Anything Goes : 2017 ACA Compliance and Information by Aly Greg

2015 was the first ACA reporting year and it presented numerous challenges. Collecting and aggregating payroll and benefits data from disparate systems, identifying full-time employees, working with service providers that faced their own challenges, corrections due to form rejections and error notifications from the IRS -- employers faced many obstacles. And for some employers, the shaky ride is still not over. Many employers were able to overcome the reporting challenges and turn the page on 2015's roll-out. But, just as employers begin to take a deep sigh of relief, it's August, and we now have draft forms and instructions hot off the IRS press for the 2016 tax year. Most likely there will be updates to these drafts, but we do not anticipate significant changes. Background: Internal Revenue Code Section 6056 requires all Applicable Large Employers (ALEs) to file an annual report that ensures compliance with the Affordable Care Act (ACA) employer shared responsibility provisions. The reporting includes information on all full-time employees who were offered, or not offered, insurance coverage, and the cost of that coverage on a month-by-month basis. This reporting will be completed on IRS Form 1094-C and 1095-C, following the applicable calendar year. Each ALE Member (i.e., legal entity in the controlled group) is subject to the reporting requirements, if it employed full-time employees. Updates for 2016: For the most part, the reporting requirements are similar to the 2015 requirements, with minor updates as indicated below: • Certain forms of transition relief that applied in 2015 are no longer applicable, unless the employer sponsored a non-calendar year health plan. • The reference to "employer" has been changed to "ALE Member" in most cases. This is to alleviate confusion since the reference to employer could mean one or more legal entities or an entire controlled group, and the filing must be done at each legal entity level, which is referred to as an ALE Member. • Some of the codes for Form 1095-C have been reserved and additional codes have been added. For example, new codes 1J and 1K have been added for line 14 of Form 1095-C to indicate if an offer of coverage to a spouse is conditional. In other words, the offer is being made on a condition that the spouse is not eligible for group health coverage through his or her employer. • The good faith compliance standard is no longer applicable under which employers can avoid reporting penalties. Reasonable cause for not reporting timely must be shown. • Reporting of COBRA coverage to non-employees is clarified for both fully-insured and self-insured plans. • The language "Do not attach to your tax returns. Keep for your records" was inserted on the Form 1095-C so that recipients do not submit the form with their personal tax reporting. • Due dates for the distribution of the Forms 1095-C to the employees is January 31, 2017, and filing with the IRS is due March 31, 2017 (if filing electronically). 30 day extensions may be requested and are subject to IRS approval. • The 9.5% affordability safe harbor threshold has been adjusted to 9.66% for plans beginning 2016. • One important non-change is the specialized coding for union employees. For reporting offers of coverage for 2016, an ALE Member relying on the multi-employer arrangement interim guidance should enter code 1H on line 14 for any month for which the ALE Member enters code 2E on line 16 (indicating that the ALE Member was required to contribute to a multi-employer plan on behalf of the employee for that month and therefore is eligible for multi-employer interim rule relief). For future years, employers may be required to obtain health insurance data from the union plans for reporting purposes. If you have multiple payroll and benefits providers for each legal entity (i.e. freelance employees are payrolled by PES Payroll and staff employees are paid by another payroll service for the same production company), you must aggregate data for the purposes of ACA reporting. Given that only five months remain in 2016, employers should start planning now for 2016 ACA reporting based on the draft instructions and make alterations as necessary when final instructions and other guidance is released. Alyson Gregory-Nadasi 818.392.8514