ACA Reporting Changes – What You Need to Know

This blog post is compliments of HR Service, Inc. (www.HRServiceInc.com). To learn more about HR Service, Inc. contact your Team BIM representative today.

The Patient Protect and Affordability Care Act (“PPACA”) imposed strict, somewhat confusing reporting requirements last year which proved to be challenging for many organizations. In this bulletin, we focus on recent and upcoming changes that affect employers regarding 2016 and 2017 reporting and insurance plan considerations.

Expiring Transitional Relief/Employer Shared Responsibility Payment

Transition relief currently provided for the Employer Shared Responsibility payment for large employers, those with an average of 50 or more full-time equivalent employees during the prior year, expires January 1, 2017 including non-calendar year transition relief. At this point, all Applicable Large Employers (ALEs) are required to offer compliant coverage to employees or face hefty fines.

Flex contribution relief

Organizations need to review their contribution strategy if they include any of the various flex contribution benefits and make adjustments. Flex contribution relief will be a lost opportunity cost after this year.

Grandfathered plan relief

Fifteen states in 2016 required the end to any grandfathered non-ACA compliant plans, and the other 35 states will in 2017. All medical plans will then be required to be fully ACA compliant.

IRS Reporting Penalties

For 2015 reporting, the IRS waived penalties for incorrect or missing data on forms 1094-C and 1095-C if a good faith effort was made for completion of the forms. The IRS has not provided this same penalty waiver for 2016 reporting. These fees are currently set at $250 per required return for incorrect or missing data, with a maximum of $3 million a year. The fine for not filing a mandated form is $500 per required return for 2016.

In addition, penalties for failing to offer minimum essential coverage to a full-time employee will increase from $2,000 to $2,160 or $180 per employee per month. For 2015 plan years, an employer was able to subtract the first 80 employees from the penalty calculation. For plan years beginning in 2016 and beyond, employers can only exclude 30 full-time employees from penalty calculations.

Penalties for not offering affordable coverage to a full-time employee who then goes to the exchange and receives a subsidy for health coverage have increased from $3,000 to $3,240 for 2016, or $270 per employee per month.

Reporting and Form Delivery Deadlines

  • January 31, 2017 – Forms 1095-B and 1095-C due to employees (to be postmarked if mailed, or sent by online delivery if applicable conditions are met)
  • February 28, 2017 – If filing by paper, forms 1094-B, 1095-B, 1094-C and 1095-C due to IRS (to be postmarked if mailed) 
  • March 31, 2017 – If filing electronically, forms 1094-B, 1095-B, 1094-C and 1095-C due to IRS

***Note: Any employer filing 250 or more information returns during the calendar year must file these returns electronically. Electronic filing is voluntary for employers with fewer than 250 returns.***

1094 and 1095 Form Changes

There were a few changes to the 1094 and 1095 forms for 2016. Here is a brief description of the form changes for 2016 reporting. See links below for forms and instructions.

1094-C

  • Transition relief: Several forms of transition relief were available to employers for 2015 under sections 4980H and 6056, but only limited transition relief continues to apply for 2016 reporting. References to transition relief that applied only in calendar year 2015 have been removed. Descriptions of the remaining forms of transition relief have been amended to clarify for which months in 2016 the transition relief applies. Line 22, box B for “Qualifying Offer Method Transition Relief” was removed and has now been designated as “Reserved”. This relief was applicable only to the 2015 calendar year.
  • The box for “Section 4980H Transition Relief” (Box C) remains, since some non-calendar-year plans may qualify for this relief for calendar months in 2016.
  • Minimum Essential Coverage (MEC) required at 95% level for Part III, column (a) rather than 70% previously.
  • In Part III, column (b), “Section 4980H” was inserted before “Full-Time Employee Count for ALE Member” to remind filers that section 4980H definition of “full-time employee” applies for purposes of this column and not any other definition that an ALE Member may use for other purposes.

1095-C

  • At the very top of Form 1095-C, the language “Do not attach to your tax return. Keep for your records.” was inserted under the title of the form to let the recipient know that Form 1095-C should not be submitted with their tax return.
  • Plan month start date is now required.
  • Section 2, Line 14 code updates:
    • No more use of code 1i
    • Two new codes (1J and 1K) for offers of coverage to a spouse which are “conditional”
  • Section 2, Line 15 updates:
    • Now also required to be completed if the new codes 1J or 1K are used for line 14 in any given month.
  • Section 2, Line 16 updates:
    • No more use of code 2i.
  • Other minor clarifying changes were made to both forms.

Affordability Contribution Percentage For plan year 2016, the calculation to determine affordability increases from 9.5 percent of an employee’s W2 wages, rate-of-pay income or the federal poverty level (FPL) for a single individual to 9.66 percent. For plan years beginning in 2017, the ACA’s affordability contribution percentage increases to 9.69 percent. The mainland FPL for 2016 affordability determination is $11,770 per year multiplied by 9.66 percent, equaling $94.75 per month.

***Note: The affordability test applies only to the portion of the annual premiums for (employee) self-only coverage, and does not include any additional cost for family coverage. Also, if an employer offers multiple health coverage options, the affordability test applies to the lowest-cost option meeting minimum value requirements.*

Benefit and Payment Limits for 2017 ACA’s 2017 out-of-pocket maximum:

  • $7,150 for self-only coverage
  • $14,300 for family coverage

Individual coverage open enrollment periods:

  • Nov. 1, 2016 to Jan. 31, 2017 – 2017 enrollment period
  • Nov. 1, 2017 to Jan. 31, 2018 – 2018 enrollment period
  • Nov. 1 to Dec. 15 of the prior year – 2019 and beyond

By Deborah Siddoway, HR Coach, Director of HR Services, HR Service, Inc.

The following links are provided by Team BIM:

Links to the 1094/1095 forms are provided below:

Link to the IRS instructions for forms 1094/1095 are provided below:

Sources: www.IRS.gov; www.HHS.gov; www.CMS.gov.