1. envision, strategize and actualize The IRS and the Affordable Care Act: New Tax Year 2015 ACA Filings Ryan J. Loeffers February 2016 Webinar Wednesdays

2. Copyright © 2015 ES&A, Inc. All Rights Reserved Confidential and Proprietary What are the new tax filing requirements for the 2015 tax year? Employer shared responsibility reporting –Whether employees were offered affordable health care coverage Individual reporting –Whether individual had health insurance –Penalty paid on the individual’s income taxes if not covered by health insurance

3. Copyright © 2015 ES&A, Inc. All Rights Reserved Confidential and Proprietary Which employers must file? Applicable Large Employers (ALE) –Employer had at least 50 full-time employees, on average, during the prior calendar year “Full time” means: –The employee worked an average of at least thirty (30) hours per week; OR –The employee worked at least 130 hours during the calendar month Includes Full-Time Equivalent employees –Combine the number of hours of service of all non-full- time employees for a month (maximum of 120 hours) –Divide the above number by 120

4. Copyright © 2015 ES&A, Inc. All Rights Reserved Confidential and Proprietary ALE Aggregated Control Groups Multiple employers under “common control” under the Internal Revenue Code are considered an ALE Aggregated Control Group –ALE Aggregated Control Groups file joint returns “Common Control” has several different tests (below are tests for corporations): –Parent-Subsidiary. One entity owns at least 80% of all classes of stock eligible to vote of another entity –Brother-Sister Effective Control. The same owner (individual, entity, etc.) owns over 50% of the value of all classes of stock, and has over 50% of the voting power of each entity

5. Copyright © 2015 ES&A, Inc. All Rights Reserved Confidential and Proprietary How is the information reported? Self-Insured Plans –Form 1095-C. Reported per employee; given to each employee and the IRS (similar to a W-2) –Form 1094-C. A single form used as a cover sheet to submit all Form 1095-Cs to the IRS Filed by the employer Insured Plans –Form 1095-B. Reported per employee; given to each employee and filed with the IRS (similar to W-2s) –Form 1094-B. A single form used as a cover sheet to submit all Form 1095-Bs to the IRS Filed by the insurance carrier

6. Copyright © 2015 ES&A, Inc. All Rights Reserved Confidential and Proprietary How is the information reported? Self-Insured Plans –Form 1095-C. Reported per employee; given to each employee and the IRS (similar to a W-2) –Form 1094-C. A single form used as a cover sheet to submit all Form 1095-Cs to the IRS Employers generate the forms 1095-C and 1094-C

7. Copyright © 2015 ES&A, Inc. All Rights Reserved Confidential and Proprietary ?

8. Copyright © 2015 ES&A, Inc. All Rights Reserved Confidential and Proprietary Form 1095-C Line 14 Coverage Codes –Page 10 of Form 1095-C Instructions –Includes 9 different coverage codes –Example code: 1A. Qualifying Offer: Minimum essential coverage providing minimum value offered to full-time employee with employee contribution for self-only coverage equal to or less than 9.5% mainland single federal poverty line and at least minimum essential coverage offered to spouse and dependent(s).

9. Copyright © 2015 ES&A, Inc. All Rights Reserved Confidential and Proprietary ?

10. Copyright © 2015 ES&A, Inc. All Rights Reserved Confidential and Proprietary Form 1095-C Line 15 Employee Share Reporting –Only enter if didn’t make a “Qualifying Offer” to employee with self-only coverage equal to or less than the 9.5% mainland single federal poverty line and minimum essential coverage to the employee’s spouse and dependent(s). –Hawaii employers not likely to need this line

11. Copyright © 2015 ES&A, Inc. All Rights Reserved Confidential and Proprietary ?

12. Copyright © 2015 ES&A, Inc. All Rights Reserved Confidential and Proprietary Form 1095-C Line 16 Safe Harbor Reporting –Used to report that employer complied with ACA under one of the safe harbor provisions –Safe harbor codes are on pages 10 and 11 of the Form 1095-C instructions –Example: by contributing to a collectively bargained health plan the employer is not self-funding or providing insured coverage itself Employer inputs code “2E” in line 16 to indicate it made coverage available by contributing to a collectively bargained plan

13. Copyright © 2015 ES&A, Inc. All Rights Reserved Confidential and Proprietary

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16. Copyright © 2015 ES&A, Inc. All Rights Reserved Confidential and Proprietary How is the information reported? Insured Plan –Form 1095-B. Reported per employee; given to each employee and filed with the IRS (similar to W-2s) –Form 1094-B. A single form used as a cover sheet to submit all Form 1095-Bs to the IRS Forms 1095-B and 1094-B are generated by the employer’s insurance carrier Filed by the insurance carrier Insurance carrier will provide employer 1095-Bs to distribute to employees Employer must file Sections I & II of Form 1095-C

17. Copyright © 2015 ES&A, Inc. All Rights Reserved Confidential and Proprietary Employee’s name & Info Employer’s name & Info Insurance company’s name & Info Employee’s name Employee’s spouse Employee’s child

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19. Copyright © 2015 ES&A, Inc. All Rights Reserved Confidential and Proprietary Unique Issues Coverage offered through a collectively bargained plan –Use form 1095-C to and enter code “2E” in line 16 Reporting COBRA coverage –Do NOT count months of COBRA coverage as months of providing affordable coverage to the employee –Use Form 1095-C and enter code “1H,” on line 14, meaning that employer made “no offer of coverage”

20. Copyright © 2015 ES&A, Inc. All Rights Reserved Confidential and Proprietary Filing Deadlines Due DateForm 1095-CForm 1094-C (With Attachments) Form 1095-BForm 1094-B (With Attachments) Provide to Employee March 31, 2016N/AMarch 31, 2016N/A Paper Filing to IRS May 31, 2016 Electronic Filing to IRS June 30, 2016 NOTE: Employees will need Forms 1095-C and 1095-B to file their own personal income taxes.

21. Copyright © 2015 ES&A, Inc. All Rights Reserved Confidential and Proprietary What do I do now? Contact your service providers –Who is preparing your Form 1095-Cs and 1094-C? Payroll servicer HR Department Accountant Benefits Consultant –Insured plans Contact your insurance carrier to confirm they will get your employees’ Form 1095-Bs as quickly as possible

22. Copyright © 2015 ES&A, Inc. All Rights Reserved Confidential and Proprietary What do I do now? Communicate –Let your employees know that the forms are used to prepare their personal income taxes, like their W-2s –Make sure you and your service providers are clear who is handling the filings –Make sure your service providers meet the applicable deadlines Questions? –Watch the IRS’s instructional video at: http://www.irsvideos.gov/ACAInformationReportingLarge EmployersIRC6056/ http://www.irsvideos.gov/ACAInformationReportingLarge EmployersIRC6056/

23. Copyright © 2015 ES&A, Inc. All Rights Reserved Confidential and Proprietary FOR MORE INFORMATION … If you have any follow up questions, email us at –aes@esandalaw.comaes@esandalaw.com –rloeffers@esandalaw.comrloeffers@esandalaw.com For access to these materials, email bdasilva@esandalaw.combdasilva@esandalaw.com Watch for our new website – www.esandalaw.com – available later this monthwww.esandalaw.com Our next webinar will be in March! –Next topic to be determined