When the calendar flips over to 2015, health reform’s new data gathering requirements for IRS Code Sections 6055 and 6056 reporting go into effect. Under these new reporting rules, employers with over 50 or over 100 full-time employees must provide information to the IRS about their group size and the health plan coverage they offer (or do not offer) to their employees.

2. Sibyl Bogardus Chief Compliance Advisor, Attorney

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2016 Reporting Obligations: Based on IRS Draft Forms & Instructions
HUB International
Sibyl Bogardus
Chief Compliance Officer
© All Rights Reserved 2014

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Report to Employees & Report to the IRS

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Report on Who Has Coverage
•Report on enrollment - Called Section 6055 reporting
•Used for enforcing individual mandate
•Employers report to employees using Form 1095-C
•Details to follow
•Employer report used for enforcement
•Carriers file a report for insured plans using Form 1095-B
•Does not eliminate employer reporting obligations
•Includes information about any employer sponsor
•Includes month-by-month information about who has coverage (employee and each covered dependent)

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Report on Who is Offered Coverage
•Report on coverage offers -- Called Section 6056 reporting
•Gives a great deal of detail about coverage that is offered by an employer
•Carriers will not know the details about the coverage the employer offers
•For example, the carrier will not know if the employer offered he coverage on an affordable basis, whether an employee is full-time or in a waiting period in a specific month, etc.
•Small employers (50-99 full-time employees) will certify they delay compliance until 2016
•Reporting should help individuals / IRS determine subsidy eligibility
•Reporting will allow IRS enforcement of employer mandate

7. Employee Report on Coverage: W-2 Related Reporting
Report goes to enrolled employees and is forwarded to the IRS as well
Assists IRS with individual mandate compliance
Insurers for fully insured plans Employers for self-insured plans
Report covers 2015 & due in 2016
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8. IRS Reporting By Employer on Offers Of Coverage
Reporting on the offer of coverage
Used by IRS for employer mandate compliance check ups
Large employers (50 or more full-time and full-time equivalent employees)
Reporting to IRS and individuals for 2015 coverage due in 2016
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Reporting Overview
What , Why and Who

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Overview
•Reporting to the IRS is required because the federal agencies need information about group health plans so they can enforce the individual and employer penalties
•Why?
•Federal government knows employees will need certain information to complete their Form 1040
•Federal government will need certain information from employers to enforce the law
•Which employees were offered coverage
•Which employees were not
•If not offered coverage, why not
•Lots of detail required on the why not issue

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Overview of The Forms
•Form 1095-C, a statement that goes to employees with their Form W-2
•Employers with 50 or more full-time employees also use this Form 1095-C for their mandate reporting to the IRS
•Employers send their Forms 1095-C to the IRS with Form 1094-C

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Overview of Report to Employees
•Form 1095-C is sent by first class mail to employee’s last known address
•Electronic distribution possible with employee consent
•Desire clarification to allow in-hand delivery or intra- office mail
•SSN can be truncated (last 4 digits)
•Who completes?
•Employers with self-funded plans should be able to report offer and actual enrollment information together (Part III)
•Carriers could provide actual enrollment for insured plans (and separately report aside from the required employer reporting)

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Overview of Report to IRS
•All employers with over 50 employees will complete the Form 1094-C, which is a Transmittal of Employer Level Data
•Each employer in a control group will report by EIN
•Third parties can help prepare the reports, but liability stays with employer
•Also, one employer in the same controlled group can help prepare the reports
•Draft instructions and forms are available along with Q&As posted on-line

14. Reporting to IRS by Employer
Form 1095-C Employer contact and EIN, with contact person’s name and phone number Calendar year for which information is reported Name address and SSN of each full-time employee By month, a certification full-time employees and dependents were offered Minimum Essential Coverage At least the basic coverage that waives $2,000 penalty For each full-time employee: Months when that coverage was elected Employee’s monthly cost for single coverage under the lowest cost basic plan offered (not necessarily elected) Number of full-time employees for each month To whom coverage offered (employee, spouse & dependents) Whether the coverage provides minimum value (bronze) Indicator codes will be used to report certain other information
More detailed information required; this is only a summary.
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15. Reporting to IRS By Employer (cont.)
What doesn’t have to be reported?
•Don’t report for people NOT working full time unless offered coverage anyway
–Will the IRS change this in the future?
•Don’t have to report exact dates, just months
•Don’t have to report portion of premium paid by employer (Because this will not reflect affordability)
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Any Exemptions?
Not Many

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Who is exempt? Who is not?
Exempt
•Small employers (under 50 full-time and full-time equivalent employees) with a plan that is fully-insured
•Do not file for 2014 (even though IRS allows it)
•Certain benefit programs
•Supplemental benefits (those so-called “excepted benefits” under health reform such as hospital indemnity programs)
•On-site clinics
•Wellness programs

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Who is exempt? Who is not?
Not exempt
•Employers with 50 or more full-time employees and full-time equivalent employees
•Determined on a control group basis, not by EIN
•Employers with 50-99 full-time employees certify delay until 2016
•Small employers with self-funded plans
•Report actual enrollments, not facts on offer of coverage
•Non-profits, churches / church bodies, federal / state / local governments, Indian tribal governments
•Special rules for unions/govt entities

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Use in Enforcement
Preliminary IRS Guidance on the Process

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What Happens with Reports?
IRS Process Flow Overview Basics
Employer will not file an Income Tax Return to report compliance.
These reports are used instead.
Unknown if employer must pay the penalty in order to appeal (not a good situation) or if the appeal can precede payment.
1.Employer* files §6056 Forms 1094-C & 1095-C
2. IRS matches §6056 information with Form 1040 PTC Schedule Form 8962
3. IRS sends employer Preliminary Letter (PreL) with proposed liability, if applicable
4. IRS receives employer’s response
5. IRS updates and processes transaction

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Reporting Deadlines & Any Missing Information
Better to File on Time Than To Be Perfect & Late

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Form and 2016 Due Dates
•Individual return / employee statement
•Due to employee by January 31, (shift to Feb.1, 2016 due to weekend)
Form 1095-B Form 1095-C
•Transmittal form of employer data for IRS
•By February 28 paper filing (shift to March 1, 2016 due to weekend)
•By March 31 electronic filing (if 250+ employee returns filed, not W-2s)
Form 1094-B
Form 1094-C

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Missing SSNs
Reasonable attempts to obtain missing SSNs Requires three requests for SSNs Enrollment application can be one attempt to obtain SSN Phone or email outreach can be considered an attempt but written is recommended Three attempts must be made by December 31 of year following enrollment
•Apply if attempts not made
•SSNs are missing on report
Penalties
•May be used if SSNs are not obtained after three attempts
Date of Birth
•If SSNs captured at enrollment
3 Requests Waived

24. Reporting Failures Penalty is up to $100 per return. Maximum annual penalty of $1.5 million Avoid penalties if failure is due to reasonable cause Limited relief applies for the 2015 return due in 2016 if incomplete or incorrect information is reported Must meet deadlines Must show good faith compliance Ability to report date of birth instead of SSN for dependents should continue past the 2016 filing Presumably the 3 request rule will apply annually
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Less Extensive Reporting
Will It Really Help?

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Alternative Reporting Methods
More limited reporting of details
Certify minimum value affordable bronze offer was made to one or more employees
Offered to spouse and dependents
Much fewer details required for the IRS form; fewer still if offered to 95% of full-time employees and family members
Full reporting required for those not covered by a qualifying offer for all 12 months

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Alternative Reporting Methods
98% Offer Reporting
Employer still required to report for full-time employees
This rule is helpful if employer does not want to determine and report on full-time employees by month
The employer may certify it offered compliant coverage to at least 98% of its employees
Employer then does not have to complete number of full-time employees per month

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Final Takeaways

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Takeaways
Know whether as an employer you are an subject to reporting or not Consider common control group situations Employers under 50 full-time employees with insured health plans are exempt Reporting is done on a calendar year basis Correlates with the identification of full-time employees for 2015 Need coordination between HR, Benefits, Payroll, carriers, TPAs, and employer members within a larger controlled group If currently not obtaining SSNs, take action to obtain Proof of three requests

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Thank You!