business/Self-Employed Division
Association of Government Accountants Tax Seminar
December 4, 2015

2. The information contained in this presentation is current as of November For the latest information about tax provisions of the Affordable Care Act, visit IRS.gov/aca.

3. Agenda Individual Shared Responsibility Provisions Premium Tax Credit
Employer Shared Responsibility Provisions
Determining Applicable Large Employer Status (ALE)
Defining Full-Time Employees
Shared Responsibility Payment (§4980H)
2015 Transition Relief
Information Reporting
Employer Reporting (§6056)
Insurance Issuer (§6055)
Summary
Resources

4. Individual Shared Responsibility

5. Reporting Coverage
Check box and leave entry space blank if everyone on the return had coverage for the full year

6. Minimum Essential Coverage
MEC coverage is:
Offered by an employer, COBRA and retiree coverage
Purchased through private insurance or Health Insurance Marketplace
Provided by government-sponsored programs, including veteran’s coverage, most Medicare and Medicaid

7. Information Statements
Marketplace - Form 1095-A, - Health Insurance Marketplace Statement
Insurers - Form 1095-B, Health Coverage
Large Employers – Form 1095-C, Employer-Provided Health Insurance Coverage and Offer

8. Form 1095-A

9. Form 1095-B

10. Form 1095-C

11. Form 8965 Health Coverage Exemptions
Submit Form 8965 with federal tax return to claim coverage exemptions granted by either the Health Insurance Marketplace or IRS

12. Coverage Exemptions Coverage Exemptions only available at filing
Coverage Exemptions only available through the Marketplace
Coverage Exemptions from Marketplace or IRS

13. Making an Individual Shared Responsibility Payment
Taxpayers calculate SRP if everyone on the return does not have:
MEC for every month of the year, or
Exemption for months without MEC

14. How is the 2015 Payment Calculated?
For the year, based on the greater of the calculated:
percentage of income (2%) or
flat dollar amount ($325 per adult)
Limited to maximum of $975 per household
Prorated for months without coverage/exemption
Cannot exceed the national average premium for bronze level health plans

15. Return Preparer Interview Best Practice
Use Form 1095-A, B or C to
verify coverage months and
who is covered
Determine eligibility for exemption
Marketplace ECN
Income below return filing threshold or
IRS coverage exemptions

16. Common Errors Eligible for coverage exemption but did not claim
Income below filing threshold
Not lawfully present
Coverage gaps
Miscalculated SRP
SRP on dependent returns

17. 2015: What You Need to Know Forms 1095-A, B and C
Apply for Marketplace exemptions early
ISRP amounts increase
2016 Marketplace enrollment
Nov 1, 2015 to January 31, 2016
Special Enrollment Periods

18. Basics of the PTC Refundable tax credit Must buy Marketplace coverage
Must file Form 8962 to claim the PTC and reconcile any advance payments
So, what is the premium tax credit?
To be eligible, an individual or a family member must have enrolled in insurance through a federal or state Health Insurance marketplace. It helps eligible individuals and families with the cost of purchasing health insurance from the Marketplace. Their household income (I’ll talk more about household income later) must be between 100 and 400 percent of the federal poverty line for the family size, but there are exceptions for certain taxpayers under 100 percent . Essentially, the credit reduces a person’s out-of-pocket costs incurred for health insurance premiums – that’s why we call it the “premium” tax credit.
The credit amount is based on a sliding scale, with bigger credit amounts available to those with lower incomes. Other factors that affect the credit amount include which family members enroll, whether any enrolled family members are eligible for other health coverage, the cost of available insurance coverage, the premiums for the plan enrolled in, family size, and where they live.
An eligible individual purchasing insurance through the Marketplace may have advance payments of the estimated credit paid directly to the insurance company, or pay all the premiums and get the full benefit of the credit when filing the tax return .
Advance payments of the estimated amount of the credit are made directly by the Marketplace to the insurer during the year. The advance payments of the premium tax credit lower the cost of health insurance premiums the individual must pay each month. Eligible individuals may choose to have the full amount, or a lesser amount, of the advance credit payments provided directly to the insurance company. Getting advance payments of the anticipated credit is done through an application process at the Marketplace.
The amount of the advance credit payment is based on the person’s estimated household income for the upcoming year, along with other factors such as projected family size, address of the taxpayer and who in the family is eligible for other non-Marketplace coverage. Advance credit payments are likely to differ from the credit amount, which is based on actual household information (household income, family size, etc.) when the tax return is filed. For this reason, the advance credit payment amount must be reconciled against the actual credit amount on the tax return for the year. It’s imperative that an individual report any change in circumstances to the Marketplace so that the advance payments of the premium tax credit can be adjusted as appropriate to minimize the effect on the amount of refund or tax due at tax filing time.
Taxpayers can also choose to forego advance credit payments and get all of the benefit of the premium tax credit at the time of filing a tax return. Because the premium tax credit is claimed on the federal income tax return that is filed the following year, foregoing advance credit payments means the taxpayer will, in effect, get a reimbursement of a portion of the insurance premiums the taxpayer already paid for a plan they purchased in the Marketplace.. Taxpayers, including those who get advance credit payments, must claim the credit by filing a federal income tax return. Taxpayers who get APTC must file a tax return to reconcile the APTC to the credit computed on the return even if not otherwise required to file a tax return.
The premium tax credit can reduce a person’s federal tax liability and lower a balance due, or it may create or increase the amount of a refund. Because the premium tax credit is refundable, an individual who has little or no income tax liability can still receive the full benefit of the credit as a refund.
Note: The premium tax credit is not considered income for any federal or federally funded public benefit program.
If an individual’s actual allowable credit is more than the advance credit payments, the difference will be added to the individual’s refund or subtracted from the balance due. On the other hand, individuals whose advance credit payments are more than their premium tax credit will owe the excess as an addition to their tax, subject to a repayment cap if their income is below 400 percent of the federal poverty line.
There are two lines on Form 1040 for the premium tax credit. Line 46 is where a person reports excess advance credit payments and line 69 is where a person claims the premium tax credit amounts that exceed APTC.
If a person receives the benefit of advance payments of the premium tax credit, the amount of advance payments made on the taxpayer’s behalf during the year must be reconciled with the actual premium tax credit allowed on the income tax return for that year.
Your clients must file a tax return to reconcile advance payments even if they would not otherwise be required to file a tax return for the year.
I will talk about the reconciliation process and the repayment cap in more detail later.
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19. PTC Eligibility Must meet all of the following requirements:
Income between % of Federal Poverty Line
Taxpayer, spouse, or dependent must enroll in Marketplace coverage for a month that the enrollee is not eligible for coverage through employer or government plan
Cannot be claimed as a dependent by another person
Not file as Married Filing Separately
Note: Some exceptions apply

20. 2015 Income Limits are based on 2014 FPL
One Individual:
$11,670 (100% FPL) - $46,680 (400% FPL)
Family of Two:
$15,730 (100% FPL) - $62,920 (400% FPL)
Family of Four:
$23,850 (100% FPL) - $95,400 (400% FPL)

21. Advance Payments of PTC (APTC)
Determined by Marketplace based on estimated household income and family size
Paid directly to insurance company on the taxpayer’s behalf
MUST file tax return to reconcile

22. Reporting Changes in Circumstances
Examples:
Family size or filing status (family = personal exemptions)
Increase/decrease in household income
Gain/loss of health care coverage or eligibility
Moving to another address
Important: Report changes to the Marketplace when they happen

23. How to claim the PTC
Based on actual annual household income and family size reported on the tax return
Claimed on tax return using Form 8962
Reconciles APTC
Results in either a refundable credit or repayment of excess advance payments

24. Forms needed to claim PTC
Form 1095-A from Marketplace
• Form 8962 to claim and reconcile PTC/APTC
File Form 8962 with 1040, 1040A or 1040NR

25. Form 1095-A, Health Insurance Marketplace Statement
Issued by the Marketplace
Must be used to complete Form 8962
Reports monthly household coverage information:
Plan premium
Applicable second lowest cost silver plan premium
APTC

26. Form 8962 - Premium Tax Credit
File Form 8962 with tax return to :
claim the premium tax credit and
reconcile APTC

27. Completing Part 1 of Form 8962

28. Completing Part II of Form 8962

29. Completing Part III of Form 89628962

30. Completing Part IV of Form 8962

31. Completing Part V of Form 8962

32. Return Preparer Interview Best Practices
Did your client receive Form 1095-A from Marketplace?
APTC
Verify coverage months and who is covered
Multiple policies issued
Were there changes in circumstances during the year?
Married/divorced  
Eligible for government or employer sponsored coverage
Months without coverage

33. 2014 Filing Season Recap Reconciling APTC Penalty relief for 2014
Reporting changes in circumstances
Corrected Forms 1095-A

34. Common Errors Claimed PTC but failed to attach Form 8962
Did not reconcile APTC
Form 8962, Part 2, Lines 11 or (Column F)
Form 1095-A data not correctly reported
Form 8962, Part 2, Lines 11 or (Columns A and B)
Transposed digits

35. Common Errors Miscalculated Monthly PTC Allowed
Form 8962, Part 2, Lines 11 or (Column E)
Miscalculated Repayment Amount of Excess APTC
Form 8962, Part 3, Lines 28 & 29

36. 2015: What You Need to Know Forms 1095-A and 8962
Report changes in circumstance to the Marketplace if receiving APTC
2016 Marketplace enrollment
Nov 1, 2015 to January 31, 2016
Special Enrollment Periods

37. Affordable Care Act: Employer Shared Responsibility and Information Reporting
Richard Furlong, Jr.
November 13, 2015

38. What Employers Need to Know
Impacts Applicable Large Employer’s (ALEs) - those with 50 or more full-time or full-time equivalent employees
Fewer than 50 – §4980H does not apply
Employer Shared Responsibility Provisions (§4980H)
ALE Information Reporting (§6056)
Health Coverage Information Reporting (§6055)

39. The Employer Shared Responsibility Provisions (§4980H)
In general, ALEs must either:
Offer health coverage that is affordable and that provides minimum value to their full-time (FT) employees (and their dependents), or
May be subject to an employer shared responsibility payment
Effective beginning January 1, 2015
2015 transition rules for eligible ALEs with less than 100 full-time employees (including full-time equivalent employees)

40. Determining ALE Status
Average number of employees and their hours of service in preceding year determines ALE status for the current year
Full time employees are defined as 30 hours/week or 130 hours/month
Definition of full-time equivalent employee
Seasonal worker exception
Common ownership and controlled groups
Transition rule for 2015 ALE determination

41. ALE Example: Subject to ESRP
Company X had 40 full-time employees and 20 part-time employees at 60 hours each month
The 20 part-time employees = 10 full-time-equivalent employees
40 FT plus 10 FTE = ALE (50 FT/FTE)
Company X is subject to the employer shared responsibility provisions

42. ALE Example: NOT Subject to ESRP
Company Y had 20 full-time employees and 20 part-time employees at 60 hours each month
The 20 part-time employees = 10 full-time-equivalent employees
20 FT plus 10 FTE = 30 FT/FTE
Company Y is NOT subject to the employer shared responsibility provisions

43. Common Owner ALE Example
For all of 2015 & 2016, Corp A owns 100% of Corp B and Corp C
Number of 2015 FT employees:
Corp A – None
Corp B – 40
Corp C – 60
Total – 100
Corp A + B + C is an ALE for 2016
Corps B & C are each an ALE member

44. Determining Full-Time Employee Status
FT = 30 hours/week or 130 hours/month
Two measurement methods
Monthly
Look-back
Defining an hour of service
Hour for which paid or entitled to be paid
Special rules

45. Employer Shared Responsibility
Generally, liability exists if employer:
Does not offer coverage to at least 95% of FT employees (and their dependents) and at least one FT employee receives the PTC, OR
Does offer to at least 95% of FT employees (and their dependents), but at least one FT employee receives the PTC because, for that full-time employee, coverage was
not offered
unaffordable, or
did not provide minimum value
2015 Transition relief

46. Definition of Affordability and Minimum Value
Affordable if employee’s share of lowest cost self-only coverage does not exceed 9.5% of household income
Three employer “safe harbors”
Minimum value
Coverage is considered to provide minimum value if the plan covers at least 60% of the total cost of benefits and covers substantial in-patient hospital and physician services

47. Employer Shared Responsibility Payment
Offer to less than 95% (70% for 2015*)
Payment of 1/12 of $2,000 per FT employee, above 30 threshold (per month)
Offer to at least 95% (70% for 2015*)
Payment of 1/12 of $3,000 per PTC-receiving FT employee, (per month), subject to limitation
* 2015 Transition Relief

48. Additional 2015 Transition Relief
Eligible employers with FT + FTE employees (requires certification)
Dependent coverage
Non-calendar year plans
First payroll rule (January 2015)
Multiemployer plans

49. Shared Responsibility – Assessment and Payment
Employer will not make a payment with a return
IRS will determine amount and notify employer
Employer will have opportunity to respond before assessment
IRS will send a notice and demand after assessment

50. ALE Information Reporting (§6056)
Requires ALEs to file an information return to report health care coverage offered to the employer’s full-time employees for the calendar year
Applies to employers who are subject to the employer shared responsibility provisions (4980H)
Information is used to (1) administer the employer shared responsibility provisions (4980H) and (2) to determine an employee’s eligibility for the premium tax credit
Effective 2015; first returns due 2016

51. ALE Reporting Methods General Reporting Method
Full reporting for all full-time employees
Reporting on a month-by-month basis
Alternative Reporting Methods
Qualifying Offer Method
98% Offer Method

52. ALE Forms
Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns
Transmittal of employer level data
Form 1095-C, Employer–Provided Health Insurance Offer and Coverage
Employee statement
Due Dates
Furnished to Employee by January 31
Filed with the IRS by February 28 (March 31 if filed electronically)

53. Form 1094-C (page 1 of 3)

54. Form 1094-C (page 2 of 3)

55. Form 1094-C (page 3 of 3)

56. Form 1095-C

57. Health Coverage Information Reporting (§6055)
Requires all health insurance issuers, self-insured employers, certain government agencies, and other entities, that provide minimum essential coverage to an individual during a calendar year to report certain information to the IRS
Information is used to verify months covered by MEC to satisfy the individual shared responsibility requirement (5000A)
Effective 2015; first returns due 2016

58. Minimum Essential Coverage
Government-sponsored programs
Medicare part A, most Medicaid programs, CHIP, most TRICARE, most VA programs, Peace Corps, DOD Non-appropriated Fund Health Program
Employer-sponsored coverage
Insured or self-insured group health plans
Excludes coverage that is solely excepted benefits
Grandfathered Plans
Cobra Coverage
Individual market coverage
Qualified health plans enrolled in through Marketplace
Other individual coverage
Miscellaneous MEC
Other health benefits coverage recognized by HHS as MEC

59. Who is an MEC provider? All insured coverage
Issuer or carrier (i.e., the insurance company)
Government-sponsored coverage
Medicare: Medicare, including for part C (Medicare Advantage)
Medicaid, CHIP: State agency administering program
Tricare, VA, Peace Corps, Non-appropriated fund program: agency sponsoring the program
Misc. MEC
Sponsoring entity

60. Who is an MEC provider? (continued)
Self-insured coverage
Plan sponsor must report. Plan sponsor is:
Employer
Multiemployer plan (as defined in ERISA) – association, committee, joint board of trustees, similar body that establishes and maintains the plan
MEWAs – each participating employer for that employer’s employees
Union plans – the employee organization
Others – person identified as sponsor or administrator

61. Health Coverage Reimbursement Arrangements
Notice provides temporary relief from the §4980D excise tax
Small employers with Employer Payment Plans got relief for 2014 and up to July 1, 2015
S corporations continue to report pursuant to Notice
Market reforms do not apply to health plans that cover less than two current employees

62. Health Coverage Forms
Form 1094-B, Transmittal of Health Coverage Information Returns
Transmittal of Individual Data
Form 1095-B, Health Coverage
Information return and recipient statement reporting Minimal Essential Coverage
Due Dates
Furnished to taxpayers by January 31
Filed with the IRS by February 28 (March 31 if filed electronically)

63. Form 1094-B

64. Form 1095-B

65. Combined Information Reporting
Applies to ALE members that sponsor self-insured group health plans
Combined reporting on Form 1095-C for both §6056 and §6055
Benefit to ALE
Only one form provided to each employee
Only one form submitted to IRS

66. Electronic Filing Requirements
Must electronically file if submitting 250 or more information returns
Note: Do not aggregate with Forms W-2 to determine if 250 threshold applies
Information Return Filing Preparation:
Responsible Officials and Contacts complete e-Services Registration Process (if not completed previously)
Complete and sign online ACA Information Return Application for Transmitter Control Code (TCC)
Receive TCC through the mail (also available online)
Participate in ACA Assurance Testing (AATS) or Communication Testing
File information returns electronically

67. Summary Applicable Large Employer (ALE) defined
Employer Shared Responsibility Provisions (§4980H)
ALE Information Reporting (§6056)
Health Coverage Information Reporting (§6055)

68. Affordable Care Act Resources

69. Affordable Care Act Resources

70. Contact Information
Richard G. Furlong, Jr.
Senior Stakeholder Liaison