Affordable Care Act Reporting Requirements

The Affordable Care Act (ACA) imposes reporting responsibilities on employers starting with the 2015 calendar year. These filing requirements are based on an employer’s health plan and number of employees. There seems to be heavy discussion regarding ACA reporting as it relates to active employee medical coverage – however, these filing requirements also extend to COBRA beneficiaries and HRA/FSA plans.

COBRA – ACA Impact
The Affordable Care Act (ACA) requires employers to consider COBRA coverage in the new required reporting under Internal Revenue Code sections 6055 and 6056 which begin in the first quarter of 2016. The 6055 reporting is satisfied using the “B” forms (the 1094-B and the 1095-B). The 6056 reporting is satisfied using the “C” forms (the 1094-C and the 1095-C). The 6055 reporting applies to all employers offering group health coverage. However, if the employer’s plan is fully-insured, the insurance carrier is required to report on the employer’s behalf. The 6056 reporting only applies to large employers with 50 or more full-time employees and full-time equivalent employees.

It’s also important to remember that Federal COBRA also applies to:

• Dental Plans
• Vision Plans
• HRAs and FSAs
• Certain EAPs and Cancer Plans

HRAs – ACA Impact
Health reimbursement arrangements (“HRAs”) are generally considered “minimum essential coverage” for which reporting is required under the new ACA reporting under Internal Revenue Code sections 6055 and 6056 beginning in the first quarter of 2016. The reporting forms for Section 6056 are the “C” forms (1094-C and 1095-C). The issue with the HRA is whether the employer must report the employees who are enrolled in its HRA in addition to the employees who are enrolled in its primary group health plan. For employers with fully-insured primary group health plans and small employers (with fewer than 50 full-time employees and full-time equivalent employees) with self-funded primary group health plans, this reporting occurs under 6055 (the 1094-B and 1095-B). For large employers (with 50 or more full-time employees and full-time employee equivalents) this reporting occurs on a consolidated basis with the 6056 reporting. Specifically, the large self-funded employer completes part III of the 1095-C in addition to the remaining portions of that form.

It is also important to remember:

• Free-standing HRAs to cover Medical expenses can no longer be offered for plan years beginning January 1, 2014 or later
• HRAs offering money to pay for premiums individually purchased and billed to their home are no longer permitted
• HRAs tied to a compliant group health plan are allowed

FSAs – ACA Impact
Health Flexible Spending Accounts (FSAs) can continue to be offered by employers and impose an annual dollar limit. However, the FSA cannot be the only program offered. An employer must also offer group medical coverage. The FSA and group medical plan do not have to be integrated. In other words, an employee could elect only the FSA. Both, however, must be offered. Health Flexible Spending Accounts that are partially employer funded arrangements are also generally considered “minimum essential coverage” for which reporting is required under the new ACA reporting under Internal Revenue Code sections 6055 and 6056 beginning in the first quarter of 2016.

Additionally, under the ACA, a new non-profit called Patient-Centered Outcomes Research Institute was created to support clinical effectiveness research. The Institute is funded in part by fees (“PCORI fees”) paid by insurance companies and employers offering self-funded plans with Health Reimbursement Arrangements (HRAs and HSAs). The PCORI fee applies to almost all HRAs, including retiree HRAs. HRAs limited to dental and vision expenses are exempt. Most FSAs are exempt, including any FSAs funded entirely by employee elections and those covering dental and vision only. If there is an employer contribution, the FSA is still exempt if the employer contribution is limited to the lesser of the employee’s contribution or $500 per year.

PCORI fees to be billed as follows:

• Plan years ending October 1, 2013 – September 30, 2014 – $2 per covered life
• Plan years ending October 1, 2014 – September 30, 2015 – $2.08 per covered life
• Plan years ending October 1, 2015 – September 30, 2019 – $2.17 per covered life