The latest Health Reform Bulletin is here! This bulletin is chock full of information from a new law that amends the definition of small employer, finalized ACA reporting forms 1094 and 105 and adjusted PCORI fees and much more. Check out some more in-depth information above.

1. CBIZ HEALTH REFORM BULLETIN
October 12, 2015 – HRB 115 Page 1
Subject: 1) New Law Amends Definition of Small Employer; 2) Finalized ACA
Reporting Forms - 1094 and 1095 Series; 3) Employer Notices of Marketplace
Determinations; 4) Cost Sharing and Out-of-Pocket Limits; 5) Adjusted
PCORI Fee; 6) Determining Minimum Value Standard of Health Coverage; and
7) Nondiscrimination in Health Plans, Programs and Activities
Date: October 12, 2015
NEW LAW AMENDS DEFINITION OF SMALL EMPLOYER
On October 7, 2015, President Obama signed H.R.1624, Protecting Affordable Coverage for
Employees Act (“PACE”). This law allows a state to define small employer for purposes of health
insurance as an employer employing between 1 and 50 employees in the previous calendar year;
and at least one employee on the first day of the corresponding plan year. Most states currently
define small employer in this manner.
The Affordable Care Act, prior to enactment of PACE, would have changed the definition of small
employer, effective January 1, 2016, to an employer employing between 1 and 100 employees.
According to this new law, a state may, but is not obligated, to use the 100 or fewer definition. For
example, California, Colorado, District of Columbia, North Carolina, New York and Virginia have
modified the definition of small employer to mean one who employs fewer than 100 employees.
These states, of course, would have the legislative right to change the definition back to 1 to 50
employees. Presumably, states that have not yet expanded their small employer definition would
retain the 50 or fewer employee definition.
What does this mean?
Small employer plans, according to the ACA, are subject to certain requirements that large
employer plans are not subject to; notably, the rate setting issue based on age, geographic
location, family composition and tobacco use. Further, only insured small employer plans are
required to include all essential health benefits (EHBs) as defined by the state (note, large
employer plans, including self-funded plans, are not required to include all EHBs; but to the extent
that a plan does include an EHB, the EHBs are subject to restrictions such as no annual or
lifetime limits and cost-sharing restrictions). Retaining the 50 or fewer employee definition will
limit the number of employers impacted by these provisions.
As true with any new law, there will surely be some issues to be resolved, not the least of which is
renewals already in process based on an expanded definition of small employer.
FINALIZED 2015 ACA REPORTING FORMS 1094 AND 1095 SERIES
The Affordable Care Act (ACA) imposes two new Internal Revenue Code sections. One requires
reporting of minimum essential coverage (MEC); the other requires employers subject to the
employer shared responsibility provisions to report on offers of coverage. This reporting is

2. CBIZ HEALTH REFORM BULLETIN
October 12, 2015 – HRB 115 Page 2
required beginning January 1, 2015, with the first reports due in 2016. The IRS has recently
released the finalized 2015 forms and instructions to be used for the reports:
Health Insurance Coverage Reporting by Insurers and Sponsors of Self-funded Plans
(IRC§ 6055)
 Instructions for 2015 Forms 1094-B and 1095-B (PDF or HTML)
 Form 1094-B, Transmittal of Health Coverage Information Returns
 Form 1095-B, Health Coverage
Employer Health Insurance Reporting Requirement (IRC § 6056)
 Instructions for 2015 Forms 1094-C and 1095-C (PDF or HTML)
 Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage
Information Returns
 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage
In addition, the IRS has updated two of their webpages to provide further information and
assistance to employers required to file the requisite forms:
 ACA Information Center for Applicable Large Employers (ALEs)
 Information Reporting by Applicable Large Employers
These finalized 2015 forms are substantially similar to the draft forms and instructions issued a
few months ago (see CBIZ Health Reform Bulletin, Draft 2015 versions of ACA Reporting Form
1094 and 1095 Series, 6/22/15). A few notable modifications and clarifications to the 2015 Forms
and Instructions are as follows:
 Coverage in more than one type of comprehensive health coverage, whether insured or
self-funded. The instructions to the B series provides that if an employer sponsors a major
medical plan and a health reimbursement arrangement (HRA), the employer need not file for
the HRA. Conversely, if the employer has an employee covered by a non-excepted HRA and
that employee is covered by, for example, a spouse’s employer plan, the employer sponsoring
the HRA would have to file (an excepted HRA is one covering, for example, dental-only or
vision-only services). Generally, reporting is required for a retiree-only HRA because these
HRAs are generally not integrated with health coverage. This exception is likewise reflected in
the finalized instructions to Part III of the Form 1095-C, applicable to MEC reporting for self-
funded plans.
With regard to the C series:
 Reporting COBRA Coverage. In Lines 14 to 16, the employer reports on offers of
coverage, affordability and any applicable safe harbor codes. Of particular note,
certain codes are used in Line 14 to specify the type of coverage offered and in Line
16 to specify any safe harbor codes that may apply, such as the employee is no longer
employed or not a full-time employee. In a significant reversal from the draft to
finalized forms that should come as welcome news for employers, an offer of COBRA
continuation coverage to a terminated employee need not be reported. Rather, an
employer can use Code 1H (No offer of coverage) on Line 14 and Code 2A (Employee
not employed during the month) in Line 16, whether the individual elects or declines
COBRA. Note, this is only applicable in the event of a terminated employee. Special
rules apply to active employees electing COBRA, such as due to reduction in hours, as
well as to dependents electing COBRA. Also note, if the plan is self-funded and the
individual is covered through COBRA, then Part III MEC reporting must still be
completed.

3. CBIZ HEALTH REFORM BULLETIN
October 12, 2015 – HRB 115 Page 3
 Determining Applicable Codes
The instructions relating to Line 14, Employee Offer and Coverage and Line 16 relating
to Code Series 2 where applicable, provide important guidance on determining which
indicator code to select if more than one code applies.
 Multiemployer plans:
 For reporting offers of coverage for 2015, an employer relying on the multiemployer
arrangement interim guidance would enter code 1H on line 14 for any month for
which the employer enters code 2E on line 16. These codes indicate that the
employer was required to contribute to a multiemployer plan on behalf of the
employee for that month and therefore is eligible for multiemployer interim rule
relief.
 An employer is deemed to offer health coverage to an employee if it, or another
employer in the Aggregated ALE Group, or a third party such as a multiemployer or
single employer Taft-Hartley plan, a multiple employer welfare arrangement or a
staffing firm offers health coverage on behalf of the employer.
 Counting Employees
 For purposes of counting employees to determine applicable large employer (ALE)
status, the final forms affirm that employees who have coverage under TRICARE
or through the Veterans Administration are not counted (see Applicability of ACA’s
Employer Shared Responsibility Provisions - Veterans from CBIZ HRB 113,
8/5/15).
 Employers must choose to use one of the following days of the month to determine
the number of employees per month and must use that day for all months of the
year:
1. The first day of each month;
2. The last day of each month;
3. The first day of the first payroll period that starts during each month; or
4. The last day of the first payroll period that starts during each month.
The final instructions provide for an additional measurement period wherein the
count can be determined from the 12th
day of each month.
EMPLOYER NOTICES OF MARKETPLACE DETERMINATIONS
Employers subject to the ACA’s’ employer shared responsibility requirements will only be at risk
for an excise tax if one or more of its full-time employees, defined as an individual working 30 or
more hours per week, qualifies for premium assistance. These individuals are known as credit
employees. To qualify for premium assistance or cost sharing, the individual must fall between
100-400% of the federal poverty level. There must have been no offer of adequate or affordable
coverage by the employer. The individual is disqualified from being a credit employee if he/she
enrolls in health coverage of any nature offered by the employer. If an individual is granted
premium assistance or a cost-share, and is later found to be ineligible, the individual would be
required to refund the advanced payment.
To facilitate this process, the federal marketplace can issue a notice to the employer advising that
one of its employees have been granted premium assistance, giving the employer an opportunity
to appeal this determination (also see Employer Appeals to Marketplace, CBIZ Health Reform
Bulletin, 2/16/15). Presumably the purpose of the notice is to mitigate incorrect advanced
payment of cost share or premium assistance.

4. CBIZ HEALTH REFORM BULLETIN
October 12, 2015 – HRB 115 Page 4
In no way does this marketplace notice impose a tax upon the employer. The employer would
only be subject to an excise tax after it has received a notice from the IRS and after it has had an
opportunity to appeal. The IRS notice would be generated after the individual has filed his/her tax
return and after the employer has filed its Form 1094-C and 1095-C.
During 2015, very few marketplaces actually issued notices. The CMS’ Center for Consumer
Information and Insurance Oversight recently issued a set of FAQs indicating that in 2016, it will
begin issuing more employer notices. These will generally come from the federal marketplace
and states that are using the federal platform. State-based marketplaces may, at their discretion,
also issue notices.
According to these FAQs, the first batch of notices will come after the 2016 open enrollment
period that will end January 31, 2016. The notices will be sent to the employer’s address that is
provided by the individual seeking coverage through the marketplace. Employers will be able to
respond to the notices within 90 days, either affirming the individual has coverage or was offered
coverage by the employer.
COST SHARING AND OUT-OF-POCKET LIMITS
The Affordable Care Act imposes certain cost-share restrictions on essential health benefits
(EHB) provided under non-grandfathered group health plans, including non-grandfathered self-
insured and large group health plans. For 2015, the annual out-of-pocket limit is $6,600 for self-
only coverage and $13,200 for other than self-only coverage. In 2016, the out-of-pocket limit
increases to $6,850 for self-only coverage; $13,700 for other than self-only coverage.
The Departments of Labor, Treasury and Health and Human Services recently released an
implementation FAQ relating to cost sharing matters. The FAQ clarifies that for plan years
beginning January 1, 2016, an individual cannot be subject to more than the individual statutory
out-of-pocket limit on EHBs, even if the individual is covered by a family plan. Following is an
example of how this cost sharing mechanism applies:
Example. Assume a family of four individuals is enrolled in family coverage under a group
health plan in 2016 with an aggregate annual limitation on cost sharing for all four
enrollees of $13,000. Individual #1 incurs claims associated with $10,000 in cost sharing;
and individuals #2, #3, and #4 each incur claims associated with $3,000 in cost sharing.
In this example, because the self-only maximum annual limitation on cost sharing ($6,850
in 2016) applies to each individual, the cost sharing for individual #1 for 2016 is limited to
$6,850, and the plan is required to bear the difference between the $10,000 in cost
sharing for individual #1 and the maximum annual limitation for that individual, or $3,150.
With respect to cost sharing incurred by all four individuals under the plan, the aggregate
$15,850 ($6,850 + $3,000 + $3,000 + $3,000) in cost sharing that would otherwise be
incurred by the four individuals together is limited to $13,000 (the annual aggregate
limitation under the plan); thus, the plan must bear the difference between the $15,850
and the $13,000 annual limitation, or $2,850.
According to guidance, a plan can have two separate cost sharing limits for different benefits,
such as one for the comprehensive medical plan and one for prescription drug plan. In this event,
the combined cost share cannot exceed the overall limit.

5. CBIZ HEALTH REFORM BULLETIN
October 12, 2015 – HRB 115 Page 5
ADJUSTED PATIENT-CENTERED OUTCOMES RESEARCH FEE
The Affordable Care Act imposes a Patient Centered Outcome Research (PCOR) fee which may
be adjusted annually. For policy and plan years ending between October 1, 2015 and October 1,
2016, the fee will increase to $2.17, according to IRS Notice 2015-60. As background, the PCOR
fee is assessed on the average number of lives covered under the policy or plan. The fee is
required to be reported annually to the IRS on the second quarter Form 720 and paid by its due
date, July 31st
.
For additional information about the PCOR fee, see IRS webpage, questions and answers and
chart of plans subject to the fees.
DETERMINING MINIMUM VALUE STANDARD OF HEALTH COVERAGE
The IRS has recently proposed a regulation to align with prior guidance relating to determining
minimum value of health coverage. This standard is used for purposes of the ACA’s employer
shared responsibility provisions that require employer-sponsored plans to cover at least 60% of
the total allowed costs of benefits provided under the plan, including substantial coverage of
inpatient hospitalization and physician services. The minimum value standard also applies for
purposes of determining eligibility for the premium tax credit.
NONDISCRIMINATION IN HEALTH PLANS, PROGRAMS AND ACTIVITIES
Section 1557 of the Affordable Care Act provides for open access to health coverage, programs
and activities by all individuals. In other words, individuals cannot be discriminated or prohibited
from participating in health related programs or denied health coverage on the basis of race,
color, national origin, sex, age, or disability. To this end, the Department of Health and Human
Services issued proposed regulations, together with a Fact Sheet and FAQs, that set forth the
standards to be used by federally-sponsored health programs and activities to ensure that
individuals are not denied access to these services. In addition, these regulations prohibit
discrimination by health insurers, including plans issued through the marketplace and certain
plans administered by employers receiving federal assistance, on the basis of race, color, national
origin, disability, age, sex, gender identity or sexual orientation. Comments on these regulations
must be submitted by November 9, 2015.
ABOUT THE AUTHOR: Karen R. McLeese is Vice President of Employee Benefit Regulatory Affairs for CBIZ
Benefits & Insurance Services, Inc., a division of CBIZ, Inc. She serves as in-house counsel, with particular
emphasis on monitoring and interpreting state and federal employee benefits law.
Ms. McLeese is based in the CBIZ Kansas City office.
The information contained herein is not intended to be legal, accounting, or other professional advice, nor are these
comments directed to specific situations. The information contained herein is provided as general guidance and may be
affected by changes in law or regulation. The information contained herein is not intended to replace or substitute for
accounting or other professional advice. Attorneys or tax advisors must be consulted for assistance in specific situations.
This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in
connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could
affect the information contained herein.