Insurance & Employee Benefits
by William F. Schaake, CIC, CRM, CLCS, President of Group Coverage, Inc. 516-
The Affordable Care Act (ACA) created a new framework for expanding the number of individuals who are covered by medical insurance. First, it introduced Individual Responsibility, which requires most individuals to have medical insurance or pay an additional tax. Second, to ensure that individuals have access to affordable coverage, it simplified underwriting rules, created an insurance Exchange for each state with federal subsidies available for families with income below 400% of the federal poverty level, and put in place incentives for states to expand Medicare for low income individuals. Third, because most people in the United States obtain their medical coverage through their employers, it establishes Employer Shared Responsibility, which requires employers over a certain size to either offer medical coverage to substantially all full-
In this series of articles, we will take a detailed look at the Employer Shared Responsibility requirements, starting with some basic information on who is subject to the requirements. Because we are in the middle of the first reporting cycle, we will also cover the reporting requirements, including the 1094-
For 2015 and after, employers employing at least a certain number of employees (generally 50 full-
If your company is an applicable large employer, then you are subject to the Employer Shared Responsibility provisions, regardless of whether you are a for-
The consequences of being an applicable large employer include:
To be subject to the Employer Shared Responsibility provisions for a calendar year, your company must have averaged during the previous calendar year at least 50 full-
To determine your status, you must count all employees (subject to a limited exception for certain seasonal workers), regardless of whether the employees are eligible for health coverage from another source, such as Medicare, Medicaid, or a spouse’s employer.
Employees working only abroad, whether or not U.S. citizens, generally will not be taken into account for purposes of determining whether an employer is an applicable large employer or for purposes of determining whether the employer owes an Employer Shared Responsibility penalty or the amount of any such penalty.
You must take seasonal workers into account in determining the number of full-
For this purpose, you may apply a reasonable, good faith interpretation of the term “seasonal worker.”
Each year, you must determine whether you are considered an applicable large employer based on the number of employees you had during the prior calendar year. For example, if your company averages at least 50 full-
Reporting to Employees Who Are Covered Under Your Medical Plan—All Employer-
Starting with the 2015 calendar year, all group health plans (whether sponsored by an applicable large employer or a small employer) must send a report to plan participants describing who is covered under the plan and the months of coverage. Individuals use these forms to validate that they are meeting the Individual Responsibility requirements.
If your medical plan is fully-
These reports are generally due by the January 31 that follows the end of the calendar year—but for the 2015 calendar year, the deadline was extended until March 31, 2016. The deadline for the 2016 calendar year remains January 31, 2017.
Reporting to Full-
In addition to reporting who is covered under the medical plan, if you are an applicable large employer then you must also send a 1095-
For most individuals, this is simply reported for informational purposes. But the IRS will use this information to verify whether individuals receiving subsidies through the Exchanges actually qualify for the subsidies, and whether an applicable large employer is subject to Employer Shared Responsibility penalties
Like the 1094-
Reporting to the IRS
Insurers and small employers sponsoring self-
A much more complicated form is the 1094-
Some of the key information that the IRS will use to determine Employer Shared Responsibility penalties is in Part III of the 1094-
You will also want to pick the correct code in column (e). If your company averaged at least 50 but no more than 99 full-
An Employer who offered affordable, minimum value coverage to at least 98% of its employees who receive a 1095-
Your 1094 filing deadline depends on whether you file by paper or electronically. The normal deadlines are February 28/29 for paper filings and March 31 for electronic filings. Electronic filing is mandatory for an entity this is filing 250 or more forms. For the 2015 calendar year, the deadlines have been extended until May 31, 2016 for paper filings and June 30, 2016 for electronic filings.
*Part 2 of the series will cover: When an employer will be liable for an Employer Shared Responsibility penalty.
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