By Phil Larson
You might know that the Affordable Care Act (ACA) has complex new reporting requirements for large employers and issuers of Minimum Essential Coverage (MEC). This reporting will be used for several important ACA topics including but not limited to: (1) the individual mandate; (2) eligibility for premium tax credits under the exchange or marketplace; and (3) the large employer penalties under 4980H for not offering coverage for full-time employees or offering the wrong form of coverage for full-time employees.
The ACA reporting questions are complex and new issues can surround multiemployer plan reporting. The IRS defines a multiemployer plan as a plan maintained pursuant to one or more collective bargaining agreements and to which more than one employer is required to contribute. For 2015 coverage (with reporting to be completed in early 2016), a special transition rule applies for multiemployer coverage making it easier to report this coverage for the large employer.
The transition relief requires that contributions required by collective bargaining agreement or related participation agreement for the employee to a multiemployer plan be for MEC that is affordable and provides minimum value, and that their dependents also be offered MEC. If all of that is true, the employer will be deemed to have made an offer of health coverage for that employee (despite the fact that the multiemployer plan either makes this coverage available or will make it available). Put another way, this means employers can avoid potential §4980H penalties with respect to full-time employees they make contributions for (despite the fact that the employer may not actually provide the required health coverage).
For purposes of the 1095-C Form, the new final instructions state that an employer using the multiemployer arrangement interim guidance can use code 1H (no offer) for any month for which it enters code 2E (multiemployer plan relief) on line 16, whether or not the employee was actually eligible to enroll in coverage under the multiemployer plan. In these cases, the employer does not need to report enrollment information on 1095-C, Part III. Instead it is likely the multiemployer plan will report enrollment on its 1095-B.
It is also important to make sure that the employer's ACA reporting forms still show this as an "offer of coverage" by the employer (despite the transition relief of code 1H as no offer). This will be done by including these offers for purposes of column (a) of Part III on 1094-C. In simple terms, these individuals count for determining whether or not the employer offered coverage to a specific percentage of its full-time employees (70% this year and 95% next year). This calculation will be important because if you do not provide coverage to a high percentage of your full time employees, the employer can be subject to the higher "no offer" penalty under 4980H.
To summarize, the reporting outlined above for Part II of 1095-C ensures the employer is not subject to a 4980H(b) penalty for these employees, while the reporting shown in Part III of 1094-C helps against the 4980H(a) penalty. The rules around reporting are complex, if you have questions on ACA reporting or the ACA generally, please contact Kinney & Larson LLP.
You might know that the Affordable Care Act (ACA) has complex new reporting requirements for large employers and issuers of Minimum Essential Coverage (MEC). This reporting will be used for several important ACA topics including but not limited to: (1) the individual mandate; (2) eligibility for premium tax credits under the exchange or marketplace; and (3) the large employer penalties under 4980H for not offering coverage for full-time employees or offering the wrong form of coverage for full-time employees.
The ACA reporting questions are complex and new issues can surround multiemployer plan reporting. The IRS defines a multiemployer plan as a plan maintained pursuant to one or more collective bargaining agreements and to which more than one employer is required to contribute. For 2015 coverage (with reporting to be completed in early 2016), a special transition rule applies for multiemployer coverage making it easier to report this coverage for the large employer.
The transition relief requires that contributions required by collective bargaining agreement or related participation agreement for the employee to a multiemployer plan be for MEC that is affordable and provides minimum value, and that their dependents also be offered MEC. If all of that is true, the employer will be deemed to have made an offer of health coverage for that employee (despite the fact that the multiemployer plan either makes this coverage available or will make it available). Put another way, this means employers can avoid potential §4980H penalties with respect to full-time employees they make contributions for (despite the fact that the employer may not actually provide the required health coverage).
For purposes of the 1095-C Form, the new final instructions state that an employer using the multiemployer arrangement interim guidance can use code 1H (no offer) for any month for which it enters code 2E (multiemployer plan relief) on line 16, whether or not the employee was actually eligible to enroll in coverage under the multiemployer plan. In these cases, the employer does not need to report enrollment information on 1095-C, Part III. Instead it is likely the multiemployer plan will report enrollment on its 1095-B.
It is also important to make sure that the employer's ACA reporting forms still show this as an "offer of coverage" by the employer (despite the transition relief of code 1H as no offer). This will be done by including these offers for purposes of column (a) of Part III on 1094-C. In simple terms, these individuals count for determining whether or not the employer offered coverage to a specific percentage of its full-time employees (70% this year and 95% next year). This calculation will be important because if you do not provide coverage to a high percentage of your full time employees, the employer can be subject to the higher "no offer" penalty under 4980H.
To summarize, the reporting outlined above for Part II of 1095-C ensures the employer is not subject to a 4980H(b) penalty for these employees, while the reporting shown in Part III of 1094-C helps against the 4980H(a) penalty. The rules around reporting are complex, if you have questions on ACA reporting or the ACA generally, please contact Kinney & Larson LLP.
