1. Identify to whom the notice will be sent, and alert that person or office to be on the lookout for the notice. Presumably, but not necessarily, it will be sent to the contact person listed in Part 1 of the Form 1094-C transmittal form.
2. Have copies of the 2015 Form 1095-Cs available to compare with the listings that will be included with the Letter 226J penalty notice.
3. Alert their Form 1095 vendor that you may need supporting information and reports on a quick turnaround basis.
4. Assemble a team to review and respond to the notice.

The sample penalty notice letter released by the IRS makes mention of the form to be used in challenging the penalty (Form 14764). A copy of that specific form has not yet been released. We will post a link to Form 14764 upon its release.
If you have questions about the new guidance, contact us at solutions@gsanational.com or 1-800-250-2741 ext. 170.

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Code Section 6055 (“All Group Health Plan”) Reporting

What information must be reported to the IRS under the Code Section 6055 rule?‎
The annual Code Section 6055 report to be filed with the IRS must include the following information:

• The name, address, and employer identification‎ number (“EIN”) of the employer;
• ‎The name, address, and tax identification number‎ ‎(“TIN”) (or date of birth if a TIN is not available) of each employee (including any retiree or employee on COBRA) with respect to whom coverage is provided;‎
• ‎The name and TIN (or date of birth if a TIN is not‎ available) of each individual who is covered under the plan;
• ‎For each covered individual (employee and dependents), the months for which, the individual was enrolled in coverage and entitled to receive benefits; and
• Any other information required by the instructions to the transmittal form or future guidance.

Which employees must receive the annual statement?
The Code Section 6055 statement must be provided to each employee who is enrolled in the plan at some point during the year. This includes covered employees who died during the year.
A statement is not required to be provided to employees who were offered coverage, but who did not enroll in the plan.
What information must be included in the statement to employees?‎
The same information outlined two questions above must be provided to each enrolled employee.

Code Section 6056 (“Applicable Large Employer Only”) Reporting

What are the Code Section 6056 reporting requirements?‎
Applicable large employers are required to file an information return with the IRS that reports the scope of the employer-sponsored health plan coverage offered to full-time employees for the applicable year.‎
The IRS and employees will use the information provided on the Code Section 6056 report and the employee statement to determine whether an employee is eligible for a premium tax credit.‎
Which employees are included in the report and required to be provided statements?
The Code Section 6056 report will cover, and a statement will need to be provided to, each employee who is deemed to be a full-time employee under the play-or-pay rules for any part of the year. Consequently, the reporting and furnishing of statements will be required even for full-time employees who declined to enroll in the plan.
The IRS has deferred until 2016 the application of the ACA “play-or pay” rules to applicable large employers ‎having between 50 and 99 full-time equivalent employees. Does this transition relief also ‎postpone the reporting obligation of a mid-size employer that is eligible for the play-or-pay deferral?‎
No, it does not. Even though a mid-size employer is exempt from the play-or-pay penalty rules ‎for 2015, a plan that is sponsored by the employer remains subject to the IRS reporting and employee statement ‎obligations for that year.‎
What information must be included in the report?‎
Subject to certain alternative reporting methods discussed below, the annual Code Section 6056 report for an applicable large employer must include the information described below (plus any additional information required by future guidance,‎ forms, and instructions).
A. Full Disclosure Information
The annual report must provide the following information in full:

• ‎The name, address, and EIN of the employer;
• The calendar‎ year for which the information is reported;‎
• The name and telephone number of the employer’s contact person;‎
• A certification of whether the employer offers its full-time employees‎ ‎(and their dependents) the opportunity to enroll in‎ minimum essential coverage, by calendar month;‎
• The months during the calendar year for which minimum essential coverage under the plan was available;
• Each full-time employee’s share of the lowest cost monthly premium (self-only) for coverage providing minimum value offered to that full-time employee under the plan, by calendar month;
• The number of full-time employees for each month during the calendar year; and
• The name, address, and TIN of each full-time employee during the calendar year and the months, if any, during which the employee was covered under the plan.

B. Information Via Indicator Code
The following information will be required to be reported via an indicator code:

• Whether the coverage offered to‎ full-time employees and their dependents under an employer-sponsored plan provides minimum value;
• Whether the employee had the opportunity to enroll his or her spouse in the coverage;‎
• The total number of employees, by calendar month;‎
• Whether an employee’s effective date of coverage‎ was affected by a permissible waiting period, by calendar month;‎
• Whether the employer had, or did not have, any employees who were credited with any hours of service during any particular month, by calendar month;‎
• Whether the employer is a‎ member of a “controlled group of companies,” and, if so, the name and EIN of each member of the controlled group on any day of the calendar year for which the information is reported;‎
• If an employer is a contributing employer to a collectively-bargained multiemployer plan, whether, with respect to a full-time employee, the employer is not subject to payment of an employer penalty by reason of the employer having made contributions to the multiemployer plan; and
• If a third party is reporting on behalf of an employer, the name,‎ address, and EIN of the third party.‎

C. Anticipated Additional Information
The IRS has indicated that it anticipates that the additional information below will also be required to be reported for each full-time employee for each calendar month using a code.

• Whether coverage meeting minimum value was offered to:
  • The employee only;
  • The employee and the employee’s dependents only;
  • The employee and the employee’s spouse only; or
  • The employee, the employee’s spouse, and dependents.

• Coverage was not offered to the employee:
  • But the failure to offer coverage will not result in a play-or-pay penalty (for example, because the employee was in a waiting period);
  • The employee was not a full-time employee;
  •  The employee was not employed by the employer during that month; or
  •  No exception applies.

• Coverage was offered to the employee for the month, although the employee was not a full-time employee for that month.
• The employee was covered under the plan.
• The employer met one of the “affordability safe harbors” with respect to the employee.

What information must be included in the employee statement?‎
The statement to full-time employees must include:

• All of the information included in the IRS report (see Q-11 above) that pertains to the full-time employee; and
• The name, address, and contact information of the employer or third party that filed the report with the IRS.

What reporting is required of members of a controlled group?
All employers that are part of a controlled group of companies are combined for purposes of determining the “large employer status” of the group. If the group is determined to be an applicable large employer on an aggregated basis, each individual employer in the controlled group is required under Code Section 6056 to separately report for its employees. In addition, each employer must furnish an employee statement to its own employees.‎
May an employer-member use a third party to assist in completing the IRS reports?‎
Yes. However, engaging a third party does not transfer any responsibility from the employer for ‎the failure to file the reports or provide the statements. It is expected that the IRS will issue ‎supplemental guidance as to the manner in which a third party may assist in the reporting ‎process.‎
Alternative Methods for Section ‎6056 Reporting‎
In certain circumstances, the final regulations permit the use of optional, alternative reporting methods. These alternate reporting methods are described below.‎
Reporting based on certification of “qualifying offers.”
An applicable large employer will be entitled to prepare a simplified Code Section 6056‎ report and provide a simplified employee statement with respect to each full-time employee for whom it made a “qualifying offer.” A “qualifying offer” is one that:

• Offers employee-only coverage providing‎ minimum value at an employee cost not exceeding 9.5% of the federal poverty line for a single individual; and
• ‎Allows the enrollment of the‎ employee’s spouse and dependents.‎

For 2014, the federal poverty level for a single individual is $11,670. If that amount stays the same (which is not likely), then in order to have a qualifying offer, the cost to an employee for employee-only coverage cannot exceed $92.39 per month (9.5% of $11,670 ÷ 12).
If an employee had a qualifying offer for all 12 months of the calendar year, the employer would only need to include in its annual report the employee’s name, Social Security number, address, and an indicator that a qualifying offer was made. The employer could then simply provide the employee with either a copy of the IRS report, or a general statement informing the employee that the employee, and the employee’s spouse and dependents (if any), are generally ineligible for a premium tax credit for all 12 months.‎
If an employee received a qualifying offer for fewer than 12 months of the calendar year, the employer must use the general reporting and statements methods for the months in which the qualifying offer was made.
Certification of the qualifying offer will be required.
2015-only alternative method based qualifying offers:
Only for 2015, an employer certifying that it has made qualifying offers to at least 95% of its full-time employees will be eligible to use an even simpler alternative reporting method. It is anticipated that the employer will only need to report the employee’s name, address, and Social Security number, and the months for which the qualifying offer was made. Further guidance is to be provided.
Option to report without separate identification‎ of full-time employees if certain conditions related to offers of coverage are satisfied.
The final regulations allow an employer to provide Section 6056 reporting without determining whether each employee offered coverage is a full-time employee, and without specifying the number of the employer’s full-time employees. For this option to apply, the employer must certify on its transmittal form that it offered affordable coverage to at least 98% of the employees on whom it reports in its Code Section 6056 return (which may include part-time employees).‎ This option relieves the employer from having to determine which covered employees are full-time for each month.
For further information or questions regarding these updated ACA reporting requirements, please contact the us at800.250.2741 or email solutions@gsanational.com.

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Recent delays have highlighted the administrations overall concerns with the complexities of integrating healthcare reform and the need for more time for effective implementation of some of the mandates. The delay of the ACA mandatory employer and insurer reporting requirements in addition to the delay of the play or pay mandate has resulted in some significant changes to the healthcare reform landscape.
So, with the Play or Pay mandate and employer reporting requirements now delayed through 2015, what is still required?

• Reporting and payment of the PCORI fee – July 31, 2013 (see below)
• Distribution of Medical Loss Ration (MLR) rebates – August 1, 2013
• Providing a Summary of Benefits and Coverage (SBC) as part of open enrollment
• Distributing the DOL notice regarding the exchange – October 1, 2013
• Reporting health care costs on employee’s W-2
• Paying the transitional reinsurance fee – January 2015

What’s next?
The deadline for most applicable self-insured health plans to report and remit the Patient-Centered Outcomes Research Institute (PCORI) fee is July 31, 2013. The PCORI fee is due no later than July 31 of the calendar year immediately following the last day of the plan year to which the fee applies.  Plans should use the revised version of Form 720 recently released by the Internal Revenue Service to report and remit the PCORI fee.
The revised Form 720 can be found here.
If you have questions regarding the healthcare reform delays and how they might effect your PPACA compliance efforts, call us at 1.800.250.2741 or email solutions@gsanational.com.

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The Obama administration unexpectedly announced Tuesday that it is delaying the employer mandate under the Patient Protection and Affordable Care Act (PPACA) until 2015. The mandate — which requires mid-sized and large employers to offer health insurance coverage to their workers — was one of the main requirements of the health care overhaul that was set to go into effect Jan. 1, 2014. This will come as a relief to employers as Affordable Care Act (ACA) penalties could amount to as much as $3000 per employee for non-compliance. The delay will allow simplification of reporting requirements by authorities and will give businesses more time to adapt their health insurance policies.
In the coming week, the Treasury department will issue official guidance, with formal rules to be proposed later this summer. We will alert you to any emerging details.
If you have questions about these changes, call us at 1.800.250.2741 or email solutions@gsanational.com.

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In 2014, the Patient Protection and Affordable Care Act (PPACA) will require companies who employ more than 50 full-time employees to offer health insurance coverage; send employees to an Exchange and pay a penalty of $2,000 per employee per year or develop a “minimum value” health insurance plan.
Employers who elect to provide health insurance for their employees will be subject to a $3,000 penalty for any employee who finds the coverage to be unaffordable and receives an Exchange subsidy. “Unaffordable coverage” is defined as an employee’s “self-only” premium that exceeds 9.5% of the employee’s wages.
An important piece of the reform is the mandate that by 2014 each state must operate a health care Exchange to provide individuals with a range of affordable health insurance plans to choose from. Through an Exchange, individuals who meet income guidelines will be eligible for subsidies to pay for premiums. If a state elects not to operate an Exchange, the Federal government will step in and do it for them.
The dilemma most companies will face is whether or not it makes business sense to extend coverage to all employees, elect not to provide coverage and pay the annual penalty, or develop a minimum value plan. Businesses must consider how their decision will impact their employees, as well as predict how many employees would be eligible for the subsidies offered through an Exchange.

An Unpredictable Future

There have been numerous reports during the last couple of years speculating on whether or not employers will flock to discontinue health insurance coverage. Reports vary, from estimates that up to 30 percent of companies will drop coverage; to quotes from consultants saying that few large companies will act so quickly.
Several keys to this type of decision remain to be seen:

• Will an Exchange offer comparable plans?
• Will Exchange rates be lower than what employer-sponsored plans cost now?
• How effective will the Exchanges be?
• What will the reaction be from employees?

Because of the perceived cost-savings of dropping coverage, it might seem tempting for organizations to simply accept the penalty without taking the time to determine if this is, in fact, the best business move.
Several factors must be considered before making the decision to discontinue or retain employer-sponsored health insurance coverage. Including:

• The current and future cost of health insurance coverage vs. annual penalties
• The impact dropping health insurance coverage may have on acquisitions and employee retention
• What other companies do and how it affects competitive advantage
• The potential cost savings and how that money can be used in other areas of the business

PPACA and its Impending Economic Realities

Beyond the HR impact, for many companies cost will be a determining issue – whether or not they make a decision to not provide coverage in 2014, or wait it out and plan to decrease or drop coverage at a later date. Determining what makes the best business decision based on cost is a crucial piece of the puzzle.
Some organizations will find that it just makes sense to extend their current health plans to all employees, but will need to carefully calculate premiums and pay scales to ensure that premiums are not considered unaffordable. Others may determine that the money saved by discontinuing coverage and paying the penalty is worth it.

PPACA and the SCA Contractor

While some employers may consider dropping coverage and paying the penalties instead, this is a much less viable option for government contractors. The Service Contract Act has not been amended in any way to reflect changes brought on by PPACA. Thus, government service contractors are still obligated to spend $3.71 per hour on health and welfare (H&W) benefits. Should a contractor elect not to offer health insurance, they may then be forced to add the H&W requirement to employee wages, resulting in double damages – increased payroll taxes AND PPACA penalties. Contractors who develop a “minimum value” coverage plan as a core offering to their SCA employees will have a distinct competitive advantage over contractors opting to drop coverage, as their H&W obligation will remain tax free and they will avoid any PPACA penalties.
In order to help our clients with this important business decision, GSA has created a Health Reform Analytics Team to help them analyze the economic effect that extending coverage, sending employees to an Exchange and paying the penalty, or developing a new minimum value plan will have on their bottom line.

Now’s the Time to Prepare

The PPACA will change how health care coverage is perceived and provided. As health care reform unfolds, now is the time to become aware of the options, responsibilities and potential impact this will have on your business and employees.

Is your company prepared to make an informed business decision prior to the effective date of January 1, 2014?

To learn how GSA can assist you with your business decisions, please contact us at 1.800.250.2741 orsolutions@gsanational.com.

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