Year-end is near which means it is time to start prepping for the Affordable Care Act reporting again. While many things have remained the same, there are a few changes you need to be aware of. Whether this is your first year reporting or you’re starting to feel like a seasoned pro, here are some bits of information to help guide you in the right direction.
Overview of the Forms
There are 2 forms to file, the 1094 and the 1095; think of the 1095 as the W-2 of benefits and the 1094 as the W-3 of benefits. This simply shows the IRS that your employees were offered an affordable method of health insurance.
B & C Forms
B Forms are the forms that the insurance carrier typically submits. The C Forms are the ones that you as the employer are required to supply the IRS as well as the employee. If you’re a client of Dominion, please note that you can have 1094-C and 1095-C submitted to the IRS by Dominion on your behalf.
The 1094-C, otherwise known as The Employer Transmittal, is what you file to the IRS stating:
- ALE Member Information - This signifies who you are as an employer.
- Specific Member Information - This signifies the information you as an employer have provided to your employees.
- Monthly Member Information - This signifies the benefits you as an employer have offered to your employees.
- Members of Aggregated/Control Group - This signifies whether you were part of an aggregated group.*
*If you are under 50 FTE’s, but you are part of an aggregated group that is commonly owned, you may still be required to file. Your best resource would be to seek advice from your employment lawyer. If you do find that you are required to file as part of an aggregated group, you will need to file underneath the companies you are associated with under your commonly controlled group.
The 1095-C, otherwise known as the offer of coverage to the employee, will need to be submitted by you to the IRS and also given to the employee.
Employee Information - Basic information, much like what you would find on a W-2.
Offer of Coverage - This deals with which codes apply to which employee.
Covered Individuals Information (self-insured only) - If you are self-funded you are required to list out each individual who is covered under your insurance, this includes dependents of employees.
Who is Required to Report?
So who exactly is required to report? Well, typically those companies who have 50 or more full time equivalents (FTE) then you must file a 1094 & 1095 to the IRS. Depending on if you are self-funded or fully insured you will follow a bit of a different filing procedure. To figure out what forms, if any, you need to file for ACA 2016 please refer to the flowchart below.
As mentioned earlier, your reporting requirements really depend on your FTE status. In order to fully understand what forms are required of you, you will first be responsible for understanding your FTE status. If you’re a current client of Dominion Systems you can access the FTE Calculator within our software.
One of the biggest changes for 2016 is the deadline for employees to receive a copy of Form 1095-C. If you are required to report (50 or more FTE’s), you must supply your employees with a copy of their 1095-C by January 31, 2017. Also, you are required to file this same report to the IRS by March 31, 2017. In 2015 the deadline was delayed, however, we are anticipating a timely filing this year.
Starting in 2016, all organizations with 50 or more full-time employees or equivalents must insure 95% of their full-time employees. This past year it was only 75%. Not complying with the 95% will subject you to possible penalties.
The Marketplace started sending out subsidy notices to employers who should have offered coverage due to full-time status. This notice states the lack of coverage offered and the penalty of that. If you did in fact offer coverage, but it was denied by the employee you will need to prove that.
Another big change for 2016 is the affordability of plans. For plan years beginning in 2016, affordability is based on 9.66%, increasing from 9.56%. This figure deals with how much you can charge an employee for single coverage, so you will need to be mindful of this when determining affordability.
Once you determine your FTE status you will either be tasked with reporting, or not reporting. If you need reach that applicable large employer (ALE) status, you will be required to report for 2016. Keep in mind that when reporting for 2016 ACA you are actually looking back at 2015. This means if you were over that 50 FTE threshold in 2015, you are required to report for 2016 for a 2017 reporting. Again, you are pulling the data from 2015, for a 2016 enrollment, and reporting that information in 2017.
One last thing to note, you should verify with your insurance provider that you are offering a qualified health plan with minimal essential coverage. You should also make sure you have a way to track employee hours. Your definition of full-time might not necessarily be the same as what the IRS defines as full-time. If you’re unsure about what the IRS classifies as full-time, it is 30 hours a week on average.
If you are currently using Dominion for your payroll and HR processes and are interested in learning more about the free tools available to you within the software please feel free to reach out to us for more information.