THE AFFORDABLE CARE ACT: Reporting and Filing Obligations for Employers Presented by Jessica Kuester Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

Agenda Overview Who Files What? Forms 1094-C and 1095-C How to Furnish and File Corrected Forms Penalties 2

Overview Annual reporting is a new requirement for 2015 Each individual receives information needed to prepare individual federal income tax return IRS collects information needed to: Assess individual mandate penalties Assess employer mandate penalties Confirm individuals’ eligibility for tax credit 3

Who Files What? Summary of Forms 1094/1095-B and 1094/1095-C Requirements Employer SizeFully Insured PlanSelf-Insured Plan Applicable Large Employer (50+ full-time employees and equivalents) Forms 1094 and 1095-C (Insurance company files 1094 and 1095-B) Forms 1094 and 1095-C Non-Applicable Large Employer (< 50 full-time employees and equivalents) N/A (Insurance company files 1094 and 1095-B) Forms 1094 and 1095-B 4

IRS Forms 1094 & 1095-C Who must report? “Applicable Large Employer” with ≥ 50 FTEs Even if not subject to employer mandate until 2016 because the ALE had employees in 2014 Each member of ALE group, regardless of size One ALE member can complete forms for others, but each member still liable TPA can file, but employer still liable Report to whom? Anyone who was a full-time employee for any month during the calendar year, and Part-time employees if enrolled and plan is self-insured, and Non-employees if enrolled and plan is self-insured, and IRS 5

IRS Forms 1094 & 1095-C Report what? Who was offered coverage during the year and whether it was the “right” coverage Who was actually covered during the year (if plan is self-insured) Report how? Form 1095-C Employee statement Separate form for each employee; one per employee If employed full-time during any month of the year Don’t count months in Limited Non-Assessment Period Form 1094-C IRS transmittal forms for filing copies of employee Forms 1095-C Separate form for each separate entity 6

IRS Forms 1094 & 1095-C Report when? Furnish statement to employees IRS extended 2016 due date to March 31, 2016 No additional extensions may be requested By mail or hand-delivered Electronic distribution permitted with consent File with IRS IRS extended 2016 due dates to May 31, 2016 if filing by paper and June 30, 2016 if filing electronically No additional extensions may be requested Must file electronically if filing 250+ of any form 7

IRS Form 1095-C 8

Part I – Identify employee and employer Each separate ALE member provides to its employees under its EIN Part II – Report offers of coverage What coverage was actually offered and to whom and for which months Must enter a code for every month If code is the same for all 12 months, enter in first column 9

IRS Form 1095-C (Part II, Line 14) Type of OfferCode MEC to EE + spouse + dependents; MV1A (if less than $93.18/month) or 1E MEC to EE only; MV1B MEC to EE + dependents; MV1C MEC to EE + spouse; MV1D MEC to EE +/- spouse & dependents; not MV1F EE not full-time but in self-insured plan1G No offer of coverage1H 2015 Transition Relief1I 10

IRS Form 1095-C (Part II, Line 15) Only complete if Code 1B, 1C, 1D, or 1E is on Line 14 i.e., if offered MEC, MV to somebody in the family and not using Qualifying Offers (1A and 1I) Report employee share of lowest-cost monthly premium for self-only MEC providing MV Coverage offered, not necessarily coverage employee actually selected Used to prove affordability Enter dollars and cents for each month If code on Line 14 is…Then on Line 15… 1A, 1F, 1G, 1H, 1ILeave blank 1B, 1C, 1D, 1EEnter the employee’s share of the premium of lowest cost employee-only coverage option that provides MV 11

IRS Form 1095-C (Part II, Line 16) Reason for no penalty:Code: Not employed during month2A Not a full-time employee, not enrolled2B Current employee enrolled in coverage2C Employee in a waiting period2D Special rule for multiemployer (union) plans2E Not enrolled, coverage is affordable2F (W-2), 2G (Rate of Pay), 2H (FPL) Non-calendar year plan transition rules2I 12

IRS Form 1095-C (Part II, Line 16) W-2 affordability safe harbor: employee cost of single coverage is less than 9.5% of Box 1 on W-2 Must use for full year Determined on an employee-by-employee basis Rate of Pay affordability safe harbor: employee cost of single coverage less than 9.5% of rate of pay Hourly rate of pay × 130 hours per month Monthly salary as of start of year Federal Poverty Line (FPL) affordability safe harbor: employee cost of single coverage less than 9.5% of the federal poverty line $93.18 per month for

IRS Form 1095-C Part III – only complete if the plan is self-insured; fully insured plans skip Report who was actually covered for each month of the year List employee, spouse, and dependents actually covered and indicate the months that they were actually covered Include full-time and part-time employees Check box for a month if covered at least one day of the month 14

IRS Form 1094-C 15

IRS Form 1094-C Each ALE Member uses Form 1094-C to transmit 1095-Cs to IRS Part I – identify employer Line 18 – can transmit in batches List total number of 1095-Cs being transmitted with this 1094-C Line 19 – check box if this is the “authoritative transmittal” Reports aggregate employer-level data Only one authoritative transmittal per employer If only one Form 1094-C is filed, it is the authoritative transmittal If more than one Form 1094-C is filed, pick one as the authoritative transmittal and report aggregate data on that form For the authoritative transmittal, complete Parts II, III, and IV 16

IRS Form 1094-C Part II – ALE Member Information Line 20 – enter total 1095-Cs being filed by the employer Line 21 If ALE is part of a controlled group, check yes and complete: Part III Column (d) (aggregated group indicator), and Part IV (list of controlled group members) If ALE is not part of a controlled group, check no and do not complete Part III Column (d) or Part IV Line 22 – certification of eligibility for certain relief Qualifying Offer Method (if entering 1A on Line 14) Qualifying Offer Method Transition Relief (if making Qualifying Offers to 95% of full-time employees for any month) Section 4980H Transition Relief (if eligible for penalty relief) 98% Offer Method (if offered affordable coverage providing MV to 98% of employees receiving a 1095-C, plus dependents) 17

IRS Form 1094-C 18

IRS Form 1094-C Column (a) – MEC Offer Indicator Check yes if: Offered MEC to at least 95% of full-time employees and dependents Reduced to 70% for 2015 Offered MEC to all but 5 employees and 5 is greater than 5% Column (b) – Full-Time Employee Count Number of full-time employees for each month, not including LNAP Don’t complete if eligible for 98% Offer Method Column (c) – Total Employee Count Include full-time, part-time, and LNAP Must use same day each month (see instructions for options) Column (d) – Aggregated Group Indicator Check if part of controlled group for a month Column (e) – Section 4980H Transition Relief Code A if eligible for relief, or Code B if eligible for 100+ relief 19

IRS Form 1094-C Part IV – list members of controlled group List name and EIN of up to 30 controlled group members In descending order by highest average monthly number of full-time employees reported in Part III Column (b) 20

How to Furnish and File the Forms To employees Generally on paper by U.S. mail or by hand delivery Unless recipient affirmatively consents to electronic delivery Must either consent or confirm consent electronically To the IRS If required to file 250+ of any form, must file that form electronically Unless receive hardship waiver Submit Form 8508 at least 45 days before due date If required to file < 250 forms, encouraged to file electronically, but may file on paper by first-class U.S. mail Keep copies for at least 3 years after due date 21

Corrected Forms Form 1095-C If already filed with IRS, file fully completed form, including corrected information, as soon as error discovered Enter an “X” in “Corrected” box at top of form File with a non-authoritative Form 1094-C but do NOT check “Corrected” box at top of 1094-C Furnish employee a corrected copy If form was delivered to employee but not IRS, write “corrected” on new form delivered to employee Form 1094-C If correcting information on authoritative transmittal, file standalone fully completed Form 1094-C including the correct information Put an “X” in the “Corrected” box Do not file return correcting information on any Form 1094-C that is not an authoritative transmittal 22

Penalties Failure to file penalty is $250 per return, up to $3 million cap per calendar year Failure to furnish penalty is $250 per statement, up to $3 million cap per calendar year Increased penalties for intentional disregard of requirements Transition relief for 2015 reporting if: Good faith effort to comply Return and statement timely filed and furnished Only error is incorrect/incomplete information Reasonable cause exception If required to file electronically and do not do so (and do not have a waiver): Penalty of up to $250 per return, unless establish reasonable cause 23

Questions? 24