Very few of us are ready for the new PPACA reporting requirements. Many of us are aware that reports are due at year end, but haven’t even looked at the rules. Should we be concerned? The answer depends upon your company size and how your organization funds its group health benefits.

What are we talking about? The requirement mandates applicable large employers (those with 50 or more full-time equivalent employees) and small employers (under 50 full-time equivalent employees) sponsoring self-funded health plans to report on group health coverage offered to employees or to disclose that health coverage was not offered to employees in 2015. There are two reports employers must prepare: (1) an annual information return that is filed with the Internal Revenue Service (IRS), and (2) statements to provide to full-time employees about the group health plan coverage offered. As such:

* Internal Revenue Code § 6056 requires applicable large employers with fully-funded health insurance to provide the annual statement (IRS Form 1095-C) to each full-time employee detailing the employer’s health coverage offer.

* Internal Revenue Code § 6055 requires employers that provide minimum essential coverage under a self-funded (uninsured) plan to provide the annual statement to covered employees (either IRS Form 1095-B or 1095-C, based on company size).
 
* Employers also must file copies with the IRS using one of the Forms 1094transmittal documents.

The new reports are intended to help the IRS administer provisions under the Patient Protection and Affordable Care Act relating to the individual and employer mandates for health coverage. Specifically, the IRS will use    information reported by employers to determine:

* Whether applicable large employers failing to offer affordable minimum value coverage to full-time employees may be subject to potential penalties;

* If employees are (or are not) eligible for subsidies when they purchase health insurance in the individual health Insurance exchange; and

* Whether individuals who are enrolled in minimum essential coverage satisfy PPACA’s individual mandate.

The bottom line is that these are important tax forms with potentially serious financial consequences to employers. Under the employer shared responsibility provisions of PPACA, often called “play or pay,” year-end is when employers tell the government, through these reports, whether or not they chose the “play” option by providing their full-time employees and dependents affordable minimum essential health coverage that satisfies PPACA mandates or whether they may have to “pay” the employer shared responsibility premium penalties outlined in the law. Experts predict that these forms will receive a very high level of scrutiny by the government, so employers need to produce accurate and complete reports.

How will employers know if this reporting requirement applies to them?Applicable large employers subject to this reporting include all employers with 50 or more full-time employees and full-time equivalent employees, including governmental and nonprofit employers. A full-time employee is generally defined as a common-law employee averaging 30 or more hours of service per week, and an hour of service includes each hour in which payment is made or due to the employee, including hours worked, vacation, holiday, paid time off, or other types of leaves. Small employers with under 50 full-time equivalent employees offering insured group health plan coverage are exempt from the reporting requirements, with one exception: Small employers sponsoring self-funded health plans are subject to reporting requirements under Code § 6055.

While PPACA offered some employers (those with 50–99 employees) transition relief in 2015 from potential employer shared responsibility coverage penalties, this relief does not extend to the new reporting requirements.

When must these be filed? The requirement applies for calendar year 2015 with reports due in early 2016:

• 2015 Form 1095 (employee statement): Due February 1, 2016.

• 2015 Form 1094 (transmittal  form with copies of Forms 1095-C): Due February 29, 2016 (or March 31, 2016, if filing electronically).

The due dates are the same as the due dates for Forms W-2 and W-3 for the same calendar year.

This should be simple, right? Simple, probably not. Doable, absolutely yes. Keep in mind these are IRS forms.

ThinkHR recently conducted an informal poll of its customers to determine how knowledgeable they felt about the reporting requirements and learned that 75 percent were not confident that they knew enough today to file the reports. In addition, PricewaterhouseCoopers (PwC) conducted a survey in the first quarter of 2015 with 480 employers in 36 different U.S. industries that confirmed these new requirements are presenting challenges and many employers have not decided how they will comply.

The year is half over and for those employers that haven’t started collecting the required data, it is time to get started. While many employers believe that their payroll systems are capturing all of the data they need, this may not be the case. The PwC report revealed that 65 percent of survey participants indicated that the quality of the data available was a concern, because for many employers there are other systems outside of payroll that may be capturing the information needed, such as the company’s HRIS, benefits administration, time off and leave of absence administration systems as well as having data housed with outside third party vendors. The results also show that many of the survey participants are considering outsourcing this function to outside vendors. Because this information must be aggregated on a month-by-month basis, compliance managers are seeing the time slipping away to organize all of this information and determine the right solution.

What information should employers be collecting? Employers will need the following information in order to complete the reports:

    * Identifying information for the employer and employee, such as name and address.

    * Names of full-time employees for each month of the year.

    * Information about the health coverage offered by month, if any.

    * The employees’ share of the monthly premium for the lowest-cost self-only minimum value coverage.

    * Months each employee was enrolled in the coverage.

    * Months the employer met an affordability safe harbor with respect to an employee and whether other relief applied for an employee.

    * If the employer offers a self-funded plan, information about the covered individuals enrolled in the plan, by month.

    * Information about whether the employer offered coverage to 70 percent of full-time employees and their dependents in 2015 (after 2015, this threshold changes to 95 percent).

    * Total number of Forms 1095-C the employer issued to employees.

    * Information about members of the aggregated applicable large employer group, if any.

    * Full-time employee counts by month.

    * Total employee counts by month.

    * Whether employers are eligible for certain transition relief.

Tips to get started. To make the end of the year reporting easier, employers should:

1. Learn the details of the filing requirements and compliance requirements for the company.

2. Pull together the internal team (human resources, finance, and legal) to determine who owns this reporting responsibility and ensure that the company’s internal system(s) and third party vendors are capturing all of the data required for accurate and timely reporting.

3. Understand that the information will come from various sources, both inside and outside the company. Some of the information will be housed in benefits, payroll, and reporting time off data. For applicable self-funded plans, employers may need to start collecting Social Security numbers for dependents.

4. Determine if the reporting will be outsourced to a third party vendor and ensure that the information the vendor will need is available for reporting.

5. Review the organization’s compliance with the employer mandate rules. Employee hours of work and benefits eligibility must be captured monthly. If an employer does not count an employee’s hours of service accurately, the worker could be misclassified, and that could lead to an employer mandate (“play or pay”) penalty for failure to offer coverage, a penalty for violating the 90-day waiting period limitation, and/or lawsuits from the employee.

6. Finally, consider now the method of delivery of the reports, especially to employees. If considering electronic communications, get the process and the consents in place before the end of the year.

Get going with these tips to make the year end reporting process smoother. The time is now.

What you need to know

Registration has started, and it’s time to get your clients registered for the 13th round of Win by Losing, our free weight-loss competition.

The official Win by Losing site was updated to provide the same valuable content while making it easier for teams to find the materials. Conveniently located at the top of the page, tabs quickly take participants to leaderboards, registration, frequently asked questions and our essential toolkits.

Visit the site to see just how easy it is to navigate.

Action item

Encourage your clients to sign up for the Win by Losing competition at bcbsm.com/yourhealth.

Time frame

Note the key dates for this fall’s competition:

• Sept. 14: Registration is open.

• Sept. 21: The competition kicks off.

• Sept. 25: Teams begin to submit their total pounds lost for each week by 5 p.m.

• Nov. 20: The competition closes.

How to register teams
Team captains will register at bcbsm.com/yourhealth. They’ll submit:

• Their company name

• Their email address

• The number of participating employees

Total group starting weight. This is used as the starting point from which we’ll track the company’s progress.

Questions? Contact your Blues sales representative or managing agent.

The IRS has provided both new and updated Q&A guidance on the reporting requirements for applicable large employers under the federal tax code. As background, beginning in 2016,  applicable large employers must file Forms 1094 and 1095 to provide information to the IRS and plan participants about health coverage provided in the prior year.

The forms are used by the IRS to enforce employer penalties according to the federal tax code, as well as individual mandate and tax credit eligibility rules. The latest guidance consists of an updated Q&A document covering basic reporting requirements and a new Q&A document addressing more specific issues that may arise while completing Forms 1094 and 1095.

Here are some highlights:

* Clarifications on who must report. The guidance clarifies that an applicable large employer with no full-time employees for any month of the year is not obligated to report unless the employer sponsors a self-insured health plan in which any employee, spouse, or dependent is actually enrolled. In that case, it must still file Forms 1094-C and 1095-C even if it has no full-time employees. The guidance also confirms that an applicable large employer must file and provide Form 1095-C to all full-time employees regardless of whether they were offered coverage during the year.

* Controlled groups. Examples show how reporting differs where an applicable large employer reports for separate divisions and where applicable large employers are part of a controlled group. In the former situation, employees working for multiple divisions must receive aggregated information on a single Form 1095-C. In the latter situation, employees will receive a separate Form 1095-C for full-time employment with each applicable large employer in the controlled group.

* Qualifying offer method of reporting. The updated Q&As now address reporting under the qualifying offer method, which allows applicable large employers to furnish a simplified employee statement to employees receiving qualifying offers for all 12 months of the year. The Q&As emphasize that use of simplified statements is not available for employees who actually enroll in an applicable large employer’s self-insured health plan.

Note: No mention is made of the qualifying offer method transition relief available in 2015, which allows an applicable large employer to use a different simplified statement provided that it makes qualifying offers to at least 95% of its full-time employees.

* Delivery to employees. The guidance confirms that a Form 1095-C may be delivered to employees in any manner permitted for delivery of Form W-2, including hand-delivery. However, unlike Form W-2, employers need not furnish a midyear Form 1095-C upon an employee’s request following termination of employment.

* New hires and terminating employees. When reporting offers of coverage on Part II of Form 1095-C, applicable large employers may indicate that an offer of coverage was made for a month only if the offer would have provided coverage for every day of the month. Therefore, applicable large employers should report on Form 1095-C that no coverage was offered in the month an employee was hired (unless an offer of coverage extended to every day of that month). Similarly, if a terminating employee’s coverage ends before the end of the month of termination, the applicable large employer must report that no coverage was offered for the month. (In each case, the applicable large employer may be able to avoid liability for employer penalties under the federal code, even though coverage was not offered for the full month.) In contrast, when reporting coverage information under Part III of Form 1095-C, an employee should be reported as having coverage if the employee is enrolled on any day of the month.

Note: The disparate treatment of partial months of coverage highlights the multiple purposes of Form 1095-C. Under the federal tax code, applicable large employers generally get credit for offering coverage for a month only if the offer applies to the full month — but an individual avoids the individual mandate penalty for a month by having coverage on any day of the month.

* Third-party reporting. The guidance verifies that applicable large employers may designate third parties to perform reporting on their behalf. The new Q&As confirm that a governmental applicable large employer may designate another governmental entity to accept reporting responsibility on its behalf; they also explain the allocation of responsibilities under various combinations of self-insured and fully insured coverage options.

* Reporting offers of COBRA coverage. New Q&As illustrate reporting under various COBRA scenarios. The guidance explains how sponsors of self-insured plans should report enrollment information for non-employee COBRA beneficiaries, such as former spouses. Qualified beneficiaries electing COBRA independently from the employee must receive separate forms, while those who have COBRA due to an employee’s election should be included on the same form that is provided to the employee. (As previously noted in the instructions to the final forms, reporting may be made on either Form 1095-B or 1095-C for individuals who were not employees at any time during the year.)

Several examples illustrate how an applicable large employer should complete Form 1095-C for full-time employees who receive a COBRA offer due to termination of employment or a reduction of hours. In general, a COBRA offer made due to termination of employment is reported as an offer of coverage only if the former employee enrolls in COBRA coverage and the employee’s cost of coverage reflects the COBRA premium for the lowest-cost, self-only coverage providing minimum value. In contrast, a COBRA offer made to an active employee due to a reduction of hours would be reported as an offer of coverage on Form 1095-C even if the employee declines COBRA coverage.

Note: Unfortunately, the example used to illustrate this final point does not extend more than 60 days after the loss of eligibility, so it is unclear whether the applicable large employer would still report that coverage is offered after the employee’s COBRA election period has ended.

With mandatory reporting starting in early 2016 (for 2015 coverage), understanding the complexities of the reporting requirements is critical. While some of the Q&As contained in this IRS guidance were previously addressed in the instructions to Forms 1094 and 1095, others provide helpful clarifications and new information. Employers subject to the reporting requirements should give careful attention to this and future guidance as the reporting deadline draws nearer.

BASIC ACA Elevate service options helps employers navigate three critical aspects of the Affordable Care Act (ACA). Our two solutions help you to determine your ACA classification status, manage employee hours for “Full-Time Equivalent” classification and complete the reporting requirements under section 6056. We provide two different service options to fit your company’s needs. ACA Elevate- Option 1 (Year-end Filing) provides year-end filing for those employers with simpler ACA reporting needs. Such as medical offices, banks, law firms and more. ACA Elevate- Option 2 (Monthly Tracking & Filing) is geared towards businesses that require monthly tracking along with year-end filing. Making it ideal for employers with multiple variable hour employees, such as restaurants, casinos, staffing agencies, and other companies with difficult measurement periods.

We’ve combined health care taxes and fees information for both the Affordable Care Act and the state of Michigan into one frequently asked questions document.

Which Taxes and Fees Are Discussed In The New, Comprehensive FAQ?

ACA Taxes and Fees                                                                   State of Michigan Taxes and Fees

* Comparative Effectiveness Research Fee                                        * Michigan Claims Assessment Tax
(also known as the Patient-Centered Outcomes Research                    (also known as the Health Insurance Claims
Institute Fee, or PCORI Fee)                                                              Assessment, or HICA)

* Federal insurance premium tax
(also known as the Health Insurance Tax, or HIT)                              * Michigan Insurance Premium Tax
                                                                                                        (also known as the state insurance premium tax)
* Reinsurance Fee
(also known as the Transitional Reinsurance Fee, or TRF)

* Risk Adjustment Fee

* Marketplace Fee

* High-Cost Health Plan Excise Tax

This comprehensive FAQ will be updated as further guidance is issued from the federal government or the state of Michigan.

Note: If you have questions about quotes, renewals and groupwide changes, read this FAQ about 2016 renewal packages and premiums as well as these talking points.

Questions? Contact your Blues sales representative or managing agent.