ACA Reporting for 2017 Filings: Coding Cues for 1095

NAHU, the National Association of Health Underwriters, recently did a webinar on this topic presented by Trey Tompkins of AdminAmerica. This article is a summary of the key points related to the forms themselves. NAHU members can access the recorded presentation at www.NAHU.org.

What changed for 2017 filings?

  • 1094-C – any references to “Section 4980H Transitional Relief” because it no longer applies.
  • No more Penalty Relief protections for GOOD FAITH COMPLIANCE. This is where penalties were waived for incomplete or incorrect filings if employers could show they made a good faith effort to comply.

Tips for the Tricky Parts on 1095 Forms

  • Line 14
COBRA – For terminated employees (and their dependents), use CODE 1H with Code 2A on line 16

– For current employees eligible for COBRA (and COBRA eligible dependents) use the appropriate code for the offer (i.e., who was actually eligible to elect COBRA for those months)

Retiree – Retiree coverage is not reported as an offer of coverage (1H on Line 14 and 2A on Line 16)
  • Line 15 considerations
    • Only completed if Line 14 response is: 1B, 1C, 1D, 1E, 1J, or 1K
    • Rules allow for smoothing reported premiums evenly across months for employees paying weekly or biweekly premiums.
  • Line 16 Safe Harbor Codes and considerations
Priority – Use the first that applies in this order: 2A, 2B, 2E, 2C, then whichever others apply
2A – Employee not employed during month
2B – Employee not a full-time employee
2C – Employee enrolled in health coverage offered

– Do not use for EX-employee COBRA continuants

– Do not use if coverage was not for the entire month

2D – Employee in a Limited Non-Assessment Period

– For use in Waiting Periods (90 days) and Variable Hour Employees in Measurement Period

– Do not use for employees to which Code 2E applies (union)

2E – Multiemployer interim rule relief (Union employees)
2F – W-2 Safe Harbor

– Can’t be used for months employer didn’t offer MEC to 95% of FTEs and dependents

– If used, must be used for each month the employee was offered coverage

– For partial year employees, can be applied using a fraction of the employee’s W-2 wages versus cost of coverage for the eligible months

2G

2H

– Federal Poverty Line Safe Harbor

– Rate of Pay Safe Harbor

– Can’t be used for months employer didn’t offer MEC to 95% of FTEs and dependents

blank – Sometimes applies, but it predicts a potential penalty assessment for employer
Waivers – There is no specific code for a waiver of offered coverage, but one of the affordability safe harbor codes will usually apply
    • Affordability Thresholds

 

YEAR Affordability %
2016 9.66%
2017 9.69%
2018 9.56%

IRS NOTICE 2015-87 has some real gems to remember when calculating affordability. Here are few:

  • Employer HRA contributions can count towards an employer’s required contribution in certain instances.
  • Wellness Program Incentives – Discounted contributions for participating are generally not In other words, you report the contribution as if the wellness incentive was NOT earned unless the program was designed to prevent tobacco use.
  • Flex Credits may reduce the reported cost of coverage unless: the credits can be used to purchase non-health coverage or can be cashed out or contributed to HSAs. Flex Credits do not apply to plan years that began prior to January 1, 2017 (Flex Credits in the IRS notice relates to a cafeteria plan or defined contribution plan—not necessarily a Flexible Spending Account, although FSAs can be one of the offerings).
  • Opt Out Payments increase the reported cost of coverage unless:
    • They are conditioned on providing proof of other coverage
    • They are part of a Collective Bargaining Agreement (CBA) entered into before December 16, 2015
    • The unconditional arrangement began before December 16, 2015
  • Amounts paid to satisfy Prevailing Wage Laws reduce the cost of coverage even if they are paid in cash to employees who waive coverage.

If your customers are struggling with the requirements of ACA reporting, there are several other tools, software, and outsourcing solutions that can help employers needing more support. Employers with high turnover and lots of different kinds of employee populations (e.g., seasonal, variable hour, part-timers, etc.) often need much more help. If you need to review some of the tools available, please contact your Cornerstone Employee Benefits Advisors.

 

This article is provided for informational purposes and should not be construed as legal or tax advice. Please consult with your tax advisor, CPA, or legal counsel for details specific to your group.

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