ACA 101:THE BASICS

March 2017

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Applicable Large Employer (ALE) Status

table of contents

Basic Requirements

Reporting Requirements

Penalties

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Introduction

Thesweeping20,000-pagePatientProtectionandAffordableCareActcreatedacomplianceandreportingchallengeforalmosteveryemployer–thenlaterrevisionsfurthercomplicatedthepicture.

Does it apply to my company? How do I determine which employees might be eligible for coverage? What reporting requirements do I have? If I don’t do everything correctly, what penalties could there be?

You’renotaloneinwondering.That’swhyAGH’shumanresourceandpayrollprofessionalshaveputtogetherthisguidetogiveyousomeofthebasicsofACAreporting.

Questions? Contact AGH’s organizational development professionals at 316.291.4022.

Introduction

ALE Status

Basic Requirements

Reporting Requirements

Penalties

November2015

NOTE: Information in this document has been obtained by Allen, Gibbs & Houlik, L.C. from sources believed to be reliable. However, AGH does not guarantee the accuracy nor completeness of any information. This communication does not and is not intended to provide legal, accounting or other professional advice or opinions on specific facts or matters, and accordingly, AGH assumes no liability whatsoever in connection with its use. Nothing in this communication can be used to avoid penalties that may be imposed by a governmental taxing authority or agency.

Applicable Large Employer (ALE) Status

Introduction

ALE Status

Basic Requirements

Reporting Requirements

Penalties

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Are you an applicable large employer (ALE)?

OneofthemostimportantthingstounderstandiswhetheryouareclassifiedasanALE.

Ingeneral,anALEisanemployerwith50ormorefull-timeorfull-timeequivalentemployees.

Forhelpdeterminingwhetheryoufallundertheapplicablelargeemployerstatus,visitirs.gov/Affordable-Care-Act/Employers/Determining-if-an-Employer-is-an-Applicable-Large-Employer.

Please note: regardless of the number of employees, any organization that has a self-funded health care plan is required to complete ACA reporting.

ALEsandself-insuredcompaniesarecurrentlytheonlyorganizationswhoarerequiredtocompleteACAreporting,althoughthatrequirementcouldchangeinfutureyears.

Introduction

ALE Status

Basic Requirements

Reporting Requirements

Penalties

November2015

Basic Requirements

Introduction

ALE Status

Basic Requirements

Reporting Requirements

Penalties

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What are the basic ACA requirements?

IfyouhavedeterminedthatyouareanALE,youshouldbecomefamiliarwiththesefourareasofbasicrequirementsforACAcomplianceandreporting:

Employer Mandate

Plan Requirements*

Reporting Requirements

Required Notes

*Planrequirementsapplytoallemployerswithhealthplans,regardlessofsize.

Introduction

ALE Status

Basic Requirements

Reporting Requirements

Penalties

November2015

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Employer mandate & plan requirements

Applicablelargeemployersmustofferhealthcoveragetosubstantiallyalloftheirfull-timeemployeesanddependentsorpayapenaltyifanyfull-timeemployeereceivesagovernmentsubsidyforhealthcoveragethroughaninsuranceexchange.

Employee health plans must include the following (not all-inclusive):

•Freepreventivecare

•Expandedpreventivecareservicesforwomen

•Noannuallimitsforessentialhealthbenefits

•Waitingperiodscannotexceed90days

•Noexclusionforpre-existingconditions

•Coverageforclinicaltrialparticipants

•Limitsoncostsharing

Introduction

ALE Status

Basic Requirements

Reporting Requirements

Penalties

November2015

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Reporting requirements

The following reporting is required for ALEs and sponsors of self-insured plans effective 1/1/2015:

•CompliancewithIRCSections6055and6056

•Reportingforcalendaryearregardlessofplanyear

•ApplicableLargeEmployers(ALEs)mustfileForms1094-Cand1095-C

•Sponsorsofself-insuredplansofnon-ALEsmustfileForms1094-Band1095-C(Insurersalsofiletheseforms)

•Employeestatement(1095-Cor1094-B)mustbeprovidedtoemployeesbyJan.31

•IRSreturnsmustbefiledbyFeb.28(March31iffiledelectronically)

Introduction

ALE Status

Basic Requirements

Reporting Requirements

Penalties

November2015

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Required notices

Employers must issue the following notices to employees as applicable:

•Statementofgrandfatheredstatus

•Noticeofpatientprotectionsandselectionofproviders(annually)

•SummaryofBenefitsandCoverage(SBC)–annuallyandtonewenrollees

•Noticeofmarketplaceexchange(2013)andtonewhires

•60-daynoticeofplanchangesoutsideofregularopenenrollmentperiods

•Noticeofrescission

Introduction

ALE Status

Basic Requirements

Reporting Requirements

Penalties

November2015

Reporting Requirements

Introduction

ALE Status

Basic Requirements

Reporting Requirements

Penalties

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When does information need to be reported?

ReportingrequirementsforallApplicableLargeEmployers(ALEs)tookeffect1/1/15.All ALEs must report for the prior calendar year as outlined below:

•Employeestatement(1095-Cor1094-C)mustbeprovidedtoemployeebyJanuary31,unlessthatdatefallsonaSunday.

•IRSreturnsmustbefiledbyFebruary28(March31iffiledelectronically)

Introduction

ALE Status

Basic Requirements

Reporting Requirements

Penalties

November2015

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What is required for information reporting?

For Applicable Large Employers:

•Whowasafull-time(orfull-timeequivalent)employeeforeachmonth

•Totalemployeecountsforeachmonth

•Name,addressandotheridentifyinginformationforboththeemployerandeachemployee

•Whathealthcarecoveragewasofferedforeachmonth,ifany

•Theemployeeshareofthemonthlypremiumforlowest-costself-onlyminimumvaluecoverage

•Whichmonthseachemployeewasinenrolledinyourcoverage

•Whichmonthsyourorganizationmetaffordabilitysafeharborrequirements(seetheIRSwebsitehereformoreinformation:https://www.irs.gov/Affordable-Care-Act/Employers/Questions-and-Answers-on-Employer-Shared-Responsibility-Provisions-Under-the-Affordable-Care-Act-Question19)

•Ifyouofferaself-insuredplan,informationaboutthecoveredindividualsineachplan

•Whetheryourorganizationiseligiblefortransitionrelief(seetheIRSwebsitefororganizationswhichmayhavedifferentrequirementsforreportingandcoverage)

For non-ALE self-insured plan sponsors:

•Name,addressandotheridentifyinginformationforboththeemployerandeachemployee

•Name,SSNandmonthsofcoverageforeachcoveredindividual

Introduction

ALE Status

Basic Requirements

Reporting Requirements

Penalties

November2015

14|MEC = Minimum Essential Coverage MV = Minimum Value

Coverage Codes Usethistabletodeterminethepropercoveragecodetouseforline14ofform1095-C:

Code Explanation

1A Qualifyingoffer:MECprovidingMVofferedtofull-timeemployeewithemployeecontributionforself-onlycoverage=<9.5%ofsinglefederalpovertyline&atleastMECofferedtospouse&dependents

1B MECprovidingMVofferedtoemployeeonly

1C MECprovidingMVofferedtoemployeeandatleastMECofferedtodependent(s)(notspouse)

1D MECprovidingMVofferedemployeeandatleastMECofferedtospouse(notdependent(s)

1E MECprovidingMVofferedtoemployeeandatleastMECofferedtodependent(s)andspouse

1F MECNOTprovidingMVofferedtoemployee,oremployeeandspouseordependent(s)oremployee,spouseanddependent(s)

1G Offerofcoveragetoemployeewhowasnotafull-timeemployeeforanymonthofthecalendaryearandwhoenrolledinself-insuredcoverageforoneormoremonthsofthecalendaryear

1H Noofferofcoverage(employeenotofferedanyhealthcoverageoremployeeofferedcoveragethatisnotMEC)

1I Reserved

1J MECprovidingMVtoemployee,andconditionalofferofMECtospouse(butnotdependents)

1K MECprovidingMVtoemployee,anddependents,andconditionaloffertoMECtospouse.

Introduction

ALE Status

Basic Requirements

Reporting Requirements

Penalties

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Safe Harbor Codes Usethistabletodeterminethepropersafeharborcodetouseforline16ofform1095-C:

Introduction

ALE Status

Basic Requirements

Reporting Requirements

Penalties

Code Explanation

2A Employeenotemployedduringthemonth

2B EmployeenotaFTemployee

2C Employeeenrolledincoverageoffered

2D Employeeinalimitednon-assessmentperiod

2E Multiemployerinterimrulerelief

2F Section4980HaffordabilityFormW-2safeharbor

2G Section4980Haffordabilityfederalpovertylinesafeharbor

2H Section4980Haffordabilityrateofpaysafeharbor

2I Reserved

Penalties Introduction

ALE Status

Basic Requirements

Reporting Requirements

Penalties

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What is the risk for non-compliance?

Introduction

ALE Status

Basic Requirements

Reporting Requirements

Penalties

ComplianceArea: Penalty(adjustedannuallyforinflation):

ForApplicableLargeEmployers(ALEs)notprovidinghealthcarecoverageforemployees(triggeredbyanyemployeewhoreceivesapremiumtaxcreditthroughtheexchange)

$2,000peremployeeperyear(calculatedonamonthlybasis).Takethenumberoffull-timeemployees(minus80in2015;minus30insubsequentyears)times$166.67foreachmonth.

ForALEswhoprovidecoveragebutitisnotaffordableordoesnotmeetminimumvaluerequirements(triggeredbytheemployeewhoreceivesapremiumtaxcreditthroughtheexchange)

$3,000peremployeeperyearwhoobtainscoveragethroughtheexchange(calculatedonanmonthlybasis)

ForanyemployernotcomplyingwithgeneralACArequirements $100peremployeeperday

Foranyemployernotcomplyingwithinformationreportingrequirements

$250peremployeeperday;cappedat$3MDoublefornotreportingtoIRSandtoemployees

Penalties may be assessed for non-compliance in several areas:

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Questions? Contact us.

Carrie Cox, PHR, SHRM-CPSenior Organizational Development ConsultantCarrie.Cox@aghlc.com316.291.4022

Sonia J. PhillipsPayroll Manager, Outsourcing ServicesSonia.Phillips@aghlc.com316.267.7231