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AFFORDABLE CARE ACT (ACA) Andrea Scheuering Finance Manager Human Resource Services University of Montana. Institution Facts University of Montana.
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AFFORDABLE CARE ACT (ACA) Andrea Scheuering Finance Manager Human Resource Services University of Montana
Institution FactsUniversity of Montana • UM is part of the self-funded benefits plan that the Montana University System maintains with member campuses across the state of Montana. (UM produces year-end forms for the campuses located in Missoula, Helena, Butte and Dillon.) • There are approximately 9,000 employees under the MUS benefits plan across the state, with another 9,000 dependents, retirees and COBRA participants. • Each member campus produces its own 1095 forms – UM will produce roughly 3,500 individual 1095 reporting forms. • UM utilizes the Banner software system for year end 1095s. • Institutions must provide forms for those on COBRA coverage and retirees/terminated employees.
What does everyone want? Part of the job of the Exchange is to verify eligibility. • Employers could be contacted to answer about the existence of qualified employer coverage. • Whether the employee is eligible for that coverage • Whether the employee was offered coverage • To answer these questions we must have records that provide the detail. • You will most likely hear from the Marketplace Exchange long before you hear from the IRS. The IRS can only begin asking questions after they have received the W2, the 1095, and the Form 1040 – it could be 2 years after you have filed a 1095 for an employee before you hear from the IRS.
ACA Regulations §4980H Title 26 U.S. Code • Applicable Large Employers (ALE) must offer health insurance coverage is : (1) affordable and (2) provides minimum essential value. • An applicable large employer is any company or organization that has an average of at least 50 full-time employees or "full-time equivalents" or "FTE.“ (or an entity that is part of an aggregate group, or control group.) • §4980H(c)(4) Full-time Employee • An employee who is employed, on average, at least 30 hours/week or 130 hours/month.
ACA Regulations - Defining Periods Initial Measurement Period • Covers new hires to determine eligibility • Runs from first day of month after the month of hire for 12 months • For new variable-hour and seasonal employees. • Start date varies based on employee’s hire date. Standard Measurement Period All employees are evaluated every year from June 1 to May 31.
ACA Regulations – Defining Periods Administrative Period – period of time for evaluation of hours and offer of coverage to employee • Standard Administrative period is June 1st – 30th • For each new hire it is the 13 month of their employment Stability Period • The stability period begins immediately after the administrative period. • The employee is counted as eligible based on analysis of measurement period. • The stability period is a minimum of 12 months. • During the stability period an employee who is eligible for coverage based on the ACA must be offered coverage even if they only work 1 hour in the month.
ACA Regulations - Full-Time Employee A full time employee averages 30 hours of service per week or 130 hours of service per month MUS method for Determining Full-Time Status if not established at time of hire: • Look-back Measurement Period • Employee averages 30 hrs/week or 130 hrs/month over established look-back measurement period.
ACA Regulations – Includable Hours Each hour for which the employee is paid, or entitled to payment: • For performance of duties • For which no duties are performed, including: • Vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military leave, leave of absence.
ACA Regulations – Excludable Hours • Worker’s Compensation • Volunteer employees for tax-exempt organization • Students performing work through the federal work study program, state work study or similar program • Unpaid Internships • Non-US-Source Income • Temp Agency Employees
ACA Regulations – Hours to Count • If a break in work service is due to a regular academic year break (winter break, summer break), then this time cannot be counted against the employee in averaging their hours. In order for the employee to receive credit of service for a break, the break must be at least 4 weeks long. • Employees with a 26-week break in service can be considered new hires upon return. • Adjuncts must be credited with a minimum of 3.0 hours/week of service for each hour of teaching or classroom time (safe harbor). • On-call employees credited for any hour of service on-call for which payment is made or due by the employer.
Annual Reporting Requirements • IRC Code §6056 • ALE must file returns to IRS for each employee who was a full-time employee during one or more months during the calendar year. • Can be paper or electronic. • Can be solely electronic only if employee consents.
Annual Reporting Requirements Employees will receive: • 1095-C from employer – what the University must provide to employee by January 31, 2019 (dates may vary depending on the IRS regulations). IRS will receive: • 1094-C from employer – what the University must provide to IRS based on filing type.
Annual Reporting – Due Dates 1095-C forms • To each employee by January 31(date may vary depending on IRS regulations) 1095-C forms & 1094-C transmittal • To IRS by February 28 (electronically, March 31 – may vary depending on IRS due date)
What comes after you file the 1095s? A Marketplace Notice – • This document will notify the employer that an employee has been found eligible for subsidy and has enrolled in a qualified health plan through the Marketplace. • This notification is supposed to come to the employer in a timely manner – and that is the intent for the process moving forward. • The intent is that the notification would come to the employer during the marketplace enrollment period so the employer can review, make appeal, and make some change for the employee, if necessary, in regard to employer coverage.
Penalties The Cadillac Tax has been delayed until 2020; however, our self-insured plan continues to mold our plan in such a way that this tax should be minimized. Employer Shared Responsibility penalty: Employer must offer minimum essential coverage to at least 95% of full-time employees and their dependents: • No – does not offer > If one full-time employee receives subsidized Marketplace coverage then the penalty = total number of full-time employees (minus 30) times $2,080 (increasing over the years). • Yes – does offer > If a full time employee receives subsidy on the exchange the penalty is $3,120 annually (increasing over the years) for however many employees got the subsidy.
Penalties • Failure to file correct information returns - $260/form, $3,178,500 calendar year maximum • Failure to furnish correct payee statements - $260/form, $3,178,500 calendar year maximum • (the calendar year maximum is reduced to $1,059,500 if gross receipts are less than $5M per year) • Failure to BOTH file correct information returns and failure to furnish correct payee statements - $520/form, $6,357,000 calendar year maximum ($2,119,000 if > $5M in receipts) • Cadillac Tax (Excise Tax on High End Plans) is a 40% excise tax on high end plans above $10,200 for individuals and $27,500 for family coverage starting in 2020.
Department Responsibilities: • It is the department’s responsibility to track the hours of their employees should they become eligible for health insurance due to ACA regulations. • If an employee becomes eligible for insurance, whether they elect to have health insurance coverage or not, the department will be charged $1054.00/month (the employers cost of health insurance) for the months the employee is eligible for health insurance.
