SMACNA—St. Louis
Affordable Care Act
Employer Mandate:
Compliance and Reporting
October 13, 2015
Agenda
 Is the ACA going away?
 Employer Mandate
 What is it?
 Does it apply? If so,
when?
 What does it require?
 How is if affected by
multiemployer plan
coverage?
 What are the penalties?
 6055/6056 Reporting
 1094 Forms
 1095 Forms
 Q&A
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ACA: Is It Going Away?
NO
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At least not any
time soon…
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ACA: It’s Not Going Anywhere
 Judicial Challenges
 Supreme Court has upheld individual mandate (2012) and federal
exchange subsidies (2015)
 ACA is here to stay (subject to any future legislative modifications).
 ACA Repeal?
 Anything’s possible, but wholesale repeal is very unlikely.
 Kaiser Family Foundation: 28% of Americans favor full repeal, but
that faction is divided on a replacement plan (if any).
 ACA Taxes – Repeal or Modification?
 House of Representatives Ways and Means Committee targeting
ACA tax provisions in Fall session.
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Employer Mandate: What is it?
 “Shared Responsibility”—ACA contains a dual
mandate for health insurance coverage
 Individual
 Employer (aka “pay or play”)
 Applicable large employers must offer minimum
essential health coverage to substantially all of their
full-time employees
 Such coverage must meet affordability and minimum
value guidelines in order for employer to avoid all
penalties
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Employer Mandate: Does it apply?
 Applicable Large Employer (ALE)— average of 50 or more full-time
and “full-time equivalent” employees (FTEs) during the prior year.




Union employees;
Seasonal employees; and
Temporary employees you employ; but
NOT sole proprietors, partners in a partnership or 2% S corporation
shareholders
 FTE Calculation:
1.
2.
3.
4.
5.
Count all full-time employees by month (any employee paid for 120
hours during that month).
Add all hours worked by all remaining employees (all non-full time
employees).
Divide hours worked by 120 to get the number of monthly equivalents.
Add monthly full time employees to monthly equivalents to get monthly
FTEs.
Add all monthly FTEs and divide by 12.
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Employer Mandate:
When Does it apply?
 Generally, January 1, 2015
 Employers with 100+ FTEs
 1st plan year or renewal during 2015 for non-calendar year
plan if no plan year change after 12/27/2012
 2016: 50-99 FTEs
 Cannot reduce workforce numbers and hours to avoid
mandate
 Have to maintain health plan coverage and eligibility in
effect as of 2/9/2014
 1st day of 2016 plan year (if no change after 2/9/2014)
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Employer Mandate: What Does it Require?
 Two Levels of Employer Obligations under IRC §4980H:
 Part (a)—offer minimum essential coverage to substantially all fulltime employees and dependent children
 “Minimum essential coverage”—basically any employer-sponsored or
multiemployer plan medical coverage
 “Substantially all”=70% in 2015; 95% in 2016 and beyond
 Part (b)--coverage must be affordable and meet minimum value
standard
 “Affordable”—Employee share of cost for self-only coverage on the lowest
offered plan cannot exceed 9.5% of the employee’s household income
 3 safe harbors are available allowing substitution for household income
 Minimum Value—plan covers at least 60% of total allowed cost of benefits
determined by use of calculator from HHS or actuarial certification
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Employer Mandate: Multiemployer Plans
 An offer of coverage is required by an employee’s
common law employer, so contractors are technically
responsible for offering coverage to union employees
who are employed on a full-time basis.
 However, regulations clarify that if an employer is
making contributions to a multiemployer plan for an
employee, an offer of coverage from the multiemployer
plan to that employee will be considered to satisfy the
employer’s obligation.
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Employer Mandate: Penalties
 Only triggered if an employee goes to the exchange
(healthcare.gov) and receives a subsidy.
 2 Types of Penalties:
 Part (a)—Failure to offer minimum essential
coverage to full-time employees and dependent
children (70% in 2015, 95% beginning in 2016)
$2,000* x each full-time employee minus 30
(minus 80 in 2015)
 Part (b)—Failure to offer affordable and/or
minimum value coverage
$3,000* per employee who received a subsidy.
*Indexed for inflation beginning in 2015
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Employer Mandate: Penalties
 Multiemployer plans—Under interim guidance,
employer will not be subject to penalty for any
employee for whom it is making contributions to a
multiemployer plan that offers coverage to that
employee as well as his/her dependents and meets
affordability and minimum value requirements.
 However, employer could still be subject to
penalty for any non-CBA employees not offered
coverage
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Employer Mandate: Penalty Example
XYZ Contracting has 100 full-time employees, 95 of which
are union members. XYZ is making contributions on those
employees’ behalf to the union’s plan, which offers them
coverage. XYZ does not offer coverage to the remaining 5
employees, who are not covered by a CBA.
 Since coverage was offered to 95% of the XYZ’s full-time
employees, XYZ will not be subject to the Part (a) penalty.
 However, if two of the non-CBA employees go to
healthcare.gov and qualify for subsidies, XYZ will be liable
for the Part (b) penalty on those two employees.
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Employer Mandate: Penalties
 Penalties are calculated on a month-by-month basis.
 Example: if employer fails to offer affordable coverage to employee
who receives a subsidy on the exchange for 3 months, employer
subject to $750 penalty.
 $3,000 / 12 = $250 per month
 3 months = $750
 Assessment based on returns (Form 1094 & 1095) filed with
IRS
 Employer will be contacted by IRS following submission of Forms and
will have an opportunity to respond before demand for payment is due
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ACA Reporting: 6055 & 6056
 2 reporting obligations: 6055 and 6056 (IRC sections).
 6055—insurance companies and self-insured plans must
report of minimum essential coverage as proof of individual
coverage
 6056—applicable large employers must report coverage
offers to full-time employees to satisfy employer mandate
 Any employer with 50+ FTEs in 2014.
 Employers with 50-99 FTEs must file for 2015 even if not
subject to the mandate until 2016.
 Reported via IRS Forms 1094 and 1095
 Each Form has “B” and “C” versions
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ACA Reporting: Deadlines & Filing
 When?
 January 31, 2016: copies of 1095-C forms must be
distributed to employees.
 Actually have until February 1, 2016 (January 31 is a Sunday).
 Consider distributing with W-2s.
 February 29, 2016: deadline for filing return to IRS by mail.
 March 31, 2016: deadline for filing electronically with IRS.
 Employers filing 250+ forms must file electronically.
 What Should You Distribute to Employees and What
Should You File?
 Each employer must file a 1094-C form with the IRS.
 Transmittal / cover letter – information about the employer.
 Each employer must file a 1095-C for each full-time
employee
 Each full-time employee should receive a copy of his or her
1095-C (proof of insurance).
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ACA Reporting: B & C Forms
 B Forms – 1094-B / 1095-B
 6055 Reporting
 Insurance Carriers
 Self-insured Plan Sponsor—Including Multiemployer Plans
 C Forms – 1094-C / 1095-C
 6056 Reporting
 Applicable Large Employers
 If employer has 50+ FTEs, it will use the C forms regardless of
self-funding / fully insured status.
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Did you
offer
coverage to
95% of full
time
employees?
2 types:
 50-99 FTEs
(not subject
to the
mandate in
2015)
 100+ FTEs
(offered to
70% of full
time
employees
or invoking
phased-in
penalty
calculations)
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Complete 1 for every full-time employee
Only Completed by Self-Insured Employers
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For Union
Employees:
use 1H in line
14 and 2E in
line 16
Line 14
Line 15
 Asks “was an offer made,
and if so, what type?”
 Commonly-used codes:
 1A: Qualifying Offer
 1C: MEC to employee
and dependents
 1E: MEC to employee,
spouse and
dependents
 1H: No offer
 1I: Transition Relief
2015
 Asks for the lowest
employee share of
premium that was
offered.
 If 2 plans (both MEC and
minimum value) are
offered, use the lower
plan.
 Leave blank if using
codes 1A or 1H in line 14.
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Line 16
 Asks for an explanation of
line 14 response.
 Codes:
 2A: Not employed during
month
 2B: Not a full-time
employee
 2C: Enrolled
 2D: Limited NonAssessment Period
 2E: Multiemployer Plan
 2F-G: Offer affordable
under safe harbor
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Questions?
Dawn Kramer
Team Leader—Compliance Consulting
J.W. Terrill, a Marsh & McLennan Agency LLC company
314-549-2624
dkramer@jwterrill.com
Please note that this presentation is for general informational purposes only
and is not intended to constitute legal or tax advice or a recommended
course of action in any given situation. Materials are not intended to be,
and should not be, relied upon by the recipient in making decisions of a
legal nature with respect to the issues discussed herein. The recipient is
encouraged to consult independent counsel before making any decisions or
taking any action concerning these matters.
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