ACA Compliance Guidelines

ACA Compliance Guidelines
2015
Presented by:
The Warner Companies
9690 Deereco Road, Suite 650
Timonium, MD 21093
Phone: (410) 252-0808
Website: www.lwarner.com
The materials in this presentation are CONFIDENTIAL and have been prepared by The Warner Companies.

TABLE OF CONTENTS
Which employer groups are affected by the ACA? ...............................................................3
Understanding transition relief and who is eligible ..................................................................4
Determining your full-time employee count ............................................................................5
What is ACA compliance reporting and how will it affect you? ............................................6
Proper application of safe harbors .........................................................................................7
Understanding the required forms .........................................................................................8
Form delivery deadlines.........................................................................................................................9
Where to find the right forms................................................................................................................9
Consequences for not complying .....................................................................................................10
Need some extra help? ........................................................................................................................11
CONFIDENTIAL
Prepared by The Warner Companies Page 2 of 11
Source: IRS Affordable Care Act: http://www.irs.gov/Affordable-Care-Act

WHICH EMPLOYER GROUPS ARE EFFECTED BY THE ACA?
If your company has 50+ full-time (FT) employees the Affordable Care Act considers you an Applicable
Large Employer (ALE). Compliance to the Affordable Care Act employer mandate in 2015 is
dependent on the size of your company in 2014.
In 2014, if your company had:
100+ FT
Employees
(In 2014)
50 - 99 FT
Employees
(In 2014)
1 - 49 FT
Employees
(In 2014)
You are required to
comply with the ACA
employer mandate
during the 2015
plan year
The ACA employer
mandate MAY apply in
the 2015 plan year
You’re not an ALE
You must offer health
coverage to ALL of
your FT employees
(and dependents up to
age 26)
Companies that are
eligible for transition
relief won’t be subject
to penalties in 2015
ACA compliance is
not necessary yet
Send this info to the
IRS using the 1094-C
and 1095-C forms,
in 2016
Penalties to be
enforced for 50-99
ALEs in the 2016
plan year
You could qualify for
a tax incentive
(through the SHOP
Marketplace) If you
provide health
coverage to your
employees
CONFIDENTIAL

UNDERSTANDING TRANSITION RELIEF AND WHO IS ELIGIBLE
Final regulations include a one (1) year delay for employers with 50-99 full-time employees (including
full-time equivalents). These employers will not be subject to penalties until their first plan year on or after
January 1, 2016 if ALL of the following conditions are met:
Limited Workforce Size – The employer must have on average at least 50 FT employees
(including full-time equivalents) but fewer than 100 FT employees (including full-time equivalents).
Maintenance of Workforce and Aggregate Hours of Service – During the period
beginning on February 9, 2014 and ending on December 31, 2014, the employer may not reduce
the size of its workforce or the overall hours of service of its employees in order to qualify for the
transition relief.
Maintenance of Previously Offered Health Coverage – During the period beginning on
February 9, 2014 and ending on December 31, 2015 (or, for employers with non-calendar-year
plans, ending on the last day of the 2015 plan year) the employer must not eliminate or materially
reduce the health coverage, if any is offered, as of February 9, 2014.
The IRS will require employers to certify eligibility for transition relief.
CONFIDENTIAL

DETERMINING YOUR FULL-TIME EMPLOYEE COUNT
As you saw on page three (3), employers with 50 or more full-time employees will be affected in 2015.
The ACA took the definition of a full-time employee a step further by factoring in your part-time (PT)
employees as well, collectively known as full-time equivalent employees (FTEs). Whether or not the ACA
applies to your company depends on your total number of (FTEs).
Here’s how to calculate it:
1. Step one – A FT employee works an average of 30+ hours per week OR 130 hours per calendar
month.
2. Step two – PT employees’ hours are used to calculate whether the employer mandate applies to
your company.
Seasonal employees such as tax preparers are not considered full-time employees.
Employees such as teachers are considered full-time employees, even if they don’t work
a year-round schedule.
3. To calculate how many FTEs you have, use this simple calculator provided by healthcare.gov:
https://www.healthcare.gov/shop-calculators-fte/
Here’s an example of how FTEs are calculated:
80 FT employees working
30 hours per week
+
40 PT employees working
15 hours per week
100 FTEs
CONFIDENTIAL

WHAT IS ACA COMPLIANCE REPORTING AND HOW WILL IT AFFECT YOU?
In order to be compliant, the ACA requires employers to offer Minimum Essential Coverage that
provides Minimum Value and is Affordable. Health insurance coverage must also be offered to
dependent children up to the age of 26.
How is “Minimum Essential Coverage” defined?
Minimum Essential Coverage is defined as health plans that are employer-sponsored, government-
sponsored, grandfathered and plans offered in the individual market. It does not include stand-alone
vision, dental (except pediatric dental), workers’ compensation or coverage limited to disease or illness.
Effective January 1, 2015, the Employer Mandate will create penalties for employers if they do not offer
Minimum Essential Coverage to at least 70% of their full-time employees and dependent children (95%
for 2016).
How is “Minimum Value” defined?
A health plan is considered to have Minimum Value when it pays on average at least 60% of the actuarial
value of the total allowed cost of benefits under the plan. This means those enrolled pay on average no
more than 40% of the total allowed cost of benefits out-of-pocket. Minimum Value does not take into
account the amount paid for premium. The Department of Health and Human Services (HHS) and the
IRS have produced a minimum value calculator. By entering specific plan information, such as
deductibles and co-pays into the calculator, employers can get a determination as to whether the plan
provides minimum value.
Find the minimum value calculator here: https://www.cms.gov/CCIIO/Resources/Regulations-and-
Guidance/Downloads/mv-calculator-final-4-11-2013.xlsm
How is “Affordable” defined?
For coverage to be considered “affordable” it must not exceed more than 9.5% of an employees’ annual
household income. Employers generally will not know their employees’ household incomes, thus the
government allows employers to take advantage of one (1) or more of the three (3) affordability safe
harbors depicted on the next page.
CONFIDENTIAL

PROPER APPLICATION OF SAFE HARBORS
It’s unlikely that an employer will know employees’ annual household income; the ACA provides three (3)
safe harbors based on information the employer will have available. If an employer meets the
requirements of any one (1) or more of these safe harbors, the offer of coverage will be deemed
affordable under the employer mandate.
Safe Harbor Who should use it? How do you use it?
What are the
disadvantages?
W2 Wages
Most valuable to an
employer with full-time
employees who regularly
work 40 hours per week
and whose compensation
is unlikely to decrease
during the year.
Refer to Box 1 of an
employee’s current year
W2 form. If the
employee’s health
coverage premium is not
more than 9.5% of Box 1,
coverage is
considered affordable
under the employer
mandate.
Box 1 income does not
include pre-tax
contributions, which will
reduce the maximum
affordable amount. This
must be calculated
monthly for every
employee in your
company.
Rate of Pay
Most valuable for
employers with hourly
employees and the need
for a fast, “fail-safe”
calculation method. If the
Rate of Pay safe harbor
is met for your lowest-
paid employee, then it will
also be met for all other
employees.
Multiply an hourly
employee’s lowest pay
rate during the calendar
month by 130 hours. If
the employee’s health
coverage premium is not
more than 9.5% of this
amount, coverage is
considered affordable
under the employer
mandate.
Even if employees work
more than 130 hours,
you can still only multiply
the hourly pay rate by
130 hours per month,
Federal
Poverty Line
Most valuable for
employers with seasonal
employees and
employers who use the
look-back measurement
period to govern if
variable-hour or seasonal
employees have full-time
status.
Take the FPL for a
household of one in the
current plan year
($11,770 in 2015), and
divide it by 12. If your
employees are not paying
more than 9.5% of the
FPL for their health
coverage premiums,
coverage is considered
affordable under the
employer mandate.
This method usually
provides the lowest
threshold allowed for
monthly premiums. Other
methods generally allow
for a higher monthly
premium.
CONFIDENTIAL

UNDERSTANDING THE REQUIRED FORMS
You should now have successfully recognized your company as an ALE, and understand how to be
compliant under the employer mandate. Now you need to address the employer reporting requirements.
IRS Forms 1094-C and 1095-C are filed by large employers that are required to offer health insurance
coverage to their employees under the ACA. The 1095-C provides information about health insurance
and is sent to both employees and the IRS, while the 1094-C acts as a transmittal form for the 1095-C
and is sent only to the IRS. The IRS will use these forms to enforce penalties under the employer and
individual mandates.
Form 1094-C is a transmittal form from the employer to the IRS that contains:
 Employer name, EIN and contact information
 Total number of full-time employees per calendar month
 Total headcount per calendar month
 Certification that minimum essential coverage was offered to employees and any dependents
entitled to enroll per calendar month
 Whether an applicable 4980H “Safe Harbor” was used by calendar month
 How many 1095-C’s forms are being sent
Form 1095-C is a statement to employees AND to the IRS that contains:
 Proof health insurance coverage was offered to employees and dependents by calendar month
 Employee’s share of the lowest cost monthly premium by calendar month
 Whether an applicable 4980H “Safe Harbor” was used by calendar month
Small employers (less than 50 full-time employees) sponsoring self-insured group health plans should
file a Form 1094-B accompanying a set of 1095-B Forms.
1095-C
1094-C
CONFIDENTIAL

FORM DELIVERY DEADLINE
To be in compliance with the ACA employer mandate:
 All employees must receive their copies of form 1095-C by January 31, 2016
 The IRS must receive your form 1094-C and 1095-C by February 28, 2016 or March 31, 2016 if
it’s filed electronically
WHERE TO FIND THE RIGHT FORMS
You can download the forms directly from the IRS website:
 1094-C
http://www.irs.gov/pub/irs-pdf/f1094c.pdf
 1095-C
http://www.irs.gov/pub/irs-pdf/f1095c.pdf
 1094-B
http://www.irs.gov/pub/irs-pdf/f1094b.pdf
 1095-B
http://www.irs.gov/pub/irs-pdf/f1095b.pdf
CONFIDENTIAL

CONSEQUENCES FOR NOT COMPLYING
Forms 1094-C and 1095-C help the IRS enforce the ACA employer mandate
The message is loud and clear: either comply with the ACA employer mandate or pay costly fines. The
penalties are already in effect for the 2015 plan year for companies with 100+ full-time employees. For
companies with 50-99 employees, penalties are effective for the plan year beginning on January 1, 2016
(see page four (4) on Transition Relief).
Offer your
employees health
insurance that
provides minimum
essential coverage
Pay a $2,000 annual
penalty for every FT
employee at your
company
Offer affordable health
coverage that provides
minimum value (see
definitions on page 4)
File Forms 1094-C
and 1095-C for ALE’s
or 1094-B and 1095-B
forms if small self-
funded employer
Provide written
informational
statements to each
of your employees
(see page 8)
Pay a $3,000 annual
penalty for every FT
employee at your
company
Pay a $100 penalty
for every delinquent
or incorrect return
Pay a $100 penalty
for every missing
statement
CONFIDENTIAL

NEED SOME EXTRA HELP?
If you still need some guidance on complying with the ACA employer mandate,
The L. Warner Companies, Inc. can help.
Our dedicated consultants will help guide you through the process and make the best recommendations
for your situation.
 Affordable Care Act implementation consulting
 Health Plan recommendations and administration
 Wellness Program recommendations and administration
 Benefit technology platform recommendations
 Voluntary Benefit recommendations and administration
 Payroll billing and reconciliation
 Eligibility audits
For more on how we can help your company with ACA compliance (and much more) contact:
Gabriel Ehrlich
Benefits Consultant
gehrlich@lwarner.com
(410) 615-7778
Disclaimer: The content presented is for informational purposes only and should not be construed as
legal advice. The material is not intended to take the place of the written law or regulations and is subject
to change at any time.
CONFIDENTIAL

ACA Compliance Guidelines

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