Two weeks ago, we hosted a webinar with Claire Manz, Product Strategist for Dominion Systems, which covered several Affordable Care Act updates. This is part 1 of 2. Below is the transcript, above the webinar.
Now, while I’m sure all of you are joining us today because you just LOVE the Affordable Care Act and you can't wait to completing these forms, if you are not quite as excited as we are, our agenda is rather short. I'll review the forms and then go through several scenarios on our platform to give you a feel for how the tool works.
There are four forms:
The B Forms
The B forms are completed by the insurance company for fully insured health plans. (Think Blue Cross, Blue Shield, and Priority Health.) The 1094-B is basically the cover sheet for the insurance company submission and details the insurance company's business information. The IRS will then use the 1095-B forms to determine how individuals were or were not covered in order to enforce that individual mandate. The IRS uses this form as well as the income tax return to verify the minimum coverage required.
The C Forms
The C forms are very very similar. They are submitted by the plan sponsor, which is typically the employer. The 1094-C is the employer transmittal so it's that same cover sheet as in the B-forms. The 1095-C is the employee offer and coverage form. It details what type of health coverage the employee was offered throughout the entire reporting year. (Think of the 1095 as the W-2 of benefits and the 1094 as the W-3 of benefits.)
Self-Funded Health Plans
Now also note that the B forms are used for small employers under 50, with a self-funded health plan. If you are a small employer under 50 and you have a self-funded health plan, you will be required to submit the B forms, the 1094 and the 1095. A large employer with the self-funded health plan, so over 50, will also be able to use the B forms and/or the C forms to submit. Now please note that the B forms will not be completed by the third party administrators for self-funded health plans. It is the responsibility of the plan sponsor to complete their forms so for those of you that are self-funded I would recommend talking to your third party administrator and seeing what kind of assistance they might be able to offer in terms of employee information.
Not every employer is required to file so this chart breaks down who is required to file the forms. Now if you are an employer with 50 or more full time equivalence, you must file forms 1094 and 1095-C. If you are under 50 FTE, you do not have to file unless you sponsor a self-funded health plan. Then you have to submit those 1094 or 1095 B forms. For today's presentation, we are going to just review the C forms as those will be most used within our client base.
We do have a calculator for our clients to utilize and determine their FTE count based on hours. The FTE count tells you whether or not you are an applicable large employer and are required to file. So this tool is a bit more accurate if you use our time-keeping platform, but can be utilized by everyone.
We will start with the 1094-C, the employer transmittal. This is simply the cover sheet--detailing the employer information. There are four parts.
Part 1 is pretty easy, just basic employer information.
Part 2 is a bit more detailed, like common control groups status and any relief forms or methods used.
Part 3 is the monthly information regarding the offering of coverage across the entire population. They just want to know on a monthly basis whether coverage was offered or not.
Part 4 is only for those in a common control group. You do have to list each of the companies within your aggregated group.
Now we do plan on creating the necessary tools for the authoritative form of this cover sheet, but it will simply be released at a later date as our main focus at this time is the 1095-C form.
Overview of 1095-C
Now the 1095-C is the employee offer and coverage form. It is employee-specific, one for each employee who meets the eligibility requirements of the IRS or who does not meet the eligibility requirements, but was still offered insurance. Each of these types of employees do receive a form. The IRS wants basic employee information, a monthly accounting of their offering coverage, and for part 3, self-insured groups must also complete each individual who is covered under that health plan. Now these forms will be filed with the IRS, and a copy must be provided to the employee just like a W-2. Now who needs to provided a form? Which employees? This goes back to the measurement periods and stability periods that we were all introduced to way back when the ACA was signed into law. Our platform has a tool where you can enter in the measurement period and insurance eligibility based on hours.
The IRS has said that full-time employees are required a qualified offer of coverage. Full-time is 30 hours per week, or on average a 130 hours per month. Now this is a separate calculation from your FTE count which just determines the ALE status. Your FTE count just determines whether you were over 50 or under 50 and required to file. This insurance eligibility determines who needs an actual qualified offer and who requires a form. So they are two different actual counts.
Now the 1095 in itself is a little bit more complicated. Part one is very simple, just employer information, but part 2 is the actual offer of coverage. Now if you are a client, then your employee information is already loaded into this system and we will pull it directly into part 1. But part 2 is where we will need your assistance. This is where the IRS wants the employer to specify the health plan offer or lack of offer. There are two series of code:
- code series 1A through 1I for line 14.
- code series 2A-2I for line 16.
Codes in line 14 designate what type of health plan was offered, minimal essential coverage, minimum value, whether dependents and spouses were offered, if the cost was 9.5% of the federal poverty level, those codes series one define each type of plan offering. The code series two 2A-2I, for line 16, explains the reason behind the codes in line 14. Now line 15 is only required if you use codes 1B-1E in line 14. This is a little bit complicated but the IRS wants the cost of the lowest costing health plan for single coverage.
For example, if you have a core health plan and a buy up health plan, line 15 should reflect the cost of a monthly coverage for the core plan regardless of whether the employee is enrolled in either plan. Now in line 16, code 2C tells the IRS that the employee was enrolled. The other codes from series 2 designate other scenarios, like the employee was not an actual employee at the time, they were a new hire, or they recently terminated, or maybe they were in their new hire waiting period.
The IRS does have instructions that determine each code and designate where they should be used. These codes will take some time to learn so make sure you take some time to review them. The instructions can be found on the IRS's website.
Part 3 of the 1095
Now for part 3, again, this is for self-insured groups only, part 3 must be completed with the name, social security number, and/or date of birth for each member that was covered under the health plan and for which months they were covered. So part 2 was just the offer, we just want to know what they were offered. Part 3 identifies each employee and their spouses and dependents covered by the plan during the year. This will take a little bit of time in order for you to complete and possibly retrieve that information from your insurance broker which would then help you identify exactly who needs to be on the form. Please just note if you are fully insured, you do not need to complete part 3.
End of part 1. Stay tuned for future installments!