ACA Shared Responsibility: 2015 Versus 2016

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Determining ALE Status
• An employer is considered an ALE if they average 50
or more full-time employees and equivalents per
month in the previous calendar year
– Full-time employees automatically count as one “head”
– Non full-time employees have an equivalency calculated where their total hours of service in a
month (capped at the first 120 hours) are divided by 120 to determine their FT equivalency.
• An employee that worked 90 hours in a month would be 0.75
equivalent

2015

2016

 

·     Determined by reviewing average monthly Full-time and FTE counts from 2014

 

 

·     Determined by reviewing average monthly Full-time and FTE counts from 2015

 

 

·     2015 Transition relief permitted use of any consecutive 6-month period in 2014

 

·     Transition relief no longer applies, ALE determination based on full 2015 calendar year

 

 

Affordability Safe Harbors

2015

2016

 

• Affordability threshold 9.56%

• Federal Poverty Level $11,770

• Affordable FPL premium $93.77

• Affordability threshold 9.66%

• Federal Poverty Level $11,880

• Affordable FPL premium $95.63 (+2%)

 

Penalties for non-compliance: 4980(a) – The “A” Penalty

2015

2016
• Employers with 100 or more Full-time employees and equivalents must offer coverage (2015 Transition Relief)

• Coverage must be offered to 70% of all full-time employees

 

 

• When calculating the ‘A’ penalty, the full-time employee count is reduced by 80

 

• 4980(a) annual penalty of $2,080 per FT employee

 

 

• Employers with 50 or more Full-time employees and equivalents must offer coverage (Transition Relief ends)

• Coverage must be offered to 95% of all full-time employees

• When calculating the ‘A’ penalty, the full-time employee count is reduced by 30 (Transition Relief ends)

• 4980(a) annual penalty of $2,160 per FT employee

 

Penalties for non-compliance: 4980(b) – The “B” Penalty

2015

2016

 

 

• Penalty of $260 per month for each employee offered unaffordable or non-MV coverage AND qualifies for a subsidy to purchase marketplace coverage

• Increase to $270 per month (indexed for inflation)

 

IRS Reporting (1094-C / 1095-C)

2015

2016
 

 

 

• Required of all ALEs

• Employee statements due March 31, 2016

• IRS eFile Due June 30, 2016

• eFile required when filing 250 or more forms

 

 

 

 

• Required of all ALEs

• Employee statements due January 31, 2017

• IRS eFile Due March 31, 2017

• eFile required when filing 250 or more forms

 

1095-C Coding – 1I No longer valid

Series Code Usage

Description

1A Qualifying Offer

 

Affordable by FPL standard, MEC/MV for employee, MEC for spouse and dependent all 12 mo.

 

1B

Employee Only

MEC, MV Coverage

 

1C Employee + Dependent(s) MEC, MV for employee, MEC for dependents

 

1D

Employee + Spouse MEC, MV for employee, MEC for dependents

 

1E Employee + Family

MEC, MV for employee, MEC for dependents and spouse

 

1F Non-MV coverage (all coverage tiers)

Coverage does not provide MV

 

1G

Offer to no Full-Time employees

 

1H

No MEC coverage offered Often explained by Series 2 codes

 

1l Qualifying Offer Transition Relief

No Longer Valid

1095-C Coding – New Codes

Series Code

Usage

Description

1J

Conditional Spouse Offer

 

MEC/MV to Employee, no offer for dependents, conditional offer for spouse

 

1l

Conditional Spouse Offer

 

MEC/MV to Employee, MEC for dependents, conditional offer for spouse

 

Penalties for non-compliance: Failure to file

2015

2016

 

• Failure to file an informational return to the IRS will result in a per-form penalty of $250

• Failure to furnish a payee statement to an employee will result in a per-instance penalty of $250

 

• Failure to file penalties remain unchanged

 

Marketplace Notice Challenges

Sample 2016 Employer Notice

• Currently issued by a handful of state-run exchanges
and state exchanges operated by the federal
government
• Sent to address indicated by employee (usually the
location worked) – have a plan to ensure notices are
funneled to the appropriate department
• Not the final word on ESR penalties, responding to the
notice doesn’t mean that you won’t have to respond
to the IRS again later.

Marketplace Appeal Request

Marketplace Employer Appeal Request Form

• Appeals are shared with the employee – consider
employee relations implications and communication
strategies to inform affected employees
• Only the IRS can levy ESR penalties

 

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