What You Need to Know

about the Maze of

Employer Responsibilities

The ACA requires employers to rethink many aspects of providing health insurance coverage to their employees. First, employers must determine if they are subject to the ACA rules. If so, then employers must:

1. Choose an affordable health insurance plan.

2. Offer insurance to appropriate full-time employees.

3. Document the decisions in #1 and #2.

4. Report health insurance coverage information to their employees and the IRS.

Employer penalties may result from failure to offer affordable coverage or failure to properly report coverage.

Patient Protection &Affordable Care Act (ACA)

Download Our CRInsight: Playing the Affordable Care Act Game: A Business Owner Guide to the Employer Mandate.

ACAReportingCompliance.com

Through the Topsy Turvy ACA Maze of RulesFollowing the ArrowsChapter 1

Through The Looking GlassACA Basics Chapter 2 Is your company subject

to the ACA’s requirements?

Which details are applicable?

Read the CRInsight: Playing the Affordable Care Act Game:

A Business Owner Guide to the Employer Mandate.

BA

C

ALE Requirement

Does your company qualify?**50 or more full-time and FTEs

NO PENALTY

Minimum Value

Does the insurance pay for at least 60% of the covered health care expenses?

NO

YES YES

NOHealth Exchange

Did a full-time employee receive a taxcredit or subsidy from a health exchange?

NO PENALTY

NOYES

NO

YES

NO PENALTY

YES

NO

Reporting RequirementsDoes your company have the controls around

your data required to comply with ACA (i.e. file Forms 1094 and 1095)?

NO

YES

Penalty

$250/form for failure to provide a 1095 to each employee.

NO PENALTY

Affordability

Is coverage affordable as determined by safe harbor rules?

Penalty

Based on $3,000 per full-time employee that receives

a premium tax credit.*

*total cannot exceed penalty for not offering any

health coveragePenalty

Based on $2,000 for all full-time employee after first

30 employees.*

*80 employees in 2015

Employee Insurance Coverage

Requirement

Is qualified coverage offered to 95% of

full-time employees and dependents?*

*70% in 2015

Affordable Care Act Applicability

Many of the decisions represented in the above chart involve complex and confusing definitions found in the 2,700 pages of the ACA — and the 20,000 plus pages of associated regulations. While the ACA mandate applies to employers with 50 or more full-time employees, the determination of employee numbers includes a calculation of full-time equivalent employees and part-time employees. Additionally, companies that share a common owner or group of owners may be considered part of a controlled group, and therefore grouped for purposes of determining whether they’re considered an applicable larger employer.

Determining Which Employees Are Eligible for Insurance Coverage

Employers may choose to offer health insurance to all employees; however, the rules only require companies to offer coverage to their full-time employees or pay a penalty. Again, a complex method determines which employees are considered full-time. While the simple explanation of full-time is an employee that works 30 or more hours a week or 130 or more hours a month, employers must develop methods to lookback into employees’ work histories over a period of time to calculate average hours worked.

The measurement periods are different for ongoing employees and newly hired employees, but the periods share three common traits.

They are that the employer:

• selects a measurement period to evaluate hours worked,

• uses an administrative period in which to make determinations and offer coverage, and

• has a stability period during which employees’ calculated full-time/part-time status does not change.

Once an employer makes a decision about their ACA periods, tracking an employee’s actual status is critical for four reasons:

1. Employers must document their offer of health insurance coverage to full-time employees.

2. If the employer is not offering health insurance, then the full-time employee count determines penalty calculations.

3. If the employer does offer health insurance, then the determination of whether an employee is a full-time employee under ACA will determine affordability or minimum value penalty calculations — if an employee receives a premium tax credit on a health exchange.

4. Employers must report coverage information for full-time employees.

Affordable Minimum Essential Coverage Health Insurance

The insurance coverage offered to full-time employees must meet affordability and minimum value requirements.

Standard Measurement Period AEvaluate FT/PT Status

AdminStability Period ANo coverage changes

Standard Measurement Period BEvaluate FT/PT Status

AdminStability Period BNo coverage changes

Standard Measurement Period CEvaluate FT/PT Status

AdminStability Period CNo coverage changes

of Reporting for Forms 1094 and 1095Becoming the Queen (or King)

Specifically:

1. Employers must work with their health insurance carriers and brokers to ensure that the plan’s lowest-cost option offered to employees covers at least 60% of the total allowed costs of benefits.

2. The employee’s share of the self-only coverage option generally should not exceed 9.5% of the employee’s household income.* *Since household income is usually unknown to employers, the IRS allows the employee’s W-2 wages for calculation of a safe harbor affordable premium.

Chapter 3

Are you confused about this decision process?

Then reference our CRInsight: Playing the Affordable Care Act Game:

A Business Owner Guide to the Employer Mandate.

Would you like a more in-depth look at affordable minimum essential coverage?

Check out the CRInsight: Playing the Affordable Care Act Game:

A Business Owner Guide to the Employer Mandate.

Our professionals can help estimate the safe harbor affordable premium.

Employee Tracking Periods

Your company has analyzed your health coverage and employees (or CRI has performed this analysis for you); now what? In addition to helping you navigate and assess these items, CRI can also assist with compliance reporting. Information about each employee’s health care coverage must be furnished to each employee each

year — similar to the way employers must report wage and withholding information on Form W-2. Insurance information is reported to employees using Form 1095. The IRS receives a copy of each Form 1095 plus a summary Form 1094. The precise information that must be reported varies depending upon specific factors related to employer organizations and the type of insurance coverage offered.

Compliance – Required FormsWhich types of employers and health plans may be subject to these new reporting requirements?

EMPLOYER TYPE SMALL EMPLOYER SMALL EMPLOYERTREATED AS LARGE LARGE EMPLOYER

PLAN TYPE NONE INSUREDSELF-

INSUREDNONE INSURED

SELF-INSURED

NONE INSUREDSELF-

INSURED

1095-B1094-B

No No* Yes No No* Yes No No*Usually

Not

1095-C1094-C

No No No Yes Yes Yes** Yes Yes Yes**

FO

RM

S

*Filed by insurer **Including dependent coverage

Unlike W-2 information, it is highly unlikely that employers’ payroll systems (by themselves) contain all of the required information. Therefore, employers must gather and consolidate information

from multiple sources before preparing the forms. CRI can facilitate discussions among departments and outside vendors, as well as lead the data mining that is needed to aggregate data from various sources.

Needed to Prepare ReportsPlanning for Aggregated Data

Compliance – Required FormsWhich types of employers and health plans may be subject to these new reporting requirements?

HR FILES HR INFO SYSTEM PAYROLL INSURANCE CO.

EMPLOYEE

Name Y Y Y E

Address Y Y Y E

Social Security Number Y Y Y E

Monthly Actual Full-Time Status

Family Coverage Offered Y Y E

Lowest Monthy Premium Y Y Y E

Affordability Safe Harbor R R, W P

Monthly Enrollment Status Y Y D Y

ENROLLEDDEPENDENTS

(SELF-INSURED PLANS)

Name Y Y Y

Address Y Y Y

Social Security Number Y Y Y

Birthdate Y Y Y

Monthly Actual Full-Time Status Y Y Y

EMPLOYERS

Name Y Y Y Y

Address Y Y Y Y

Contact Information Y Y Y Y

Tax ID Number(s) Y Y Y Y

Number of 1095-Cs Filed

Monthly Coverage Offered Certification Y

Monthly Full-Time Employees

Monthly Total All Employees Y

Applicable Special Rules or Relief Y

CONTROLLED OR AFFILIATED GROUP

Names Y

Tax ID Number Y

Y = Yes, information needed • R = Rate • D = Deduction • W = W-2 E = Enrolled Only • P = Federal Poverty

Employer Responsibility Checklist for Forms 1094 and 1095 ComplianceChapter 5 Don't Be Late for the Very Important Date!

Alice: This is impossible.The Mad Hatter: Only if you believe it is.

Define your ACA responsibilities based on employer size.

¨Determine whether your business has 50 or more full-time and full-time equivalent employees as defined by ACA.

¨ Keep in mind that the full time employee count includes aggregating full-time equivalent employees (including seasonal workers). CRI’s ACA professionals can assist in those calculations.

¨ If your business has common ownership, consider whether the controlled group rules may push your otherwise small business into the large employer arena.

Gather employee work history data.

¨ Implement a process for analyzing employee work history to calculate and document employee full-time/part-time status. Note: Software applications can assist with this process.

¨ Institute appropriate measurement, administrative, and stability periods by categories of employees.

¨ Create a process that documents:

» full-time status conclusions during the measurement period,

» insurance offerings (during the administrative period), and

» enrollment information during all periods for each employee.

Evaluate insurance option(s).

¨ Analyze whether your lowest cost health plan satisfies affordability requirements for each employee.

¨Work with your insurance broker to evaluate available plan options that could provide lower cost options.

¨ Confirm with your insurance broker that the plan options meet minimum value standards.

¨Work with CRI to perform a cost/benefit analysis of all options — including the cost of cutting coverage altogether.

Report and track your ACA compliance.

¨Determine location(s) of data needed to complete Forms 1095 and 1094.

¨ Implement a method of compiling the data from the identified sources. Note: The documentation created during the gathering of employee work history is a key component.

¨ Identify a reporting software or service that can print Forms 1095 and 1094 and assist with IRS filings.

¨ Contact CRI’s ACA professionals with any questions.