New ACA Reporting Requirements Part 2 (Benefit Minute)
The Department of Treasury has issued final regulations implementing the insurer and employer reporting requirements under the Affordable Care Act, which will form the basis of the process for assessing penalties under both the individual mandate and the employer mandate, and for determining eligibility for premium tax credits. The last ACA blog post summarized the general reporting requirements. This post discusses special reporting requirements, including combined reporting for self-insured group health plans of large employers and permitted alternative methods for large employers to report an offer of coverage.
Large employer members that provide minimum essential coverage (MEC) on a self-insured basis are required to report both those individuals enrolled in MEC and those employees who were offered MEC. These are two separate reporting requirements. However, the Department of Treasury and IRS are permitting combined reporting due to significant duplication in the information reported under these two different requirements. Form 1095-C will include two sections, both of which must be completed for the combined reporting. A large employer member with a self-insured plan will not be required to complete the separate Form 1095-B and will provide a single statement to individuals eligible for and/or enrolled in MEC.
If a large employer member offers MEC on a fully-insured basis, the insurance carrier will be responsible for the reporting for those individuals enrolled in the coverage (on Form 1095-B) and the employer will be responsible for reporting the offer of MEC (on Form 1095-C). Only one section of the Form 1095-C will be completed, and there will be no combined reporting in this situation.
Alternative Reporting Methods
The final regulations also allow for several alternative methods of reporting an offer of MEC by a large employer member. These alternative methods are intended to minimize the cost and administrative tasks for employers who meet certain criteria. In some cases, an employer will be able to use one of the alternative methods for some groups of employees, but must use the general method for others.
Certification of “Qualifying Offers” – This alternative method allows the large employer member to report less information with respect to each full-time employee. The employer must certify that an offer of MEC providing minimum value with a cost for employee-only coverage not exceeding 9.5% of the federal poverty line (approximately $92 per month) was made for all months of the calendar year to a full-time employee. The “qualifying offer” must extend to the spouse and children of the employee.
Under this method, the employer will only have to report the name, address and tax identification number of each full-time employee with an indicator code that that a “qualifying offer” was made for all 12 months of the calendar year. A simplified reporting statement will be provided to the employee. It is anticipated that the reporting statement will inform the employee that he or she will generally not be eligible to claim a premium tax credit. If a “qualifying offer” was not made for all 12 months of the calendar year (due to a permissible waiting period, termination of employment, etc.), then the alternative reporting method generally will not be available for that employee. However, an exception may apply for 2015 only.
Certification of “Qualifying Offers” for 2015 – A large employer member who certifies that a “qualifying offer” was made to at least 95% of full-time employees for 2015 may be able to use the simplified reporting method described above for all full-time employees even if the “qualifying offer” was not made for all 12 months. The simplified reporting statement to the employee will be modified if the “qualifying offer” was not made for all months of the calendar year.
Reporting without Separate Identification of Full-time Employees – This method allows an employer to report without identifying or specifying which employees are full-time employees or how many full-time employees the employer has. This method may be useful to employers who offer coverage to substantially all employees, including those with less than 30 hours of service per week. It is available to a large employer member who certifies that it offered affordable minimum value coverage to at least 98% of the employees who are reported on the return (an employer will generally report all employees on the return under this reporting method). If an employee reported on the return receives a premium tax credit thereby resulting in a possible penalty to the employer, the large employer member could determine at that point whether the employee was full-time.
Large Employers with Fewer than 100 FTEs – This applies to employers with at least 50 but less than 100 full-time equivalent employees who qualify for the transition relief that delays the employer mandate until 2016. These employers will still be subject to the reporting requirements for 2015 and must certify (as part of the return to the IRS) that they have satisfied the eligibility criteria for the transition relief.
Further details for these alternative reporting methods, as well as the general method, will be provided in the forms and instructions when they are released by the IRS. In the meantime, employers subject to these reporting requirements should begin to determine what data is required to comply and whether such data is available, either in existing HRIS and/or payroll systems or from third party administrators.
Interested in learning more about the PPACA employer mandate that becomes effective in 2015? If you have questions regarding this topics please to go our Employee Benefits department or contact Tina Bull.