1. Informational Reporting and the Affordable Care Act? March 10, 2015 Presented by Sharon Whittle, Principal, Compensation and Benefits Consulting, Grant Thornton, LLP

2. Agenda Introduction Individual Mandate Review Employer Mandate Review Transition Provisions Information Reporting Requirement Financial Statement Impact Questions

3. Overview of individual mandate Eligible Individual Income is between 100% - 400% of the poverty level Affordability Test 9.5% of Family Income; or Tax credit or premium reduction may be offered to individuals who purchase coverage through an insurance exchange if the family household income is between 100% and 400% of the poverty level No Employer Coverage; or Household of 4: $94,200 Minimum Value Test Plan covers 60% of Plan Costs © 2014 Grant Thornton LLP. All rights reserved. 1 Tax Credit, and Plan Cost Reduction At Income of 250% or Less of Federal Poverty Line Poverty Level Guidelines to Determine Credit Eligibility for 2014 Individual: $45,960 Household of 2: $62,040

4. Employer mandate: the penalties An applicable large employer with 100 or more FTE beginning in 2015 and 50-99 FTE beginning in 2016 may be subject to a penalty: * 70% in 2015 ** Minus 80 employees for 2015 Coverage Offered to Less than 95%* of Full- Time Employees During the Month Coverage Offered to 95% or More of Full- Time Employees During the Month But Does Not Satisfy Affordability or Minimum Value Requirements Affordability Employee Premium for Self-Only Coverage Is 9.5% or Less of Employee’s Income Minimum Value Plan Covers At Least 60% of Plan Costs $250 Per Month ($3,000 Per Year) Per Full-Time Employee Who Purchases Insurance Through an Exchange and Receives a Premium Tax Credit or Subsidy $166.66 Per Month ($2,000 Per Year) Per Full-Time Employee (Minus 30 Employees**) © 2014 Grant Thornton LLP. All rights reserved. 2

5. Transition periods and delays © 2014 Grant Thornton LLP. All rights reserved. 3 Employer must offer health coverage that is affordable and provides minimum value For 2015, employers will need to certify that they are not reducing workforce to stay below 100 Employer Size 2015 Plan Year2016 Plan Year and Beyond 1-49 FTEsDoes not apply 50-99 FTEsDoes not applyEmployer must cover 95% of FTEs and dependents to age 26 100+ FTEsEmployer must cover 70% of FTEs and dependents to age 26 Employer must cover 95% of FTEs and dependents to age 26

6. Information reporting Applies only to employers with 50 or more full- time plus full-time equivalent employees Annual statements provided to employees and IRS(Information broken down by month) Required starting for calendar year 2015 Deadline for first year is Jan. 31, 2016 © 2014 Grant Thornton LLP. All rights reserved. 4

7. Information reporting © 2014 Grant Thornton LLP. All rights reserved. 5 What employees receive… FormIssued byTo whomDeadline 1095-CEmployerEach full-time employee January 31 1095-BInsurance company (Fully-Insured Plans Only) Each employee covered by fully- insured plan January 31

8. Information reporting © 2014 Grant Thornton LLP. All rights reserved. 6 What the IRS receives… FormFiled byDeadline Form 1094-C Transmittal form with a copy of each employees 1095-C EmployerFeb. 28 (paper filing) Mar. 31 (electronic filing) Form 1094-B Transmittal form with a copy of each employees 1095-B Insurance company (Fully-Insured Plans Only) Feb. 28 (paper filing) Mar. 31 (electronic filing)

9. Form 1095-C provided by employer to each full-time employee Provides coverage information and premium information © 2014 Grant Thornton LLP. All rights reserved. 7

10. Form 1095-C reporting– Employer Mandate Compliance © 2014 Grant Thornton LLP. All rights reserved. 10 Whether employee was offered minimum essential coverage for the month Whether coverage was of minimum value and affordability Coverage level offered during the month –Employee only –Employee and dependents only –Employee and spouse only –Employee, spouse and dependents Whether coverage offered even though employee not full-time for the month Transition rule for 50-99 FTE employees applied

11.  Form 1095-C coverage information (cont'd) © 2014 Grant Thornton LLP. All rights reserved. 11 Enrolled in coverage offered Coverage offered under multiemployer plan for the month Applicable affordability safe harbor If coverage not offered for the month, why –Not an employee –Not full-time employee –Other circumstances  Initial measurement period  Waiting period (3 month)

12. Contents of Form 1095-C Offer of Coverage All 12 months? Month by month? Lowest Cost Premium All 12 months? Month by month? Safe Harbor All 12 months? Month by month? © 2014 Grant Thornton LLP. All rights reserved. 10

13. Form 1095-B/1095-C Part III reporting– Individual Mandate Compliance © 2014 Grant Thornton LLP. All rights reserved. 13 Report information on everyone provided minimum essential coverage Form 1095-B issued by insurance company for fully-insured plans Form 1095-C Part III issued by employer for self-insured plans

14. Form 1095-B/1095-C Part III Coverage Information Policy number Contact person's name, address, telephone number Name and taxpayer identification number of each individual who had coverage during the year –Employee –Spouse –Dependents For each individual, months during which coverage provided © 2014 Grant Thornton LLP. All rights reserved. 14

15. Contents of Form 1095-C (cont'd) Covered Individuals Name Social Security Number Date of Birth if No SSN Coverage Covered for all 12 Months? Month by Month? © 2014 Grant Thornton LLP. All rights reserved. 14

16. Form 1094-C transmittal form filed with IRS by employer © 2014 Grant Thornton LLP. All rights reserved. 16 Contact person’s name and telephone number Whether employer member of aggregated group on any day of calendar year –If so, names and EINs of aggregated group members Monthly employee counts –Total employees –Total full-time employees Months during which coverage offered to full-time employees

17. # of 1095-C Filed Member of an Aggregated ALE Group Certification Contents of Form 1094-C © 2014 Grant Thornton LLP. All rights reserved. 16

18. Minimum Essential Coverage All 12 months? Month by month? Employer Mandate Full-Time Employees Total Employees Contents of Form 1094-C (cont'd) © 2014 Grant Thornton LLP. All rights reserved. 17

19. Contents of Form 1094-C (cont'd) Aggregate ALE Group Name EIN © 2014 Grant Thornton LLP. All rights reserved. 18

20. Simplified reporting alternative for employers with “98 percent offers” © 2014 Grant Thornton LLP. All rights reserved. 20 Created for employers who do not track full-time employee status due to broad coverage 98 percent offers –Coverage offered to 98 percent or more of all employees (including full-time and part-time) –Employee premium for self-only coverage for lowest cost option is affordable (not more than 9.5% of employee's compensation, using any safe harbor) Form 1094-C transmittal to IRS –Report total number of employees –Do not report information regarding full-time employees Form 1095-C to employees –Issue to all employees, including full-time and part-time –No information required as to whether employee is full-time

21. Information reporting Employee DataRecordkeeping? Payroll vender? Insurance carrier? HRIS system? Advisor? Form Preparer? Paid Hours Salaried vs. Hourly Variable Hour Status Break-in-Service Eligibility Month-to-Month Tracking Offered Coverage? Measurement Periods Preparation? ? Offered Coverage? Technical review? © 2014 Grant Thornton LLP. All rights reserved. 20

22. Financial statement audit Employer Mandate © 2014 Grant Thornton LLP. All rights reserved. 21 Employers may easily fall below the 95% threshold and trigger the excise tax. (For 2015, employer must cover 70% of FTEs and dependents to age 26) Total number of full- time employees 5% thresholdExcise tax per year 1005$140,000 25012$440,000 50025$940,000 1,00050$1,940,000 5,000250$9,940,000 10,000500$19,940,000

23. Financial statement audit Employer mandate © 2014 Grant Thornton LLP. All rights reserved. 22 ASC 450 requires entities to record probable and estimable contingencies. –ACA penalties are probable and estimable –Tax liability may be material A company will need to demonstrate process, procedures, and internal controls to mitigate the penalty

24. ACACA – Information Reporting Questions 24