Employer Reporting June 2015

Agenda Background and Basic Rules Form 1094-C Form 1095-C Form 1095-C Examples Form 1094-B and 1095-B Miscellaneous

Background And Basic Rules

Background Employer reporting of plan and coverage information will provide the IRS with the information necessary to administer and regulate: Individual compliance with the requirement to have minimum essential coverage (“individual mandate”) Individual eligibility for a premium tax credit/subsidy for coverage through a public Marketplace Employer compliance with the requirement to offer coverage to full-time employees and their dependent children under the employer shared responsibility rules (Section 4980H)

Background All “applicable large employers” (ALE = 50 or more FTEs) must report plan and offer of coverage information (§6056) Required regardless of whether employer offers a fully-insured or self-funded or even if no coverage is offered at all Employers with 50-99 FTEs satisfying the transition relief criteria to delay compliance until 2016 must still report for 2015 Reporting required on any employee who is full-time for at least 1 month during the year as defined by Section 4980H using the monthly measurement method or the look-back measurement method

Background All employers offering self-funded plans (large and small) must report participant coverage information for any individual covered by the self-funded plan (§6055) Insurance companies will report this coverage information to the IRS for fully-insured plans Reporting must be provided on any individual covered by the self-funded plan for at least one month (full-time, part-time, or non-employee) including information on any covered spouse and dependents Reporting is required for minimum essential coverage “…minimum essential coverage that supplements a primary plan of the same plan sponsor or that supplements government-sponsored coverage (such as Medicare) are supplemental coverage not subject to reporting”  Rules specifically address HRAs and clarify that HRAs are not subject to the reporting requirements

When Must Employers Report? Reporting first required in 2016 for the 2015 calendar year Reporting is based on data from the previous calendar year regardless of the employer’s plan year Annual timeframes for reporting (same as for W-2s) Form 1094 and all Form 1095s must be filed with the IRS by Feb 28 (Mar 31, if filed electronically) Form 1095s (employee statements) must be provided annually to employees by Jan 31

Form Details Form 1094 Employer Summary & Transmittal Form Used to report employer summary information to the IRS Think of it as a cover sheet for the individual employee statements Form 1095 Employee Statement Used to report employee-specific and covered individual information In general, one is required for: Each full-time employee; and Each covered individual under a self-funded plan 2014 forms and instructions on the IRS website at: http://www.irs.gov/Forms-&-Pubs Electronic Reporting Employers who file 250 or more 1095s must file electronically

ALE Fully-Insured Plan Small Fully-Insured Plan Small Self-Funded Plan 8/15/2013 Which Forms? ALE Fully-Insured Plan ALE Self-Funded Plan Form 1094-C (all parts) Form 1095-C Part I - Employee & Employer Info Part II - Offer of Coverage (eligibility) Info *Insurance carrier will provide coverage information via Form 1094/1095-B Part III - Info on Covered Individuals *Form 1094/1095-B may be used instead for non-employees covered under the plan Small Fully-Insured Plan Small Self-Funded Plan  No reporting required by the employer Form 1094-B and 1095-B Info on Covered Individuals

Form 1094-C

Form 1094–C Page 1

Qualifying Offer Method “Qualifying Offer” to one or more of its full-time employees for all months during the year in which the employee was a full-time employee for whom an employer shared responsibility payment could apply “Qualifying Offer” = a minimum value offer at an employee cost for employee-only coverage for each month not exceeding $93.18/month for 2015 (9.5 percent of the mainland single federal poverty line (FPL)), and a minimum essential coverage offer to spouses and dependents Benefits to employer: Easier reporting on Form 1095-C (no need to complete Line 15) May use simplified statement for employees instead of copy of Form 1095 Employer still has to provide a 1095 to the IRS…why not just give the employees a copy? Self-funded employers cannot use the simplified statement for anyone who has elected coverage

Qualifying Offer Method Transition Relief “Qualifying Offer” for one or more months of 2015 to at least 95% of its full-time employees Benefits to employer: Easier reporting on Form 1095-C (no need to complete Line 15) Use Code 1A for those offered coverage and 1I for those not offered coverage May use simplified statement for employees instead of copy of Form 1095 Employer still has to provide a 1095 to the IRS…why not just give the employees a copy? Self-funded employers cannot use the simplified statement for anyone who has elected coverage

4980H Transition Relief Employers taking advantage of the following transition relief: Employers with 50-99 FTEs that are not in compliance for 2015 and want to take avoid any potential penalties until plan year 2016 Employers with 100 or more FTEs that fail to offer coverage to 70% of full-time employees and want to take advantage of the waiver for the first 80 full-time employees when calculating penalty 4980H(a)

98% Offer Method For all months of the calendar year, employer offered affordable, minimum value coverage to at least 98% of its full-time employees and offered minimum essential coverage to the employees’ dependents (not spouses) Affordability can be based on any of the affordability safe harbors Benefits to employer: Employer does not have to provide number of full-time employees by month in column (b) of 1094-C So long as the employer files a Form 1095-C for each full-time employee, the employer is not required to identify which employees are full-time or part-time Must provide a 1095-C for any employees taken into consideration in establishing the 98%

Form 1094–C Page 2

Page 2 Information Required Column (a) – Offered coverage to 95% of full-time employees and dependent children? Employee in a limited non-assessment period (i.e. waiting period or initial measurement period) is not counted Employee for whom employer is contributing to a multiemployer plan (even if individual is not actually eligible for coverage) is treated as offered coverage For 2015 only: If employer offered to 70% or more of its full-time employees, the employer may check “Yes” If employer is taking steps to offer dependent coverage by next year, the employer may check “Yes” For non-calendar year plans, if employer is in compliance as of the start of the 2015 plan year, employer may check “Yes” for the months prior to the beginning of the 2015 plan year For January 2015, if employer offers health coverage to employees no later than 1st day of the 1st payroll period, the employer may check “Yes” for January

Page 2 Information Required Column (b) – Number of full-time employees Not necessary to complete if using the 98% Offer Method Do not count employees in a limited non-assessment period (i.e. waiting period or initial measurement period) Column (c) – Total number of employees Use either (a) first or last day of the month; or (b) first or last day of the first payroll period for the month Column (d) – Is employer part of a controlled group? If Yes, complete this column; otherwise leave blank Column (e) – Transition relief code Code A for employer with 50-99 FTEs Code B for employer with 100 or more FTEs that fails to offer coverage to 70% of full-time employees and wants to take advantage of the waiver for the first 80 full-time employees when calculating penalty 4980H(a)

Form 1094–C Page 3

Form 1095-C

1095–C Fully-Insured Plan Employer does not fill out Part III

Part II - Information Required Line 14 Code Series 1 (Offer of Coverage Codes) Offer of coverage valid only if available for the entire month Code Description 1A MV offered at less than 9.5% of mainland FPL ($93.18/mo), at least MEC offered to spouse & dependents (“qualifying offer”) 1B MV Offer to EE only 1C MV Offer to EE + Dependent (not spouse) 1D MV Offer to EE + Spouse 1E MV offered to EE, at least MEC offered to spouse & dependents 1F MEC that is not MV offered to employee 1G Part-time EE or non-employee covered under self-funded plan 1H No offer of coverage to full-time employee 1I No offer to employee but employer using qualifying offer transition relief

Part II - Information Required Line 15 Complete line 15 only if Code 1B, 1C, 1D or 1E was used on Line 14 Provide employee contribution required to participate as an employee-only (single coverage) in the lowest cost minimum value plan offered Be sure to consider any applicable wellness incentives or opt-out (waiver) incentives when determining the employee contribution

Part II - Information Required Line 16 Code Series 2 (Safe Harbor Codes) Code Description 2A Not employed any day that month 2B Part-time or termination month when not covered all month 2C Enrolled in coverage (Use over any other code if applicable) 2D EE in non-assessment period (e.g. waiting period or initial measurement period) 2E Multi-employer plan interim relief 2F W-2 Safe harbor 2G FPL safe-harbor 2H Rate of pay safe harbor 2I Non-calendar year plan transition relief

1095-C 1095–C

Part III – Information Required 8/15/2013 Part III – Information Required Self-Funded Plans Only Coverage related information required for all covered individuals including employees, non-employees, spouses, & dependents: Name SSN (or DOB if SSN is not available) Rules require employer to make 3 reasonable attempts to obtain SSN numbers for spouses and dependents Whether individual had coverage in employer-sponsored minimum essential coverage (MEC) for each calendar month (Y or N) Individual is considered to have coverage for the month if covered any day during the month

1095-C Examples

8/15/2013 Covered All Year Employee and spouse covered on minimum value self-funded plan all year, child added in July $100 per month to participate in single minimum value coverage

Qualifying Offer Covered All Year 8/15/2013 Qualifying Offer Covered All Year Offer of minimum value coverage to employee (single cost less than $93.18 per month) and coverage offered to spouse and dependents Employee is covered under the fully-insured plan all year

8/15/2013 New Hire New employee hired February 15th made a “qualifying offer” May 1st after waiting period of 1st of the month following 60 days – employee waives coverage

8/15/2013 Terminated Employee Fully-insured minimum value plan offered, employee waived $110 per month for minimum value single coverage Employer set contributions based on the W-2 safe harbor Employee terminated August 15th and plan offers coverage only through date of termination

8/15/2013 Terminated Employee Fully-insured minimum value plan offered, employee accepted $110 per month for minimum value single coverage Employee terminated August 15th and plan offers coverage only through date of termination COBRA offered and waived

8/15/2013 Terminated Employee Fully-insured minimum value plan offered, employee accepted $110 per month for minimum value single coverage Employee terminated August 15th and plan offers coverage only through date of termination COBRA offered and accepted at $300 per month for single coverage

8/15/2013 Reduction in Hours Fully-insured minimum value plan offered, employee accepted $110 per month for minimum value single coverage Employee has a reduction in hours to part-time in August and coverage terminates end of July COBRA offered and accepted at $300 per month for single coverage

8/15/2013 Reduction in Hours Fully-insured minimum value plan offered, employee accepted $110 per month for minimum value single coverage Employee has a reduction in hours to part-time in August and coverage terminates end of July COBRA offered and waived at $300 per month for single coverage

8/15/2013 COBRA to Non-Employee COBRA coverage under a self-funded plan of individual not full-time for any month during the year

Form 1094-B and 1095-B

8/15/2013 1094-B and 1095-B When to Use Small employers (not an ALE) for individuals covered by a self-funded plan ALEs for certain individuals covered by a self-funded plan Can only be used if the individual was not a full-time employee for any month during the year Part-time employees covered by self-funded plan Non-employees covered by self-funded plan COBRA, retirees, board of directors, etc.

1094-B

1095-B

Miscellaneous

Reporting Responsibilities 8/15/2013 Reporting Responsibilities ALEs in an “Aggregated Group” (controlled group) Each must file separately with their own 1094 and 1095s for respective full-time employees Multiple employers participating in a self-funded plan (MEWA or controlled group) Each must file separately with their own 1094 and 1095s for respective covered individuals Multiemployer Plans (Union or Taft-Hartley) Employer still required to file necessary 1095s Trust administrator will provide coverage statement (i.e. 1095-B)

Reporting Responsibilities 8/15/2013 Reporting Responsibilities Some will choose to do the reporting internally More commonly, employers will utilize vendor services Payroll vendor Ben admin vendor TPA