Determining & Reporting ACA Affordability Coverage
By: Grace Taylor, Capstone Brokerage Vice President, January 5, 2016
Affordability is based on the “self-only” (or, employee only) premium for the lowest cost option offered by the employer that meets the minimum value (MV) requirement. This applies even with employees who “buy-up” to a richer plan design alternative or enroll their dependents. If the lowest cost self-only health plan is 9.5% or less of your full-time employee’s household income, then the coverage is considered affordable. However, because you are unlikely to know your employee’s household income, you can determine whether you are offered affordable coverage under the various safe harbors for employer shared responsibility provisions.
Who must be given a Copy of the 1095-C Form?
– Anyone who worked full-time for you at least one-month during the reporting year including:
– Both full-time employees who enrolled and those who waived coverage.
-New hires who worked full-time part of the year.
-Employees who are currently working part-time, but worked full-time hours (average of 130+ hours per month) for at least one-month during the year.
– Former employees who worked full-time at least one-month during reporting year (whether or not they elected COBRA continuation).
-Seasonal, variable hour or temporary employees who worked full-time at least one-month during the year (even if they were not offered coverage because they were in a look-back measurement period to determine their status).
– Employers may supply a copy of the 1095-C to their employees electronically, IF the employee affirmatively agrees to receive it in this manner. For example, if the company has an intranet site where the employee has access to his or her own personal account to obtain the information.
– Otherwise, the 1095-C must be mailed to the employee via 1st class mail (it is highly recommended to send with proof of mailing) to the last known address of the employee.
-It is NOT recommended to hand any employee a copy of the 1095-C.
For employers with Fully-insured plans:
o Insurers who do have a Social Security Number (SSN) or Tax Identification Number (TIN) for all covered dependents of your employees will be reaching out to secure this information in order to complete IRS Form 1095-B. By law, they must make at least three attempts to secure a SSN or TIN. If they are unsuccessful after three attempts, the insurer is permitted to use the dependents date of birth.
For employers with Self-insured plans:
-You are required to try a minimum of two times to secure the SSN or TIN for covered dependents. If you cannot secure this information after two attempts, you may use the dependents date of birth on Form 1095-B or Form 1095-C (Part III).
Instructions for Form 1095-C
You will meet the requirement to furnish Form 1095-C to an employee if the form is properly addressed and mailed on or before the due date. If the regular due date happens to fall on a Saturday, Sunday, or legal holiday, file by the next business day. Business days do not include Saturdays, Sundays, or legal holidays.
An employer must furnish a Form 1095-C to each of its full-time employees by January 31st of the year following the year to which the Form 1095-C relates.
The first Form 1095-C is due to individuals by February 1, 2016.
Filers of Form 1095-C may truncate the social security number (SSN) of an individual (the employee or any family member of the employee receiving coverage) on Form 1095-C statements furnished to employees by showing only the last four digits of the SSN and replacing the first five digits with asterisks (*) or Xs. Truncation is not allowed on forms filed with the IRS. In addition, an ALE Member’s employer identification number (EIN) may not be truncated on the statements furnished to employees or the forms filed with the IRS.
Statements must be furnished on paper by mail, unless the recipient affirmatively consents to receive the statement in an electronic format. If mailed, the statement must be sent to the employee’s last known permanent address, or if no permanent address is known, to the employee’s temporary address.
Consent to furnish statement electronically
-An employer is required to obtain affirmative consent to furnish a statement electronically. This requirement ensures that statements are furnished electronically only to individuals who are able to access them. An individual may consent on paper or electronically, such as by email. If consent is on paper, the individual must confirm the consent electronically. A statement may be furnished electronically by email or by informing the individual how to access the statement on the employer’s website. Statements reporting coverage under an expatriate health plan, however, may be furnished electronically unless the recipient affirmatively refuses consent or requests a paper statement. For more information on expatriate health plans, see Notice 2015-43, 2015-29 I.R.B. 73, here.
Extensions of time to furnish statement to recipients
– You may request an extension of time to furnish the statements to recipients by sending a letter to the Internal Revenue Service, Information Returns Branch, Attn: Extension of Time Coordinator, 240 Murall Drive, Mail Stop 4360, Kearneysville, WV 25430. The letter must include (a) filer name, (b) filer TIN, (c) filer address, (d) type of return, (e) a statement that extension request is for providing statements to recipients, (f) reason for delay, and (g) the signature of the filer or authorized agent. Your request must be postmarked by the date on which the statements are due to the recipients. If your request for an extension is approved, generally you will be granted a maximum of 30 extra days to furnish the recipient statements. For purposes of requesting an extension of time to furnish the statements, the term filer means the ALE Member, or the Designated Government Entity, if applicable.
Extensions and Waivers
– Extensions–
-You can get an automatic 30-day extension file time by completing Form 8809, Application for Extension of Time to File Information Returns. The form may be submitted on paper, or through the FIRE System either as a fill-in form or an electronic file. No signature or explanation is required for the extension. However, you must file Form 8809 by the due date of the returns in order to get the 30-day extension. Under certain hardship conditions you may apply for an additional 30-day extension. See the instructions for Form 8809 for more information.
-How to apply? As soon as you know that a 30-day extension is needed, file Form 8809. Follow the instructions on Form 8809 and mail it to the address listed in the instructions on the form or you can fax it. See the instructions for Form 8809 for more information. You can submit the extension request online through the FIRE System. You are encouraged to submit requests using the online fill-in form. See Pub. 1220, Part B, for more information on filing online or electronically.
– Waivers–
-To receive a waiver from the required filing of information returns electronically, submit Form 8508, Request for Waiver form Filing Information Returns Electronically, at least 45 days before the due date of the returns. You cannot apply for a waiver for more than one tax year at a time. If you need a waiver for more than one tax year, you must reapply at the appropriate time each year. If a waiver for original returns is approved, any corrections for the same types of returns will be covered under the waiver. However, if you submit original returns electronically but you want to submit your corrections on paper, a waiver must be approved for the corrections if you must file 250 or more corrections. If you receive an approved waiver, do not send a copy of it to the service center where you file your paper returns. Keep the waiver for your records only.
– If you are required to file electronically but fail to do so, and you do not have an approved waiver, you may be subject to a penalty of up to $250 per return for failure to file electronically unless you establish reasonable cause. However, you can file up to 250 returns on paper; those returns will not be subject to a penalty for failure to file electronically. The penalty applies separately to original returns and corrected returns.
Prepare Your Employees for the New IRS Forms
This is the first year your full-time employees will be receiving the new IRS Form 1095-C; therefore, a strategic communications plan can contribute to your success. Start planning now how you can develop and deliver the right tools in combination with effective benefits communications to drive awareness and engagement of your employees.
While large employers must be prepared to issue Form 1095-C to their employees by Feb. 1, your workforce may not be aware of how they will be impacted by the new reporting requirements in 2016. In fact, most likely, most of your employee’s have never heard about this new Form 1095-C. Without an organized and proactive communications plan in place, most employers are going to get a lot of questions from their employees
Employees will see a Form 1095-C for the first time in January. They should know what it is, what it means and what they need to do with it. Contact your a health care agent for more details or with questions regarding these forms.
