As discussed in last month’s column, an employer should determine its Applicable Large Employer (ALE) status under the Affordable Care Act (ACA) and its federal COBRA or Cal-COBRA (if applicable) status in early January of each year, both of which are made by evaluating group size for the prior year. Consult Word & Brown’s exclusive Employee Count Reference for California employers or Nevada employers for help understanding how to make these evaluations.
You may have clients – or potential clients – who have re-evaluated their group size and found they are first-time ALEs for 2019. This means they must now comply with the ACA’s Employer Shared Responsibility provisions and are required to offer “affordable” Minimum Essential Coverage (MEC) that meets minimum value (MV) to “all” (the greater of 95% or five) FT employees and their dependents, or be subject to hefty noncompliance penalties. (Note: Updated 2019 penalty amounts have not been confirmed by the IRS as of this article’s publishing date, but are expected to increase with inflation.)
First-time (new) ALEs are provided transition relief by the IRS, which allows eligible employers up to a three-month window, through March 31st annually, to comply with the ACA’s Employer Mandate. In order to be eligible for this transition relief, the first-time ALE must not have offered coverage in the prior calendar year, and the first-time ALE’s new plan must be in place by April 1.
ABC’s of IRS Form 1095 – Reference for Employees
The beginning of 2019 also brings rapidly approaching deadlines for ALEs to file their 2018 IRS Forms 1094-C and 1095-C with the IRS, and for ALEs to distribute copies of those IRS Forms 1095-C to any person employed full time for at least one calendar month of 2018. Health insurance carriers, employers sponsoring self-insured plans, and state exchanges must also generate and distribute 2018 IRS Forms 1095-B or 1095-A to employees/covered individuals. These forms are usually due beginning on (or before) January 31st annually, but some dates have been delayed for the 2019 reporting season.
In November 2018, the IRS announced an extension to the 2018 deadline for ALEs to distribute IRS Form 1095-C to covered individuals/employees. The new deadline is March 4, 2019. This new extended 2018 deadline also applies to carriers and self-insured employers required to distribute IRS Forms 1095-B. For more information on this year’s reporting deadlines, consult Word & Brown’s 2018 IRS Reporting Dates and Deadlines reference.
Depending on how they access coverage, employees/covered individuals can get multiple IRS Forms 1095 from different entities. For example, an employee who worked full time for an ALE with a fully insured plan for at least one month of 2018 will receive a 1095-C from the employer and a 1095-B from the health insurance carrier. If there are multiple people in this employee’s family, the employee and employee’s dependents will potentially receive many of these IRS forms. This can be very confusing; clients, employees, family, and friends alike will turn to you for help.
Word & Brown has created an exclusive resource to aid your discussions with employers, group clients’ employees, friends, colleagues, and family members about these IRS Forms 1095: A-B-Cs of IRS Form 1095. The document can be used as an internal reference for you in your role as a broker, or it can be given directly to those inquiring about what the IRS Forms 1095 are and what to do with them.
As always, rely on your Word & Brown Compliance Team for help throughout the year. They can be reached via email at ComplianceSupport@wordandbrown.com or by phone at 866.375.2039.