1. ACA Eligibility & Tracking IRS Code Section 6055 & 6056
September 2015

2. ACA Eligibility: The Basics

3. ACA Eligibility: Employee Status Change to Full-time

4. ACA Eligibility: Employee Status Change to Full-time

5. ACA Eligibility: Employee Status Change to Part-time

6. ACA Eligibility: Re-Hire

7. ACA Eligibility: Leave of Absence

8. ACA Eligibility: Initial Measurement Period
A. Determine Length
Recommend 11 or 12 month
B. Define Start Date of IMP
Hire date
First of month following hire date
C. Administration Period
D. Effective Date of Coverage

9. ACA Eligibility: Tracking
How are you tracking hours to determine if an offer of coverage is required at the end of the Initial Measurement Period? Did they average 30 hours per week/130 hours per month? Have Adjunct Professors? What is the reasonable method you are using? 2 ¼ hours of service per week for each teaching hour, this method would credit 1 ¼ hours for activities such as class preparation, office hours, grading papers and the like. Have Coaches? Are you using the Session/Event Method? How does Stipend Pay come into play?

10. ACA Eligibility: Tracking

11. You’ve Tracked, Now The Reporting

12. 6055 / 6056 Introduction Final Regulations
Section 6055 – information reporting on Minimum Essential Coverage (MEC)
79 Fed Reg (March 10, 2014)
Section 6056 – information reporting by Applicable Large Employers (ALE)
79 Fed Reg (March 10, 2014)
Final Forms released February 11th
1095-B: Health Coverage
1095-C: Employer-Provided Health Insurance Offer and Coverage
1094-B: Transmittal of Health Coverage Information Return
1094-C: Transmittal of Employer-Provided Health Insurance Office and Coverage Information Returns

13. Why? Reporting rules used to enforce
Individual mandate under IRC 5000A (penalty for no coverage)
Employer mandate under IRC 4980H (penalty no MEV, Affordable)
Premium tax credits under IRC 36B (subsidy eligibility)
Agencies will be electronically connected and interface with software programs to make determinations on the above mandates…………………….
Anyone remember the little problem with Healthcare.gov ?!?

14. 6055 MEC Reporting Background
Reports information about individuals with MEC
Allows the IRS to assess the individual income tax penalty for those individuals without MEC
Similar to W-2 reporting, one copy to the individual, and another copy to the IRS

15. 6055 MEC Reporting Insured Plans – insurer is responsible
Self-Insured plans – employer is responsible
Multi-employer plans – plan administrator is responsible
Affordable MEC reporting applies regardless of whether a ALE (Applicable Large Employer) under 4980H (50-99 EMPLOYEES MUST REPORT)
What is MEC
Major medical coverage including COBRA coverage and pre-65 retiree coverage
What is not MEC
Stand-alone dental and vision (in most cases)
EAPs, Separate wellness arrangements, health FSAs
HSAs

16. 6055 MEC Reporting
Exceptions for Integrated HRAs
No separate reporting is required for coverage that supplements other coverage, if the primary and secondary coverage have the same plan sponsor. This is intended to exclude the necessity of separate reporting requirements for integrated HRA’s.
SPOILER ALERT!!! The revised draft instructions released in August make the HRA not a supplemental plan and therefore would be required to be reported separately from the health insurance plan.
NOTE: If you have a “Stand-Alone HRA” in spend down you must report!
No Exceptions
Pre-65 HRA coverage must be reported as MEC
Any employee enrolled in MEC regardless of full time or not (if you offer coverage to under hour per week employees, must report on all employees that are covered regardless if considered full time under ACA
COBRA beneficiaries
Any enrolled spouses and dependents of the above
Self-funded plans will meet the 6055 reporting requirements using the C
If you are self-funded and offering coverage to non-employees (for example, Board of Directors) who enroll in coverage, you must complete a 1095-C for that individual even though they are not a full time employee.

17. 6056 FTE Reporting Background Entities required to report
Provides the IRS with documentation to determine the applicable 4980H penalty to employers)
Provides information to the employees to determine eligibility for premium tax credits on the Exchanges
Similar to W-2 reporting, one copy to the individual, and another copy to the IRS
Entities required to report
Any employer that is an ALE for purposes of 4980H (50 – 99 & 100+)
If not a large employer (under *50 FTEs) then no reporting at all is required
FTE is Full Time Equivalents, not Full Time Employees

18. 6056 FTE Reporting Controlled Groups
For determining ALE, use total employee count among entire controlled group – this can be difficult for family and brother-sister entities –corporate council should be directly involved in this instance
Each employer in the controlled group is responsible for reporting
Reporting can be coordinated by a single entity of the control group *note: single transmittal may be done under the control group ONLY if they file their taxes that way*

19. 6056 FTE Reporting Multiemployer Plan / Union
On February 8, 2015, the Internal Revenue Service (IRS) published final Forms 1094-C and 1095-C and instructions on the employer reporting requirements under Code Section 6056.
Although the Preamble to the Code Section 6056 final regulations indicated that the multiemployer plan administrator may prepare the forms for the employees eligible for the multiemployer plan (reporting information for both the plan and the ALE member), the instructions for the final forms do not appear to provide any way for the plan administrator to do so, and thus, it appears that the ALE member must report under Section 6056 for its full-time employees eligible for a multiemployer plan and the ALE member is responsible for any penalties resulting from incorrect reporting.  
ALE members must file one Form 1095-C for each employee who was a full-time employee for any month of the calendar year, providing information regarding the offer of health coverage. In cases of multiemployer arrangements, the ALE member is not directly making the offer, so details of any such offers must be obtained from the coverage provider (i.e., the multiemployer plan).  The Preamble to the Code Section 4980H final regulations contains interim guidance for employers that contribute to a multiemployer plan.

20. 6056 FTE Reporting Multiemployer Plan / Union
An ALE member relying on the interim guidance reports on the Forms C and 1095-C in the following manner:
Form 1094-C, Part III, column (a), which reports whether the employer offered minimum essential coverage to at least 70% of its full-time employees (95% after 2015), for the month(s) in which the employer is eligible, employees for whom the employer is contributing to the multiemployer plan should be treated as having been offered minimum essential coverage (even if not actually offered coverage) for the months in which the employer is eligible to use the interim guidance. 

21. 6056 FTE Reporting Multiemployer Plan / Union
Form 1095-C, Part II, line 14 (detailing offers of coverage), ALE members should not enter a code for health coverage the employer is treated as having offered (but did not actually offer), even if the employee is included in the count of full-time employees offered coverage on Form 1094-C, Part III, column (a). Rather, although the language in the instructions is somewhat unclear it appears that line 14 must reflect the coverage actually offered to the employee.
Form 1095-C, Part II, line 15 (Employee Share of Lowest Cost Monthly Premium for Self-Only Minimum Value Coverage), it appears that the ALE must obtain the lowest- cost self-only coverage premium amount applicable to each employee from the multiemployer plan for Form 1095-C, line 15 reporting purposes.
ALE members that rely on this interim guidance for a full-time employee will generally enter Code “2E” (multiemployer interim rule relief) on line 16 of that employee’s Form 1095-C (Section 4980H Safe Harbor Codes and Other Relief for Employers) unless the employee actually enrolled in the coverage offered, in which case the ALE member will report Code “2C.” 

22. 6056 FTE Reporting Individuals included
All employees who are considered full time employees
- employees classified as “full time”
- “Safe harbor” employees – hours counted and determined to be full time under 4980H
All full time employees are reported regardless if coverage is offered or if they are enrolled in coverage

23. 6056 FTE Reporting Information included in the report to the IRS
Certification by month whether employer offered FTE’s and dependents an opportunity to enroll in MEC
Total number of FTEs each month
Name, address, SSN for each FTE
Months FTE was offered MEC
FTE share of lowest cost employee only premium for coverage that provides minimum value for each month
Over 250 forms, must file electronically with the IRS, but how?

24. Affordable Care Act Information Returns (AIR) Program - Did You Know?
Registering to Electronically File Information Returns Through AIR
Each Software Developer, Transmitter and Issuer/Payer (Submitter) must first complete the e-Services Registration to obtain login credentials and then login within 28 days to confirm registration and activate IRS user account.
The following steps, specific to AIR, will be available at a later date:
Each Software Developer, Transmitter and Issuer/Payer (Submitter) must complete the ACA Information Return Transmitter Control Code (TCC) Application and receive a TCC in the mail prior to electronically filing Affordable Care Act Information Return (AIR) Forms 1094-B, 1094-C, 1095-B and 1095-C.
An Issuer/Payer would only need a TCC if they are acting as a transmitter and submitting the information returns to IRS directly. Issuers/Payers using an authorized e-file Provider to transmit their information returns do not need to register for a TCC.
If a Software Developer plans to transmit submissions, they must apply for a TCC as both a Software Developer and Transmitter.  
AIR forms can be transmitted to IRS using either the Application to Application (A2A) channel or the ACA Web Browser User Interface (UI) channel in Extensible Markup Language (XML) format. 
An A2A Transmitter must complete the Automated Enrollment Process to obtain a certificate prior to transmitting returns to IRS.

25. Electronically Filing Through AIR
The AIR System will be available for Production in the fall of 2015.
ACA information returns are subject to Regulation , which requires filers of 250 or more of any one type of information return to file electronically.
Publication 5165, Affordable Care Act (ACA) Information Return (AIR) Guide for Software Developers and Transmitters, which outlines the communication procedures, transmission formats, business rules and validation procedures for ACA Information Returns filed electronically, will be published in the summer of 2015.
Transmissions to AIR must be comprised of only one type of ACA information return and its associated transmittal, for example, a transmission must only contain:
 Form 1094-B and Form 1095-B or 
 Form 1094-C and Form 1095-C.
 The form types cannot be combined.
Each transmission must contain at least one Transmittal, either Form 1094-B or Form 1094-C.
Original and corrected submissions cannot be combined in the same transmission file.
 Only original submissions can be submitted in the same transmission 
 Only correction submissions can be submitted in the same transmission
The data file size limit for a single transmission filed through AIR is 100MB
The 100MB limit applies to ACA Assurance Testing and Production. 
The 100MB limit applies to A2A and UI channels.
The XML Schemas for Forms 1094-B, 1094-C, 1095-B and 1095-C include elements designed to uniquely identify AIR transmissions, submissions within the transmission, and records within the submission. Transmitters must generate these IDs and maintain them along with their associated transmissions.
A Receipt ID will be generated for each transmission. The Receipt ID will either be returned in the SOAP Response when using A2A or on a web page in the Web Browser when using UI.
The Receipt ID is the key piece of information required when requesting the acknowledgement for that transmission from the IRS. The Receipt ID is not proof that the transmission was accepted or rejected.
The IRS will return one of the following processing statuses for each transmission: In Processing, Accepted, Accepted with Errors, or Rejected.
The IRS will create an Error Data File, when applicable, that includes record information, error code and description and the xpath content for each error in the transmission.

26. 6056 FTE Reporting Information included in the report to the FTE
Name, address, EIN of employer
Name and contact individual at the employer
Name, address and SSN of the FTE
Months which FTE was offered MEC coverage
Months FTE was enrolled in MEC, FTE share of lowest cost employee only premium for coverage that provides minimum value (60%) for each month

27. 6056 FTE Reporting Reporting timeline
Individual – send individual copy of Form 1095-C to the FTE by January 31 of each year starting with 2015 reporting year so first forms to employees by January 31, 2016 for 2015 tax year
IRS – send Form 1095-C along with 1094-C (employer transmittal) to IRS by March 31 each year, first file due March 31, 2016 for 2105 tax year
Penalties
Same as 6055 penalties, not combined, each has separate penalties assessed.

28. Penalty Old Amount New Amount
Failure to file/furnish an annual IRS return or provide individual statements to all full-time employees $100 $250
Annual cap on penalties $1,500,000 $3,000,000
Failure to file/furnish when corrected within 30 days of the required filing date $30 $50
Annual cap on penalties when corrected within 30 days of required filing date $250,000 $500,000
Failure to file/furnish when corrected by August 1 of the year in which the required filing date occurs $60 $100
Cap on penalties when corrected by August 1 of the year in which the required filing date occurs $500,000 $1,500,000

29. 6056 FTE Reporting Alternative Reporting #1
If FTE receives qualifying offer for all 12 months, then only the name, address and SSN of the FTE are reported along with a special code (1A)
Only applies if 95% of who is reported on 6055 receives “qualifying” offer on fully insured. 95% of who is reported on 6056 receives a “qualifying” offer on self funded
For Example: 100 FT and 100PT employees who are covered, the employer would have to make a qualifying offer to 95% of the total 200
What is a “Qualifying” offer?
Offer to an employee of Minimum Value Coverage to employee that costs the employee no more than 9.5% of the FPL for single coverage AND an offer of MEC to spouse and dependents

30. 6056 FTE Reporting Alternative Reporting #2
Employer must offer affordable minimum value MEC to at least 98% of employees included in 6056 reporting
Only if you meet the above, employer is not required to identify which employees are FTEs or total number of FTEs
This would be useful for larger self-funded plans that offer to employees under 30 hours, for example Part Time employees working 20+ hours per week.

31. What Happens After Reporting
Employer penalty
IRS calculates penalty for each separate employer
IRS sends penalty notice to employers ($2,000/$3,000)
Employer will have ability to appeal (no guidance on how/when)
Timeframe is late in year i.e.: September 2016 for 2015 tax year
Individual penalty
Some individuals will have received “advances” of the tax credits during year
Either way, individuals claim tax credits and calculate the full amount of the credit on Form The IRS has released Form 1095-A.

32. What to track •Name •Company/Division •Location •Employment Status
•Pay Frequency
•Benefit Status
•Hours Worked
•Pay Rate
•W2-Wages
•Birthdate
•Hire Date
•Rehire Date
•Full Time/PT/ Seasonal Indicator
•Benefits Eligibility Date
•Dependent Data (Name, DOB, SSN, Address etc.)
•Coverage Begin Date
•Coverage End Date
•Waivers
•Indicator if Employee is on LOA (STD, FMLA, WC)
•Verification each month employee was covered even if only 1 day
•Indicator Code for Employee Offer of Coverage

33. A few codes to review Line #14 & 15
Offer for the month only if offered for everyday of the month!
•1A
•1B
•1G
•1I
•Qualifying offer, MEC, providing MV self-only 9.5% FPL
•Minimum essential coverage providing minimum value offered to employee only
•Offer of coverage to employee who was not a full time employee for ANY month of the calendar year and enrolled in for one or more months
•Qualifying Offer Transitional Relief 2015: employee (and spouse or dependents) received no offer of coverage, received an offer that is not a qualifying offer, or received a qualifying offer for less than 12 months
Qualifying Offer: Offer of MV that costs no more than 9.5% of FPL for single coverage
Line #15 ONLY complete if Line #14 code is 1B, 1C, 1D or 1E

34. A few codes to review Line #16
If more than one code applicable, specific ordering rules for which code to use must be followed!
•2A
•2B
•2C
•2D
•Employee was not employed on any day that month
•Employee is not a full time employee
•Employee enrolled in coverage
•Employee is Limited Non-Assessment Period *Note if employee is in initial measurement period, use 2D and NOT 2B
A total of 8 codes to choose from to populate Line #16

35. 1095-C: Example #1
Bob is employed by ABC on April 15, Bob is hired into a full-time position.
ABC’s health plan imposes a 60 day waiting period on full-time employees. If Bob enrolls, his coverage will be effective June 15, 2015.
Bob is offered the following coverage:
HDHP health plan with an employee contribution for self only coverage is $92.00 per month. The HDHP provides minimum value. Coverage for the spouse and dependent children (if any) is also offered. (9.5% FPL Offer of Coverage Method)
Bob does not enroll in the health plan.

36. IH – No offer of coverage Bob is in his waiting period
1A - Qualified Offer was made with MEC, MV and Affordable.
When 1A code is applicable, Line 15 is not populated
2A – Bob was not an employee of ABC Company
2D – Bob is in his waiting period. Even though in this example Bob is eligible on July 15th, if there is not a full month of coverage, then no coverage offered for that month
Line #14
IH – No offer of Coverage code - Bob is not an employee for the months of January thru March, Bob is in his 60 day waiting period for April, May and June.
1A – Qualified offer and self only coverage is equal to or less than 9.5% mainland FPL was made to Bob for coverage on July 1st
Line #16
2A employee not employed during the month – 2A entered for January, February and March.
2D Employee is in his limited non assessment period (waiting period) – 2D entered for April, May and June
1095-C EXAMPLE 1

37. 1095-C: Example #2
Bob is employed by ABC on April 15, Bob is hired into a full-time position.
ABC’s health plan imposes a 60 day waiting period on full-time employees. If Bob enrolls, his coverage will be effective June 15, 2015.
Bob is offered the following coverage:
HDHP health plan with an employee contribution for self only coverage is $ per month. The HDHP provides minimum value. Coverage for the spouse and dependent children (if any) is also offered.
ABC uses the W-2 affordability safe harbor.
Coverage is “affordable” for Bob under the W-2 safe harbor.

38. 1E – Bob was offered MEC and MV and at least MEC offered to dependent(s) & spouse
Line 15 – Complete ONLY if code 1B, 1C, 1D or 1E is used in line #14
2F – ABC company is using Form W-2 Safe Harbor
Line #14
IH – No offer of Coverage code - Bob is not an employee for the months of January thru March, Bob is in his 60 day waiting period for April, May and June.
1E – Minimum essential coverage providing minimum value offer to employee and dependents & spouse. You would not use code 1A in this example because remember in this example ABC company is using W-2 safe harbor affordability
Line #15
Lowest cost single plan entered since ABC is not using FPL affordability safe harbor
Line #16
2A employee not employed during the month – 2A entered for January, February and March.
2D Employee is in his limited non assessment period (waiting period) – 2D entered for April, May and June
2F is the code used when affordability is Form W-2 safe harbor
1095-C EXAMPLE 2

39. 1095-C: Example #3
John was employed by ABC Company as a full-time employee and then terminated employment on June 15, 2015
John was a full-time employee of ABC Corporation and received an offer of coverage providing minimum value for an employee, spouse and dependents (family coverage) under the ABC Corporation health plan.
ABC Corporation is an ALE and its health plan is a self-insured health plan. 
John enrolled in family coverage under the ABC Corporation health plan effective January 1, 2015.  On June 15, 2015, John terminated employment with ABC Corporation and received an offer of continuation coverage under COBRA but did not enroll in the coverage

40. Sample 1095-C Term EE offered COBRA
January thru May.
Line 14 is code 1E MEC providing MV to employee and at least MV to the spouse & dependents.
Line 15 lowest cost self only coverage as an active employee
Line 16 is code 2C employee enrolled in coverage.
June is the month John terminated employment.
Line 14 is code 1H, no offer of coverage (he wasn’t covered for the full month)
Line 15 is blank
Line 16 is code 2B, employee is not a full time employee
July thru December.
Line 14 is code 1H, no offer of coverage
Line 15 is blank
Line 16 is code 2A, John is no longer an employee in those months
Type info in here – copy and paste for more boxes
Sample 1095-C Term EE offered COBRA

41. 1095-C: Example #4
An ALE member making an offer of COBRA continuation coverage to an ongoing employee who loses eligibility for non-COBRA coverage due to a reduction in hours (for instance, a change from full time to part time status resulting in loss of eligibility under the plan) should report the offer of COBRA coverage as an offer of coverage in Part II.
James was a full-time employee of ABC Corporation and received an offer of coverage under the ABC Corporation health plan providing minimum value, including an offer of minimum essential coverage to his spouse and dependents. James enrolled in self-only coverage offered from January 1, 2015 through October 31, The required employee contribution for the lowest cost self-only coverage option under the plan was $150 per month. On November 1, 2015, James transferred to a part-time position and was no longer eligible for coverage under the terms of the ABC Corporation health plan. James received an offer of COBRA continuation coverage on account of the transfer to the reduced-hours position (using the 3 month exception rule), with a COBRA premium of $250 per month for self-only coverage.  James elected to enroll in the COBRA continuation coverage for the months of November and December, 2015.

42. SAMPLE 1095-C Reduction in Hours elected COBRA
Type info in here – copy and paste for more boxes
January thru October.
Line 14 is code 1E, MEC providing MV offer to employee and at least MEC offered to spouse & dependents.
Line 15 is $150, lowest cost self-only coverage.
Line 16 is code 2C, employee enrolled in coverage offered
November and December
Line 14 is code 1E, MEC providing MV offer to employee and at least MEC offered to spouse & dependents.
Line 15 is $250, the lowest cost COBRA premium coverage available
Line 16 is code 2C, employee enrolled in coverage offered
SAMPLE 1095-C Reduction in Hours elected COBRA

43. 1094-C: Example #1
ABC Company is a member of a controlled group of corporations that qualifies as an ALE. The other ALE Members in the same controlled group are:
123, Inc.
XYZ Company
Acme Inc.
During 2015, ABC had 1,000 total employees each month except for November and December, when ABC had 1200.
During 2015, ABC offered coverage to only 80% of its full-time employees each month.
ABC sponsors a self-insured medical plan (“Plan”).
In 2015, ABC made a qualifying offer under the Plan to one or more full- time employees.
In total, ABC had 500 full-time employees.
In addition, ABC had 200 part-time employees who enrolled in the Plan.

44. The contract person must be knowledgeable regarding the 1094-C and 1095-C form completion and the companies employees. This is the individual the IRS, DOL, HHS or even CMS will be calling.
500 FT at ACA 30+ hrs. & 200 PT who enrolled in the plan = 700
ABC Company is filing as the ALE including the other members of the controlled group.
Qualifying Offer Method ABC Company for all months during the year in which the employee was full time, made a qualifying offer to at least one employee and their dependents & spouse
Section 4980H Transitional Relief ABC Company offers coverage to 80%
(Transitional relief for employers employees, 100+ employees 70% test)
1094-C EXAMPLE 1

45. Box C on line 22 was selected (Section 4980H Transition Relief) so enter code B in (E)
Minimum Essential Coverage was not offered to 95% of full time employees for all 12 months of the calendar year
Column C is the total number of ALL employees per month. Employer can use either the first or last day of the month, whichever they choose must use the same for the following months counts
TIP 
If the employer offered to all but five of its full time employees and their dependents and if five is greater than 5% of the number of full time employees, the employer may report “yes”.
Example: offered to 75 of its 80 full time employees and their dependents
Since the employer did not qualify for the 98% Offer Method, Column B is required to be completed per month. If employer qualifies for 98% offer, column B completion is not required
1094-C EXAMPLE 2

46. Enter the names and EIN’s for all members of the ALE member group (control group) from largest to smallest. DO NOT include the control group member in this listing. In this example ABC Company is authoritative ALE
You can only file as a control group entity if the taxes for the control group are also filed together.
1094-C EXAMPLE 3

47. Thank You Lisa C. Allen, CHRS, CAS, CFC
Vice President, Regulatory Affairs
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