6055 and 6056 Reporting: Are Your Clients Ready for the IRS Shared Responsibility Provisions - PowerPoint Presentation

Slide1

6055 and 6056 Reporting: Are Your Clients Ready for the IRS Shared Responsibility Provisions?August 27, 2015Slide2

AgendaWelcomeMatt

BanaszynskiIIAWDavd Grunke

Relationship

Stephanie Cook

IRS LawSSN ConcernsDavid Grunke Tax Issues Impact on Individual ProductsRoger EbertImpact on Group ProductsImpact to Self-fundingDavid Grunke Cadillac Tax SummarySlide3

Today’s SpeakersDavid Grunke

Senior Director Sales OperationsSales/WPS Health Insurance608-226-8030David.Grunke@wpsic.comMatt

Banaszynski

Executive Vice President, IIAW

matt@iiaw.com Stephanie CookDirector Compliance Quality Services & HIPAA Privacy OfficerLegal Department608-221-7107stephanie.cook@wpsic.comSlide4

Today’s SpeakersRoger EbertRegional Vice President

Sales/WPS Health Insurance262-717-3253Roger.Ebert@wpsic.com

The information provided in this webinar does not constitute legal advice. The presenters are not attorneys. You should not act on the information provided in this webinar without first seeking the advice of an attorney or tax advisor.

This presentation is proprietary and confidential.Slide5

Today’s Speakers

IIAW

Matt

BanaszynskiSlide6

David

Grunke

Under

requirements of the Patient Protection and Affordable Care Act (

PP

A

CA

),

entities

that

provide

minimum

essential

coverage — such as health insurers and self-funded employer group plans — must report data to the Internal Revenue Service (IRS) about every individual covered by their benefit plans. A copy of the form used to report coverage must be sent to each subscriber.

The federal government is seeking this data to monitor compliance with the law’s mandate that individuals obtain basic coverage. Under the PPACA, individuals are required to maintain minimum essential coverage (basic health insurance coverage) for themselves and their dependents.Employers must provide Affordable Minimum Essential Coverage

WHY?

This reporting combined with IRS social security number matching exercise will be the basis for the enforcement of “Everyone must have insurance” or make a “Shared Responsibility Payment” requirement of

PPACA

.Slide7

Today’s Speakers

IRS Reporting RequirementsIndividual & Shared Responsibility

Stephanie CookSlide8

Section 6055 Reporting:

Information Reporting of Minimum Essential CoverageIRS regulations provide that, beginning with 2015 tax year reporting in 2016, every provider of minimum essential coverage (MEC) to an individual during a calendar year must for each tax year file an information return with the IRS and furnish a statement to covered individuals

.

Information reported is used by:

The IRS to administer individual shared responsibility requirementsIndividuals to show compliance with individual shared responsibility requirementsProviders of MEC include:Health insurance issuers of fully-insured individual and group health coveragePlan sponsors of self-insured group health plan coverageSlide9

Section 6055 Reporting: Information Reporting of Minimum Essential Coverage

The following IRS Forms operationalize the information reporting requirements under section 6055. Required forms must be furnished to individuals by January 31 of the year following the tax year, and to the IRS by February 28 (if filing on paper) or March 31 (if filing electronically).1095-A: Health Insurance Marketplace Statement; the Exchange is required to file the form with the IRS and furnish it to individuals who obtained coverage through the individual market Exchange (the requirement does not apply to coverage obtained through SHOP

)

1095-B: Health Coverage

; for all coverage that meets the definition of “minimum essential coverage”, insurers and sponsors of self-funded plans are required to file the form with the IRS and furnish it to each primary insured1094-B: Transmittal of Health Coverage Information Returns; transmittal form insurers and sponsors of self-funded plans file with the IRS along with all the Forms 1095-BSlide10

Section 6056 Reporting:Information Reporting by Applicable Large Employers on Health Insurance Coverage Offered Under Employer-Sponsored Plans

IRS regulations provide that, beginning with 2015 tax year reporting in 2016, “applicable large employers”, or ALEs, subject to employer shared responsibility for each tax year file an information return with the IRS with respect to each full-time employee and furnish a statement to each full-time employee about the health insurance the employer offered.Information reported is used by the IRS to administer employer shared responsibility

requirements

“Applicable large employer”, or ALE, is defined as an employer that employed an average of at least 50 full-time employees on business days during the preceding calendar year. A full-time employee generally includes any employee who was employed on average at least 30 hours per week and any full-time equivalents. For purposes of section 6056 reporting requirements, any member of a controlled group of employers which, in aggregate, employed at least 50 full-time employees on business days during the preceding calendar year is an ALE. This is true regardless of whether the employer purchases coverage independently or as a member of a controlled group. Slide11

Section 6056 Reporting:Information Reporting by Applicable Large Employers on Health Insurance Coverage Offered Under Employer-Sponsored Plans

The following IRS Forms operationalize the information reporting requirements under section 6056. Required forms must be furnished to individuals by January 31 of the year following the tax year, and to the IRS by February 28 (if filing on paper) or March 31 (if filing electronically).1095-C: Employer-Provided Health Insurance Offer and Coverage; ALEs are required to provide one to each full-time employee

1094-C: Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns

; transmittal form employers will file with the IRS along with all the Forms 1095-CSlide12

Combined 6055 & 6056 Reporting: Self-Insured Applicable Large Employers (ALEs)Self-insured employers are subject to both section 6055 (as a sponsor of a self-insured plan) and 6056 (as an employer) reporting requirements.

If an employer offering self-insured coverage to its employees meets the definition of an “applicable large employer”, or ALE, it fulfills both section 6055 and 6056 reporting requirements by completing IRS Forms 1095-C and 1094-C.Slide13

Summary of Reporting Requirements

Reporting Entity

Required Forms (and Sections)

Subject of Reporting Form

Form Recipient

Insurer

1095-

B P

arts I-

I

V

All m

i

nimum esse

nti

a

l

coverage, EXC

E

P

T individual coverage issued through the Exchange; form reflects coverage information for the primary individual and all covered dependentsIRS & Primary Individual  1094-B

Filer information and attestationIRSSelf-Insured Employer (<50 FTE)1095- B Parts I- IVAll covered employees of the employer; form reflects coverage information for the primary individual and all covered dependentsIRS & Primary Individual

1

094

-B

Fil

er

i

nformat

i

on and attes

t

at

i

o

n

I

RS

Self-Insured Applicable Large Employer (50 or more FTE)

1

095-C

,

Par

t

s I-

Il

l

All full-t

i

me emp

l

oyees o

f t

he employer; form r

e

flect

s

cover

a

ge

i

nform

a

t

ion

for the employee and all dependents

I

RS

&

emp

l

oyee

1

094-C

Fil

er

i

nformat

i

on and a

t

tes

t

at

i

on

I

RS

Insured Applicable Large Employer (50 ore more FTE)

1

095-C

,

Par

t

s I-

II

All full-t

i

me emp

l

oyees of

t

he employer; form reflects coverage information for the employee and all dependents

I

RS

&

emp

l

oyee

1

094-C

Fil

er

i

nformat

i

on and a

t

te

s

tat

i

on

I

RSSlide14

Tax Issues

David

GrunkeSlide15

David GrunkeOn March 10, 2014, the U.S. Department of the Treasury and IRS published final rules to implement

the information reporting provisions for insurers and certain employers (ASO & Large) under the Patient Protection and Affordable Care Act

(

PPACA

) that take effect in 2015. Draft versions of the forms were released on July 24, 2014 Draft Instructions for the forms were released on August 28, 2014 Final forms issued February 2015 without change from draft forms 4 changes announced June 16, 2015Employers who provide minimum essential coverage (MEC) during a calendar year are required to report to the IRS certain information about individuals offered coverage and covered by MEC and also to provide a statement to those individuals.Slide16

David Grunke

March 10, 2014Slide17

David

Grunke

Type of Failure

Per Form Penalty

Annual Maximums Large Business / Small BusinessFiled less than 30 days late$50

$500,000 / $175,000

Filed before August 1

$100

$1,500,000 / $500,000

Filed August 1 or later

$250

$3,000,000 / $1,000,000

Intentional Disregard

$500

No Cap

As modified by the Trade Preferences Extension Act of 2015 (June 2015)Slide18

David

GrunkeSlide19

David

GrunkeSlide20

David

GrunkeSlide21

David

Grunke

Minimum

Essential Co

v

e

r

age

(

MEC

)

r

eporting

–

individual

mandateEmployers sponsoring self-insured group health plans, and health insurers, must report on the minimum essential coverage they provide for

all covered individuals starting in 2015. These employers and insurers must confirm – during every tax season – that the coverage satisfied the individual mandate r

equirements

for

a

n

y

or

all

months

during

the

p

r

e

c

eding

calendar

y

ear

or

r

eportable

tax

y

ea

r

.

T

his

r

eporting

is

r

equi

r

ed

for

all

si

z

e

g

r

oup

plans

and

pri

v

a

t

e

individual

/

f

amily

plans.

R

eportin

g

i

s

no

t

r

equi

r

e

d

f

o

r

supplementa

l

benefits

,

i

f

th

e

supplementa

l

c

o

v

e

r

ag

e

i

s

p

r

o

vide

d

b

y

th

e

sam

e

plan

sponso

r

,

o

r

i

f

c

o

v

e

r

ag

e

supplement

s

g

o

v

ernment-sponso

r

e

d

plans

,

li

k

e

Medica

re

supplementa

l

c

o

v

e

r

ag

e

.Slide22

David

Grunke

La

r

ge emplo

y

e

r

r

eportin

g

–

empl

o

y

e

r

mandateAll employers subject to the employer mandate (i.e., employers with 50 or more full-time employees and/ or full-tim

e equivalents) are required to annually report to the IRS on the coverage offered to their full-time employees and their dependent

childr

en.

*

T

hi

s

r

eportin

g

wil

l

b

e

c

omple

t

e

d

o

n

IR

S

F

or

m

10

9

5

b

y

F

ebruary

2

8

(Ma

r

c

h

3

1

i

f

file

d

elect

r

onically

)

f

oll

o

win

g

th

e

applicabl

e

calenda

r

y

ea

r

.

A

c

o

p

y

o

f

th

e

f

or

m

o

r

al

t

ern

a

ti

v

e

s

t

a

t

emen

t

th

a

t

include

s

th

e

identica

l

d

a

t

a

mu

s

t

als

o

b

e

p

r

o

vide

d

t

o

thei

r

full-tim

e

empl

o

y

ee

s

b

y

Januar

y

31.Slide23

David

Grunke

Large Group & ASO Group IRS/Employee reporting

Social Security number

EmployeeSpouseDependentsCoverage offeredCoverage providedSources of reporting assistance

Insurer

ASO Administrator

Payroll Processer

HR

System

Niche VendorSlide24

David

Grunke

Considerations for choosing a reporting service vendor

Considerations

about the filer Identify the filer’s specific reporting requirementsNumber of 1095-c forms requiredVariance in coverage offerings among workforceBased on those, what data must the filer track?Monthly Full-Time / Part-Time statusCoverage offerings

Self-Insured Enrollments

Where are they currently in their tracking?

Will they file on paper or electronically?Slide25

David

Grunke

Considerations for choosing a reporting service vendor

Considerations about the vendor prospect

Can they efficiently receive data from the client’s time and attendance tracking system?Do they offer a written service guarantee regarding timeliness?Do they (or their software vendor) have a system of developing other systems to send electronic files to the federal government?Will they file on paper or electronically?Did they process any 2014 voluntary filings?Slide26

Individual Products

David

GrunkeSlide27

David GrunkeWhat Products are effected?

Impact on Individual PPACA ProductsProducts Purchased from InsurerSlide28

Group Products

Roger EbertSlide29

Roger Ebert

Who is required to report with what form?

Smal

l

g

ro

up fully

i

nsu

r

ed

(both

SHO

P

Ma

rke

t

p

l

ace and

off-Marketplace)Form 1095-BN ASmall group self

-fundedN AForm 1095-B(sent by employer)Applicable large employer (fully insured)Form 1095-B

Form 1095

-

C

Sec

t

ion

s

I

,

II

A

pp

l

icab

l

e

l

arge emp

l

oye

r

(se

l

f

-

funded)

N A

Form 1095

-

C

A

ll

sections

(6

055

+

6056)Slide30

Roger EbertImpact to Self-funded Plans

Impact to Insured GroupsSmall 2-50

Large 50+Slide31

Conclusion and Wrap up

David

GrunkeSlide32

And you thought we were done

Cadillac Tax in 2018

New projections from the Kaiser Family Foundation estimate that one in four employers (26%) offering health benefits could be subject to the Affordable Care Act's tax on high-cost health plans, also known as the "Cadillac plan" tax, in 2018 unless they make

changes

to their plans.The analysis also estimates that the share of employers potentially affected by the tax could grow significantly over time - to 30 percent in 2023 and 42 percent in 2028.The ACA's high-cost plan tax, which takes effect in 2018, was meant to raise revenue to fund coverage expansions under the health care law and to help contain health spending. It taxes plans at 40 percent of each employee's health benefits that exceed certain cost thresholds: In the first year, the thresholds are $10,200 for self-only coverage and $27,500 for other than self-only coverage. The thresholds increase annually with inflation.

David

GrunkeSlide33

Thank You!!

The information provided in this webinar does not constitute legal advice. The presenters are not attorneys. You should not act on the information provided in this webinar without first seeking the advice of an attorney or tax advisor. This presentation is proprietary and confidential.