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Compliance Update:  
1095's             
  

August 2016






Have you implemented your look back measurement periods and included the look back policy in your handbook or SPD?
1095 Reporting
The primary use for Part II of Form 1095-C by individuals is to help them determine their eligibility for the federal premium tax credit for health plan coverage purchased in the Marketplace.  Employers are the custodians and suppliers of the information and there are penalties if not handled correctly.
 
Recordkeeping Requirements:

 

Keep copies of information returns filed with the IRS, (or have the ability to reconstruct the data) for at least 3 years, from the due date of the returns

 

Undeliverable 1095-Cs

  • Document the attempt to deliver by mail and retain a copy of the 1095-C if requested late
  • Keep for 4 years- the IRS requirement for undeliverable W-2 Forms
  • The IRS will not impose a penalty for incorrect reporting for 2015 as long as the employer files timely and makes a good faith effort to comply with the reporting requirements.
Make sure you correctly identify Full-Time Employees and New Employees.  There are 4 categories of new employees: full-time, part-time, variable hour & seasonal:
  • Full-time employees- hired with the expectation of working 30 hours or more per week, year round.
  • Variable hour- on the start date, the employer is unable to determine if the EE is reasonably expected to be employed on average 30 or more hours of service per week
  • Seasonal- is customary annual recurring employment of 6 months or less
  • Part-time- EE hired with reasonable expectation of working less than 30 hours per week
Measurement Periods & Affordability Standards
The STANDARD Measurement Period: Applies to ONGOING employees. It is a fixed time period and timed to end prior to open enrollment period.  It is used to determine if current non full-time employees employed for at least a year, have averaged 30 hours or more per week and therefore should be considered eligible for the company's medical benefits.
 
The INITIAL Measurement Period: Applies to new non full-time hires. It is not related to open enrollment and begins with the start date of 1st of month following start date.
 
If under either measurement period an employee meets the 30 hour/week average, that employee must be allowed to enroll in the company's medical plan and receive the same company contribution toward the plan should they elect to enroll. The employee is eligible to remain enrolled until the next applicable look back period is calculated.
 
Affordability Standard for 2016: applicable percentage=9.66%, and the maximum affordable federal poverty line= $94.75
 
 Indexing excise tax penalty amounts for:
    2015
    2016
$2,000 A-Tax "no offer penalty"
$2,080/yr
$2,160/yr
 
$173/mth
$180/mth
$3,000 B-Tax "unaffordable/non-MV penalty"
$3,120/yr
$3,240/yr
 
$260/mth
$270/mth
Penalties will be indexed
 
 
For more information on the above update 
and to read previous newsletter topics, please visit our website at:


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This update is a publication of TBR Associates, designed to highlight employee benefit matters of interest to our readers.  The information contained in this publication is meant for general educational purposes only.