ACA Reporting Advisor

Welcome to MSEC’s second weekly ACA FAQ on reporting. While we won’t cover details on how to complete the IRS reports, we will discuss general questions on reporting requirements. For detailed information on form completion, contact your broker, tax advisor, payroll company, or insurance carrier. If you have a general ACA reporting question, please email it to us at aca@msec.org. We’ll answer the most commonly asked questions in this forum. As always, the Health Care Reform Learning Zone, found on the MSEC website, is a rich source of information about the Affordable Care Act (ACA).

Q:  What individuals are included in the IRS health plan reporting due in early 2016?

A:  It depends on the size of your organization and the funding method your health plan uses. The table below shows which individuals are included in reporting requirements. The Health Care Reform Learning Zone on the MSEC website also contains information on reporting requirements, if you’d like more information.

Reports Which Individuals Must Receive a Report for 2015?
Applicable Large Employer (ALE) (Sec 6056)

Purpose of Report:  Enforce the Employer Mandate and notify individuals of eligibility for Marketplace subsidies

 

 

 

 

 

 

 

Minimum Essential Coverage (MEC) (Sec 6055)  Purpose of Report:  Enforce the individual coverage mandate

Applicable Large Employer Report (50+ full-time plus full-time equivalent employees) :

  • Anyone who was a full-time employee for at least one full month during the year. This includes employees who declined coverage, and those who qualified to receive coverage in your organization’s “Stability” period.
  • Full-time employees whose coverage terminated during the year and were offered COBRA or the employer’s Retiree Medical Plan
  • Non-employee participants (such as Directors)
  • For self-insured ALE’s only: Part-time employees who were covered under your plan

 

 

Minimum Essential Coverage Report:

  • Anyone who received Minimum Essential Coverage under your plan during 2015, whether a full-time or part-time employee

 Small Employers (under 50 full-time plus full-time equivalent employees):

  • Employer offered a health plan during 2015: Must do MEC reporting.
  • Employer did not offer a health plan during 2015: No reporting is required.

Q: What is the definition of full-time employee under the ACA?

A: A full-time employee is an employee who, based on a calendar month, is employed an average of at least 30 hours of service per week. The monthly equivalent of 30 hours of service per week is 130 hours of service in a calendar month. This equivalency rule must be applied on a reasonable and consistent basis.

There are key differences when counting full-time employees for purposes of determining whether an employer is an applicable large employer (ALE) and whether an ALE has an obligation to offer coverage or risk paying a penalty and to provide a report to the IRS under Code Section 6056.

  • It is not necessary to convert part-time employees to full-time equivalents for reporting purposes. Part-time employees (working less than 30 hours per week) are excluded from reporting if they are not covered by a health plan. It is not necessary to offer coverage to part-time employees to avoid a penalty.
  • The test to determine ALE status is retrospective, looking at employees’ hours of service in the preceding calendar year. Therefore, once the prior year ends, the employer’s status as an ALE (or not) will be fixed for the current year. In contrast, the test for employer reporting looks at employees’ hours of service on a monthly and ongoing basis during the current year.
  • The definition of monthly equivalency for a full-time employee for purposes of reporting is 130 hours per month. But for purposes of determining whether an employer is an ALE, the correct monthly equivalency to determine whether an employee should be counted as full-time is 120 hours per month.

Final regulations provide two different measurement methods to determine who is a full-time employee for coverage and reporting purposes:

  • Monthly Measurement Method: In this method, an employer determines each employee’s status as a full-time employee for a calendar month by counting the employee’s hours of service for that same month.
  • Look-back Measurement Method: In this method, employers tabulate hours of service by employees over a defined period (known as a measurement period) and conduct enrollments for those found to be full-time during another specific period (known as an administrative period). Coverage for eligible employees is implemented for a following stability period.