Employers preparing for the 2015 health benefit plan year will need to review limits on the cost-sharing expected of plan participants due to changes under the Patient Protection and Affordable Care Act (PPACA).
 
PPACA limits employee cost-sharing for certain benefits (called “essential health benefits”) under a non-grandfathered employer sponsored health plan. Specifically, the law limits the maximum amount that an employee can be required to pay out-of-pocket for deductibles, coinsurance, copayments or similar charges, and any other expenditure that is required to be paid by the employee related to essential health benefits covered under the plan.
 
For the 2014 plan year, the maximum cost-sharing limit under an employer sponsored plan was tied to the maximum out-of-pocket limit permitted under a “high deductible health plan.”[1]  However, beginning with the 2015 plan year, the maximum employee cost-sharing under an employer sponsored health plan is no longer tied to the out-of-pocket limit for high deductible health plans. Instead, the limit is adjusted by a premium adjustment percentage as determined by the Department of Health and Human Services.  The 2015 limits are:

•    The maximum employee cost-sharing on essential health benefits under an employer sponsored health plan is $6,600 for self-only coverage and $13,200 for family coverage.
•    The maximum out-of-pocket limits for a high deductible health plan is $6,450 for self-only coverage and $12,900 for family coverage.
 
An employer sponsored health plan with cost-sharing limits higher than the out-of-pocket limits permitted for a high deductible health plan will not qualify as a high deductible health plan and therefore may not be paired with a Health Savings Account (HSA). Therefore, plan sponsors who intend to permit employees to contribute to an HSA (or who intend to contribute to an HSA on behalf of employees) should set the health plan’s cost-sharing limits to correspond with the high deductible health plan limits (rather than the higher amounts permitted for the health plan). A plan sponsor that does not intend to pair its plan with an HSA may incorporate the higher cost-sharing maximums.
 
Another important change effective for the 2015 plan year is that cost-sharing limits now apply to all essential health benefits under the plan (including both major medical coverage and prescription drug coverage). Therefore, beginning with the 2015 plan year, non-grandfathered health plans must have an out-of-pocket maximum which limits overall cost-sharing on all essential health benefits. Prior to 2015, a plan could establish separate limits for major medical benefits and prescription drug coverage if the plan utilized more than one service provider to administer benefits.
 
If you have any questions please contact:

Nancy Farnam at nfarnam@clarkhill.com or (248) 530-6333;
Ed Hammond at ehammond@clarkhill.com or (248) 988-1821;
Kristi Gauthier at kgauthier@clarkhill.com or (248) 988-5854;
Doug Ellis at dellis@clarkhill.com or (412) 394-2367;

or another member of our Labor and Employment Practice group.

[1] Qualification as a high deductible health plan is important because an individual is eligible to contribute to an HSA only if the individual is covered by a high deductible health plan (and meets other requirements).

Are you ready to get covered during the next Health Insurance Marketplace Open Enrollment Period? Open Enrollment is the time when you can apply for a new Marketplace plan, keep your current plan, or pick a new one.

Here are 4 key dates you should know:

NOVEMBER 15, 2014 – Marketplace Open Enrollment Begins

DECEMBER 15, 2014 – Deadline: Enroll for January 1 Coverage

JANUARY 1, 2015 – Happy New Year! 2015 Coverage Begins

FEBRUARY 15, 2015 – Last Day To Enroll for 2015 Coverage

HealthCare.gov

By Larry Grudzien
Attorney at Law

September 2014

Introduction
The Affordable Care Act (“ACA”) created new reporting requirements under Internal Revenue Code (“Code”) Sections 6055 and 6056. Under these new reporting rules, certain employers must provide information to the IRS about the medical plan coverage they offer (or do not offer) to their employees.

Code Section 6055 requires insurers, insurance issuers, self-insured health plan sponsors, government agencies that administer government-sponsored health insurance programs and any other entity that provides minimum essential coverage (“MEC”) to report information on that coverage to the Internal Revenue Service (“IRS”) and covered individuals.

Code Section 6056 requires applicable large employers (“ALEs”) subject to the employer shared responsibility rules to report information on the health coverage offered to full-time employees to the IRS and covered individuals.

The additional reporting is intended to promote transparency with respect to health plan coverage and costs. It will also provide the government with information to administer other ACA mandates, such as the large employer shared responsibility penalty and the individual mandate.

On March 5, 2014, the IRS released two final regulations on the ACA’s health coverage reporting requirements.

On July 24, 2014, the IRS released draft forms relating to the information reporting requirements under Code Sections 6055 and 6056.

Summary of the Draft Forms

The draft forms operationalize the information reporting requirements under IRC Sections 6055 and 6056. The draft forms issued included:

1095-B Health Coverage. Insurers and self-funded plans will provide one to each enrollee. The form provides information on the coverage provided.
1094-B Transmittal of Health Coverage Information Returns. Transmittal form insurers and self-funded plans will file with IRS along with all the Forms 1095-B.
1095-C Employer-Provided Health Insurance Offer and Coverage. Large employers will provide one to each enrollee. The form provides information on the coverage provided, and on to whom and when the coverage was offered.
1094-C Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns. Transmittal form insurers and self-funded plans will file with IRS along with all the Forms 1095-C.
1095-A Health Insurance Marketplace Statement. Exchanges will provide to their enrollees.

On August 28, 2014, the IRS released draft instructions for the above forms that employers use to report under Code Sections 6055 and 6056.

The following will review what has to be reported, when it has to be reported and to whom. In addition, the instructions for each form will be reviewed. Please remember that both the forms and the instructions have been released in draft form. Expect changes to each in the future.

Who must file?

An ALE (50 or more full-time and full-time equivalent employees during 2014) must file one or more Forms 1094-C and must file a Form 1095-C for each employee who was a full-time employee of the employer for any month of the calendar year 2015. An ALE that provided health coverage through an employer sponsored self-insured health plan must also complete Form 1095-C, Part III for any full-time employee, non-full-time employee, employee family members and others) who are enrolled in an employer-sponsored self-insured health plan. If an employer offers health coverage through a health plan, and some of the enrollment options under the plan are employer-sponsored self-insured health arrangements while others are not (for example, some of the enrollment options are insured arrangements), the employer must only complete Form 1095-C, Part III, for the employees who enrolled in the self-insured enrollment option(s) under the plan.

An employer that provides health coverage through an employer-sponsored self-insured health plan must complete Form 1095-C, Parts I and III, for any employee who enrolls in the health coverage, whether or not the employee is a full-time employee for any month of the calendar year. If the employee is a full-time employee for any month of the calendar year, the employer must also complete Part II. If, for all 12 months of the calendar year, the employee is not a full-time employee, the employer must complete only Part II, line 14, by entering code 1G in the “All 12 Months” column.

If an employer is providing health coverage in another manner, such as through an insured health plan or a multiemployer health plan, the issuer of the insurance or the sponsor of the plan providing the coverage will provide the information about their health coverage to any enrolled employees, and the employer should not complete Form 1095-C, Part III, for those employees.

An employer that provides employer-sponsored self-insured health coverage but is not subject to the employer shared responsibility provisions under Code Section 4980H (less than 50 employees) is not required to file Forms 1094-C and 1095-C and reports instead on Forms 1094-B and 1095-B for employees who enrolled in the employer-sponsored self-insured health coverage.

What has to be reported to the IRS?

Under both Code Sections 6055 and 6056, each reporting entity will be required to file all of the following with the IRS:

A separate information return for each individual who is provided MEC (for ALEs, this includes only full-time employees); and
A single transmittal form for all of the returns filed for a given calendar year.

When do the forms have to be filed with the IRS?

Under both Code Sections 6055 and 6056, the return and transmittal forms must be filed with the IRS on or before Feb. 28 (March 31, if filed electronically) of the year following the calendar year of coverage. However, if the regular due date falls on a Saturday, Sunday or legal holiday, entities should file by the next business day. For calendar year 2015, these forms must be filed by Feb. 29, 2016, (or March 31, 2016, if filing electronically).

These forms are not required to be filed for 2014. However, in preparation for the first required filing (in 2016 for 2015 coverage), reporting entities may voluntarily file in 2015 for 2014 in accordance with the draft forms and instructions.

What has to be provided to participants and when?

All entities reporting under Code Section 6055 or 6056 must furnish a copy of Form 1094-C or 1095-C, as applicable, to the person identified as the responsible individual named on the form. Statements must be furnished by mail, unless the recipient affirmatively consents to receive the statement electronically.

The statement must be furnished on or before Jan. 31 of the year following the calendar year of coverage. The first statements are due to individuals by Feb. 1, 2016.

Review of the Instructions for the Forms

Form 1095-B – Heath Coverage

Part 1 – Responsible individual

Indicate the name, address, date of birth and social security number of the responsible individual. The responsible individual is the primary insured employee, former employer, parent, uniformed services sponsor or other person enrolling individual.

On line 8, a letter must be entered identifying the origin of the policy:

A. Small Business Health Options Program (SHOP).
B. Employer-sponsored coverage.
C. Government-sponsored program.
D. Individual market insurance.
E. Multiemployer plan.
F. Miscellaneous minimum essential coverage.

Part II – Employer Sponsored Coverage

If letters A or B is entered on Line 8 above, this part has to be completed indicating the name address and employer identification number of the employer sponsoring the group health coverage.

Part III – Issuer of Other Coverage Provider

This part has to be completed indicating the name and address of the entity providing the coverage. If the coverage is insured, it is the insurer. If the coverage is self-insured, it is the employer or the governmental or other entity providing the coverage. On line 18, the telephone number of a contact person must be entered if there are any questions from the employee participant.

Part IV – Covered Individuals

In this part, the name and social security number of each covered person. If the social security number for the covered person cannot be obtained, then the person’s date of birth must be entered. In addition, if the person was covered for twelve months, the column (d) is checked, If the person was not covered for twelve months, then months during the calendar year covered must be indicated in column (e).

Form 1094-B – Transmittal of Health Coverage Information Returns

The name, address and Employer Identification Number of the entity filing the forms must be indicated. On line 4, a contract telephone number must be indicated, if questions arise from employee participants. On line 9, the total number of Form 1095-B to be filed must be indicated. The form must be signed and dated and title of the person signing must be indicated.

Form 1095-C – Employer-Provided Health Insurance Offer and Coverage

Part I – Employee

On lines 1 through 6, indicate the name, address and social security number of the employee offered coverage. On lines 7-13 indicate the name, address and employer identification number of the employer. On line 10, indicate the telephone number of the person that the employee participant can call if he or she has any questions.

Part II – Employee Offer and Coverage

On line 14, enter the applicable code for the offer of coverage of each calendar month. If the offer was made for the entire calendar year 2015, place the code in the first column. A code must be entered for each calendar month January through December, even if the employee was not a full-time employee for one or more of the calendar months. Enter the code identifying the type of health coverage actually offered by the employer (or on behalf of the employer) to the employee, if any. Do not enter a code for any other type of health coverage the employer is treated as having offered under the dependent coverage transition relief, non-calendar year transition relief, or multi-employer arrangement interim guidance (if the employer is contributing on behalf of an employee but the employee is not eligible for coverage under the multiemployer plan) under Form 1094-C, Part III, column (a).

Applicable Codes – Offer of Coverage

1A. Qualifying Offer: Minimum essential coverage providing minimum value offered to full-time employee with employee contribution for individual coverage equal to or less than 9.5% mainland single federal poverty line and at least minimum essential coverage offered to spouse and dependent(s).
1B. Minimum essential coverage providing minimum value offered to employee only.
1C. Minimum essential coverage providing minimum value offered to employee and at least minimum essential coverage offered to dependent(s) (not spouse).
1D. Minimum essential coverage providing minimum value offered to employee and at least minimum essential coverage offered to spouse (not dependent(s)).
1E. Minimum essential coverage providing minimum value offered to employee and at least minimum essential coverage offered to dependent(s) and spouse.
1F. Minimum essential coverage NOT providing minimum value offered to employee, or employee and spouse or dependent(s), or employee, spouse and dependents.
1G. Offer of coverage to employee who was not a full-time employee for any month of the calendar year and who enrolled in self-insured coverage for one or more months of the calendar year. Enter code 1G in the “All 12 Months” box and do not complete the monthly boxes.
1H. No offer of coverage (employee not offered any health coverage or employee offered coverage that is not minimum essential coverage).
1I. Qualified Offer Transition Relief 2015: Employee (and spouse or dependents) received no offer of coverage, received an offer that is not a qualified offer, or received a qualified offer for less than 12 months. Solely for January 2015, if an employer offers health coverage to an employee no later than the first day of the first payroll period that begins in January 2015, the employer is treated as having offered health coverage for January 2015. An employer that is eligible for this transition relief for an employee for January 2015 should treat that employee as having been offered minimum essential coverage for January 2015 for purposes of Form 1094-C, line 23 or 24 (whichever is applicable), column (a). An employer that is eligible for this transition relief would report on Form 1095-C, line 14 that it offered its employee health coverage for the month of January. There is not a specific indicator code to reflect this transition relief.

Line 15 is only completed if the coverage offered to the employee provided minimum value and Code 1B, 1C, 1D or 1E is entered in line 14 in either the “all 12 Months” box or in any of the monthly boxes.

Enter into the Box the amount of the employee’s share of the lowest-cost monthly premium of individual coverage minimum essential coverage providing minimum value. Enter the entire amount including cents. If no amount is required, then 0.00 must be entered. If the amount is the same for all 12 months, then the amount is entered into the first column and do not complete the monthly boxes. If the employer did not offer health coverage or it offered health coverage that was not minimum essential coverage or did not provide minimum value, do not complete line 15.

On line 16, enter the applicable code for the Code Section 4980H Safe Harbor Codes and Other Relief for Employers of each calendar month. If the offer was made for the entire calendar year, place the code in the first column.

Applicable Codes – Code Section 4980H Safe Harbor Codes and Other Relief for Employers

2A. Employee not employed during the month. Enter code 2A if the employee was not employed on any day of the month. Do not use code 2A for a month if the individual is an employee of the employer on any day of the month. Do not use this code for the month during which an employee terminates employment with the employer.
2B. Employee not a full-time employee. Enter code 2B if the employee is not a full-time employee for the month and did not enroll in minimum essential coverage, if offered for the month.
2C. Employee enrolled in coverage offered. Enter code 2C for any month in which the employee enrolled in health coverage offered by the employer, regardless of whether any other code in Code Series 2 might also apply. Note. If the employee enrolled in the minimum essential coverage offered for the month, enter code 2C (employee enrolled in coverage offered), and not any other in Code Series 2 that might also apply.
2D. Employee in a Code Section 4980H(b) Limited Non-Assessment Period. Enter code 2D for any month during which an employee is in a Limited Non-Assessment Period for Code Section 4980H(b). If an employee is in an initial measurement period, enter code 2D (employee in a Code Section 4980H(b) Limited Non-Assessment Period) for the month, and not code 2B (employee not a full-time employee). For an employee in a Code Section 4980H(b) Limited Non-Assessment Period for whom the employer is also eligible for the multiemployer interim rule relief for the month code 2E, enter code 2E (multiemployer interim rule relief) and not code 2D (employee in a Limited Non-Assessment Period).

In various circumstances, the final regulations provide that an employer will not be subject to a penalty under Code Section 4980H for a certain period of time. The term “limited non-assessment period” for certain employees is used to describe these periods.

Specifically, an employer will not be subject to a penalty under Code Section 4980H(a), and in certain cases Code Section 4980H(b), with respect to an employee in the following circumstances:

• the transition rule for an employer’s first year as an applicable large employer;
• the application of Code Section 4980H for the three full calendar month period beginning with the first full calendar month in which an employee is first otherwise eligible for an offer of coverage under the monthly measurement method;
• the application of Code Section 4980H during the initial three full calendar months of employment for an employee reasonably expected to be a full-time employee at the start date, under the look-back measurement method;
• the application of Code Section 4980H during the initial measurement period to a new variable-hour employee, seasonal employee, or part-time employee determined to be employed on average at least 30 hours of service per week, under the look-back measurement method;
• the application of Code Section 4980H following an employee’s change in employment status to a full-time employee during the initial measurement period, under the look-back measurement method; and
• the application of Code Section 4980H to the calendar month in which an employee’s start date occurs on a day other than the first day of the calendar month.

2E. Multi-employer interim rule relief. Enter code 2E for any month for which the multi-employer interim guidance applies for that employee.
An employer is treated as offering health coverage to an employee if the employer is required by a collective bargaining agreement or related participation agreement to make contributions for that employee to a multi-employer plan that offers, to individuals who satisfy the plan’s eligibility conditions, health coverage that is affordable and provides minimum value, and that also offers health coverage to those individuals’ dependents.
2F. Code Section 4980H affordability Form W-2 safe harbor. Enter code 2F if the employer used the Code Section 4980H Form W-2 safe harbor to determine affordability for purposes of Code Section 4980H(b) for this employee for the year. If an employer uses this safe harbor for an employee, it must be used for all months of the calendar year for which the employee is offered health coverage.
2G. Code Section 4980H affordability federal poverty line safe harbor. Enter code 2G if the employer used the Code Section 4980H federal poverty line safe harbor to determine affordability for purposes of Code Section 4980H(b) for this employee for any month(s).
2H. Code Section 4980H affordability rate of pay safe harbor. Enter code 2H if the employer used the Code Section 4980H rate of pay safe harbor to determine affordability for purposes of Code Section 4980H(b) for this employee for any month(s).
2I. Non-calendar year transition relief applies to this employee. Enter code 2I if non-calendar year transition relief for Code Section 4980H(b) applies to this employee for the month. See the instructions later under Code Section 4980H Transition Relief for 2015 and 2015 Section 4980H(b)

Part III – Covered Individual

This part is only completed if the employer offers self-insured health coverage in which the employee is enrolled. This part must be completed for any employee who enrolled in coverage regardless of whether the employee is full-time employee If the employer is required to complete this part, an ”X must be entered in the box.

For this purpose employer-sponsored self-insured health coverage does not include coverage under a multi-employer plan.

In this part, the name and social security number of each covered person must be entered. If the social security number for the covered person cannot be obtained, then the person’s date of birth must be entered. In addition, if the person was covered for twelve months, column (d) is checked, If the person was not covered for twelve months, then months during the calendar year covered must be indicated in column (e).

Form 1094-C – Transmittal of Employer – Provided Health Insurance Offer and Coverage Information Returns

Part I – Applicable Large Employer Member

The name, address and Employer Identification Number of the member filing the forms must be indicated. On lines 7 and 8, a contact person’s name and telephone number must be indicated if questions arise.

Lines 9 through 16 are only completed if an entity is a Designed Governmental Entity (“DGE”) filing on behalf of employer. DGE is a person or persons that are part of or related to appropriately designated for purposes of these reporting requirements.

On line 18, the total number of Form 1095-C to be filed must be indicated.

Part ll – ALE Member Information

The box on line 19 is checked if this Form 1094-C is the Authoritative Transmittal to report aggregate employer-level data for the employer.

Only one Authoritative Transmittal can be filed for each employer. If only one Form 1094-C is being filed for the employer, that Form 1094-C must report aggregate employer-level data for the employer and be identified on line 19 as the Authoritative Transmittal. If multiple Forms 1094-C are being filed for an employer so that Forms 1095-C for all full-time employees of the employer are not attached to this transmittal (because Forms 1095-C for some full-time employees of the employer are being transmitted separately), one of the Forms 1094-C must report aggregate employer-level data for the employer and be identified on line 19 as the Authoritative Transmittal.

Lines 20–22 should be completed only on the Authoritative Transmittal for the employer. If this is not the Authoritative Transmittal for the employer, lines 20–22, Parts III or IV should not be completed.

The form must be signed and dated and title of the person signing must be indicated.

On line 20, enter the total number of Forms 1095-c that will be filed by and on behalf of the employer.

On line 21, indicate whether the ALE Member is a member of an Aggregated ALE Group. An Aggregated ALE Group refers to a group of ALE Members treated as a single employer under Code Section 414(b), 414(c), 414(m), or 414(o). An ALE Member is a member of an Aggregated ALE Group for a month if it is treated as a single employer with the other members of the group on any day of the calendar month. If an ALE is made up of only one person or entity, that one ALE Member is not a part of an Aggregated ALE Group. Government entities and churches or conventions or associations of churches may apply a reasonable, good faith interpretation of the
aggregation rules under Code Section 414 in determining their status as an ALE or member of an Aggregated ALE Group.

If the member indicates that it is a member of an Aggregated ALE group then the Aggregated Group Indicator must be completed in Part III, column (d) and Part IV to list the other members of the Aggregated ALE Group.

If the member is not part of an Aggregated ALE Group for all twelve months of the calendar year then “No” should be checked and Part III, column (d) or Part IV is not completed.

On line 22, indicate whether the employer meets the eligibility requirements of one of the Offering Methods and/or one of the forms of Transitional Relief, as explained below: b x.

A. Qualifying Offer Method

This box is checked if the employer is eligible to use and is using the Qualifying Offer Method for one or more full-time employees. To be eligible to use the Qualifying Offer Method, the employer must certify that, for all months during the year in which the employee was a full-time employee for whom a Code Section 4980H employer shared responsibility payment could apply, the employer made a Qualifying Offer.

An employer is deemed to make a Qualifying Offer if for all months during the year in which the employee was a full-time employee to whom the Code Section 4980H penalty could apply, the applicable large employer: (1) offered minimum essential coverage, providing minimum value where the employee cost for self-only coverage did not exceed 9.5 percent of the mainland single federal poverty line to one or more full-time employee and (2) offered minimum essential coverage to the employee’s spouses and dependents.

If the employer uses this method, it must not provide on Form 1095-C, line 15, the dollar amount required as an employee contribution for the lowest-cost employee-only coverage providing minimum value. It instead must use the Qualifying Offer code 1A on Form 1095-C, line 14, to indicate that the employee received a Qualifying Offer for all 12 months. Use of this method is optional and an employer may, rather than report using this method and the Qualifying Offer code 1A, report on line 14 the applicable offer code and on line 15 the dollar amount required as an employee contribution for the lowest-cost employee-only coverage providing minimum value for that month. An employer may not, for any month, use code 1A and also report the dollar amount required as an employee contribution for the lowest-cost employee-only coverage providing minimum value.

If the employer is eligible to use the Qualifying Offer Method, it may use the Qualifying Offer Code 1A for any month for which it made a Qualifying Offer to an employee, even if the employee did not receive a Qualifying Offer for all 12 months. However, the employer must furnish a copy of Form 1095-C to any employee who did not receive a Qualifying Offer for all 12
months, unless the Qualifying Offer Method Transition Relief applies.

Alternative Method of Furnishing to Employees under the Qualifying Offer Method. An employer that is eligible to use the Qualifying Offer Method meets the requirement to furnish the Form 1095-C to its full-time employees who received a Qualifying Offer for all 12 months of the calendar year if it furnishes each of those full-time employees either a copy of Form 1095-C as filed with the IRS or a statement containing the following information.

• Employer name, address, and EIN.
• Contact name and telephone number.

A statement indicating that, for all 12 months of the calendar year, the employee and his or her spouse and dependents, if any, received a Qualifying Offer and therefore are not eligible for a premium tax credit.

B. Qualifying Offer Method Transition Relief

This box is checked if the employer is eligible for and is using the Qualifying Offer Method Transition Relief for 2015. For the 2015 calendar year, to be eligible to use the Qualifying Offer Method Transition Relief the employer must certify that it made a Qualifying Offer for one or more months of calendar year 2015 to at least 95% of its full-time employees (spouse and dependent children).

If an employer uses this method, it must not provide on Form 1095-C, line 15, the dollar amount required as an employee contribution for the lowest-cost employee-only coverage providing minimum value and instead must use either the Qualifying Offer code 1A or the Qualifying Offer Method Transition Relief code 1I on Form 1095-C, line 14, to indicate the months in 2015 for which the employer is eligible for the Qualifying Offer Method Transition Relief code 1I or the months for which the employee received a Qualifying Offer code 1A. For any months for which the employee received a Qualifying Offer, the employer must report using the Qualifying Offer code 1A to indicate that the employee received a Qualifying Offer for that month.

For any month, use of this method is optional, and an employer may, rather than report using this method and the Qualifying Offer code 1A or the Qualifying Offer Method Transition Relief code 1I, report on line 14 the applicable offer code and on line 15 the dollar amount required as an employee contribution for the lowest-cost employee-only coverage providing minimum value for that month. An employer may not, for any month, use code 1A or code 1I and also report the dollar amount required as an employee contribution for the lowest-cost employee-only coverage providing minimum value.

Alternative Furnishing Methods Under the Qualifying Offer Method Transition Relief for 2015. Solely for 2015, for any employee of an employer eligible for the Qualifying Offer Method Transition Relief who does not receive a Qualifying Offer for all 12 calendar months, including employees who receive no offer, the employer may, in lieu of providing the employee with a copy of Form 1095-C, furnish a statement containing the following information.

• Employer name, address, and EIN.
• Contact name and telephone number.
• A statement indicating that the employee and his or her spouse and dependents, if any, may be eligible for a premium tax credit for one or more months of 2015.

An employer that is eligible for the Qualifying Offer Method Transition Relief for any employee who receives a Qualifying Offer for all 12 months of the calendar year may, in lieu of furnishing the employee a copy of Form 1095-C, furnish a statement as described in Alternative Method of Furnishing to Employees Under the Qualifying Offer Method, above.

C. Code Section 4980H Transition Relief

This box must be checked if either (1) 2015 Coded Section 4980H Transition Relief for ALEs with Fewer Than 100 Full-Time Employees, Including Full-Time Equivalent Employees (50-99 Transition Relief) or (2) 2015 Transition Relief for Calculation of Assessable Payments Under Code Section 4980H(a) for ALEs with 100 or More Full-Time Employees, Including Full-Time Equivalent Employees (100 or More Transition Relief) apply.

If an employer checks this box, it must also complete Form 1094-C, Part III, column (e), Code Section 4980H Transition Relief Indicator, to indicate the type of Section 4980H transition relief for which it is eligible.

D. 98% Offer Method

This box is checked if the employer is eligible for and is using the 98% Offer Method. To be eligible to use the 98% Offer Method, an employer must certify that it offered, for all months of the calendar year, affordable health coverage providing minimum value to at least 98% of its employees and their dependents for whom it is filing a Form 1095-C employee statement. The employer is not required to identify which of the employees for whom it is filing were full-time employees, but the employer is still required to file Forms 1095-C on behalf of all of its full-time employees. (For this purpose, the health coverage is affordable if the employer meets one of the Code Section 4980H affordability safe harbors.)

If an employer uses this method, it is not required to complete the “Full-Time Employee Count” in Part III, column (b).

The form must be signed and dated and title of the person signing must be indicated.

Part III – ALE Member Information- Monthly

Column (a) Minimum Essential Coverage Offer indicator

If the employer offered minimum essential coverage under an eligible employer-sponsored plan to at least 95% of its full-time employees and their dependents for the entire calendar year, enter “X” in the “Yes” checkbox on line 23 for “All 12 Months”.

If the employer offered minimum essential coverage to at least 95% of its full-time employees and their dependents only for certain calendar months, enter “X” in the “Yes” checkbox for each
applicable month. For the months, if any, for which the employer did not offer minimum essential coverage to at least 95% of its full-time employees and their dependents, enter “X” in the “No” checkbox for each applicable month, or enter “X” in the “All 12 Months” box on line 23 if the employer did not offer minimum essential coverage to at least 95% of its full-time employees and their dependents for any of the 12 months. However, an employer that did not offer minimum essential coverage to at least 95% of its full-time employees and their dependents but is entitled to certain transition relief described in the instructions later under Code Section 4980H Transition Relief for 2015 should enter an “X” in the “Yes” checkbox for Part III, line 23, column (a), as applicable.

For purposes of column (a), an employee in a Limited Non-Assessment Period is not counted in determining whether minimum essential coverage was offered to at least 95% of an employer’s full-time employees and their dependents.

For purposes of column (a), if the employer offered minimum essential coverage 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 of the employer, the employer may report in column (a) as if it offered health coverage to at least 95% of its full-time employees and their dependents (even if it offered health coverage to less than 95% of its full-time employees and their dependents, for example to 75 of its 80 full-time employees and their dependents).

Column (b) Full-Time Employee Count for ALE Member

Enter the number of full-time employees for each month, but do not include any employee in a Limited Non-Assessment Period. (If the number of full-time employees (excluding employees in a Limited Non-Assessment Period) for a month is zero, enter 0.)

If the employer certified that it was eligible for the 98% Offer Method by selecting box D, on line 22, it is not required to complete column (b).

Column (c) Total Employee Count for ALE Member

Enter the total number of employees, including full-time employees and non-full-time employees, for each calendar month. An employer must choose to use either the first day of each month or the last day of each month to determine the number of employees per month and must use the same day (first or last day of the month) for all months of the year. If the total number of employees was the same for every month of the entire calendar year, enter that number in line 23 “All 12 months.” If the number of employees for any month is zero, enter 0.

Column (d) Aggregated Group Indicator

An employer must complete this column if it checked “Yes” on line 21, indicating that, during any month of the calendar year; it was a member of an Aggregated ALE Group. If during each month of the calendar year the employer was a member of an Aggregated ALE Group, enter “X” in the “All 12 months” box. If the employer was not a member of an Aggregated ALE Group for all 12 months but was a member of an Aggregated ALE Group for one or more month(s), enter “X” in each month for which it was a member of an Aggregated ALE Group. If an employer enters “X” in one or more months in this column, it must also complete Part IV.

Column (e) Code Section 4980H Transition Relief Indicator

If the employer certifies by selecting box D on line 22, that it is eligible for Code Section 4980H Transition Relief and is eligible for the 50 to 99 Relief, enter code A. If the employer certifies by selecting box C on line 22, that it is eligible for Code Section 4980H Transition Relief and is eligible for the 100 or More Relief, enter code B. An employer will not be eligible for both types of relief.

Part IV – Other ALE Members of Aggregated ALE Group

An employer must complete this Section if it checks “Yes” on line 21. If the employer was a member of an Aggregated ALE Group for any month of the calendar year, enter the name(s) and EIN of up to 30 of the other Aggregated ALE Group members. If there are more than 30 members of the Aggregated ALE Group, enter the 30 with the highest monthly average number of full-time employees (as reported in Part III, column (b)) for the year or for the number of months during which the ALE Member was a member of the Aggregated ALE Group.

Regardless of the number of members in the Aggregated ALE Group, list the members in descending order listing first the member with the highest average monthly number of full-time employees. The employer must also complete Part III, column (d), to indicate which months it was part of the Aggregated ALE Group.

CLICK HERE to view the Draft Forms.

By Nancy L. Farnam
September 15, 2014
 
As employers head into open enrollment, they face a number of administrative responsibilities as well as new challenges under the Affordable Care Act. While there isn’t a one-size-fits-all approach, the following guidelines address some of the issues employers should consider this open enrollment season.
 
Employers must provide employees with a number of annual notices. They can minimize the burden of providing these notices by including them with enrollment materials. Click here for an example of an annual enrollment notice. If you would like a modifiable version of the document for use in your open enrollment materials, please contact Nancy Farnam.
 
In addition to the enclosed annual notices, employers must distribute a Summary of Benefits and Coverage (SBC) at open enrollment and to new participants when they enter the plan. Employers are also required to distribute the Medicare Part D Creditable (or Non-Creditable Coverage) Notice. This notice of creditable coverage is due before October 15 of each year; if the timing is right, employers may want to include this notice with open enrollment materials.[1]
 
Employers need to review plan design and plan documents to determine if any amendments are necessary for the 2014 and 2015 plan years. A number of amendments may be required by the end of the 2014 plan year to comply with the Affordable Care Act and other laws, including:

•    Limiting waiting periods to no more than 90 days.
•    Addressing how the plan defines “spouse” for purposes of including or excluding a legally married same-sex spouse.
•    Plans may no longer have annual limits on certain benefits and are subject to new maximum out-of-pocket limits.
•    Beginning in 2015, “large” employers will be required to offer health coverage that meets certain requirements and is considered “affordable” to all “full-time” employees (those employees working on average 30 or more hours per week). An employer will be permitted to use a special measurement period to determine full-time employee status. To comply with this requirement, employers need to address plan eligibility (including exclusions for certain categories of employees such as temporary employees, employees hired through staffing companies and seasonal employees), and may need to establish a measurement period to track hours.

We’re working with clients now to comply with and prepare for these existing and upcoming mandates. Contact Nancy Farnam at nfarnam@clarkhill.com, or (248) 530-6333, Ed Hammond at ehammond@clarkhill.com or (248) 988-1821; Kristi Gauthier at kgauthier@clarkhill.com or (248) 988-5854; or Doug Ellis at dellis@clarkhill.com or (412) 394-2367 or a member of our Labor and Employment Practice group.

[1] Additional notices are required throughout the year that are not discussed in this alert.

As we approach the end of 2014, employers are gearing up for the impact of the Patient Protection and Affordable Care Act’s (“PPACA”) employer shared responsibility provisions on their organizations which take effect as early as January 1, 2015 for some employers.  The employer shared responsibility provisions, and the related penalties, only apply to “Applicable Large Employers” or “ALEs.”  Therefore, the first step in determining the impact of these dreaded provisions is to determine whether your organization is an ALE. 

Generally speaking, an “ALE” is an employer that averages 50 or more full-time and/or full-time equivalent employees in the previous calendar year.  In making this determination, employers need to take into consideration the IRS’ controlled group rules.  Unfortunately, with the application of these long standing rules, many “small” employers are considered to be ALEs and subject to the employer share responsibility provisions.
 
Pursuant to the controlled group rules found in Internal Revenue Code sections 414(b), (c) and (m), the IRS will treat two or more employers as a single employer if there is sufficient common ownership or a combination of joint ownership and common activity.  A controlled group of organizations may be composed of:

•    Parent-Subsidiary Group: one or more businesses that are connected through ownership with a common parent corporation;
•    Brother-Sister Group:  a group of two or more businesses where five or fewer common owners own directly or indirectly a “controlling interest” (together own 80% or more of each entity) and have “effective control” (takes into account identical ownership with each corporation); or
•    Combined Group:  three or more organizations with combined parent-subsidiary and brother-sister controlled group structures.

The controlled group rules also take into consideration many factors including family attribution rules and ownership rights, and vary depending on the business structure and for non-profit entities.

For purposes of ALE determination, all members of the controlled group are counted together when determining if there are more than 50 full-time and/or full-time equivalents.  If the controlled group consists of more than 50 full-time and/or full-time equivalent employees, all members of the controlled group will be considered an ALE and subject the employer shared responsibility provisions.  This means, for example, that an employer with only 20 full-time employees would be considered an ALE and subject to these provisions, if the employer is part of a larger controlled group of employers that together exceed the 50 full-time employee threshold.  This is a rule that has caught many smaller employers by surprise.

Given the complexity of the IRS’ controlled group rules, and the fast approaching deadline for compliance with the employer shared responsibility provisions, you should consult with your legal counsel to conduct a detailed controlled group analysis so that you are able to determine next steps for PPACA compliance.

*This article is not intended to give legal advice. It is comprised of general information. Employers facing specific issues should seek the assistance of legal counsel.