Year-End Client Seminar

November 15, 2018

ACA Compliance Update

DP Benefits Team - Frank Thomas / Tara RothrockAlex (AJ) Johnson, Ashley Smartt, Erin Carlson, Jonah Lampkin,

Josh Orange

What will you learn about today?

What is new to ACA in 2018

2018 ACA Reporting Deadlines

How to audit data now to avoid most 1095 form errors

ACA compliance – shared responsibility notices, IRS 226J

Next steps & helpful tools, additional resources

ACA Update -Who must file?

Are you an ALE (Applicable Large Employer)

12 month look back (generally)

Full time + all part-time hours / 120 => 50

Who to cover fulltime , 130 hours month

1094C Corporation Transmittal

1095C Employee Information Form

1094B for under 50 self funded plans

All 50 + must file

What’s new for 2018?Oct 10th – Final ACA forms and instructions

were released by the IRS

• Support for foreign address

• 1095-C Single space (box ) for name , now divided into separate space on forms for first name, middle initial, last name

• Penalty Increase for failure to file a correct information return is now $270 not to exceed $3,275,500.

• Penalty increase for failure to provide correct employee form is now $270 not to exceed $3,275,500.

Dec 14th – iSolved final release for year end updates

2018 ACA Reporting Deadlines

1095-C or 1095-B Participant Statements

Postmarked to employees by January 31, 2019

1094-C or 1094-B Employer Statements

April 1, 2019 (electronic filing)

New clients needing ACA Compliance

Notify us you need reporting by December 1st, 2018

Approving your ACA Forms Must be approved by January 4, 2019

IRS DEADLINES

DP DEADLINES

How we DO want you to feel this year…

So… what can I do now?

audit, audit, audit!

So… what can I do now? Step 1

ü Verify Employment Categories

So… what can I do now? Step 2

ü Verify Medical

Start & Stop Dates

So… what can I do now? Step 3

ü Verify Hire, Rehire,

& Termination

Dates

So… what can I do now? – additional

ü Verify all Dependents

are in iSolved

SELF INSURED COMPANIES

ONLY!

Reminder Approve forms “push button” by January 4th, 2019

What’s new in iSolved to assist with ACA Employer Compliance

• New in 2016: a new reporting “Preview Report” was created with error highlighting

• New for 2017: Employees can now choose paperless year end forms which include 1095’s

• New For 2017: printed forms mailing side will display Company Code, Paygroup, OrgValue1, Org Value2, employee number information to facilitate easier hand delivery sorting and distribution

• New for 2018: enhancements to Employee ACA coding override screen

What we are doing to prepare for 2018 Compliance

Setup 2018 Reporting Year, update measurement periods to enable client Previews of ACA reporting and forms

iSolved system product release: updates made to break out employee name in three fields on information return to reduce “TIN” errors.

2018 ACA processing support: communication tracking ticket will be used for ACA clients with IRS Instructions for 2018 , 2018 Preparation guide

Proactive review to identify employers who grew to 50 Full Time Equivalents in 2017 and may now be required to file for 2018 (if you are unsure, let us know and we will run for you the Applicable Large Employer (ALE) test report)

Next Steps & Helpful Tools2018 ACA Preparation Guide and Checklist: Available online for downloadingQuick Viewing Training videos:• Where to Review & Approve ACA Forms• How to Override 1095 Forms• ACA Reports & Tools

2018 ACA – Zendesk Tracking Ticket Updates• 2018 IRS Instructions for Forms 1094-C and 1095-C• ACA 2018 Preparation Guide• ACA 2018 Checklist

Preview 2018 ACA Forms: You can start previewing forms today

üDeadlines• By Dec 1st: New clients notify DP that they need ACA Reporting• By Jan 4th: Clients must approve 2018 ACA forms in iSolved• By Jan 31st: Clients distribute 1095 forms to employees• By April 1st: DP to electronically file 1094 & 1095 forms with IRS

ü Review Updated IRS 2018 Instructionsü Verify that accurate employee data is in iSolvedü Watch for 2018 ACA – Zendesk ticket for updates and reminders

Main Take-Aways

Update - IRS Continuing Employer Mandate Enforcement

These first letters for the enforcement of 2015 ACA penalties were sent earlier this year. So with this update we now know a few things:

The IRS expected to continue enforcement of the ACA employer mandate penalties?• Beginning with the 2015 reporting submitted by employers. > 30,000+ notices were sent

When will they begin enforcing for the 2016 calendar year reporting for ACA?• expected to begin in the fall 2018.

How will employers be notified?• This will be done through a letter called “Letter 226J” which will include all of the details

about what penalties you will be responsible for paying.

What will be included in the IRS letter?• These letters will also include a Form 14765 which will outline in detail the months that

employees received tax credits for reduced health premiums from the exchange and will therefore mean the employer is subject to a shared responsibility payment/penalty

Employers will have 30 days to respond with Form 14764- ESRP Response and should setup internal / external resources for a timely review and response

• Consult with your benefits broker and tax, legal support resources. (you may request a 30 day extension to prepare your response)

Will the IRS extend “good faith efforts” penalty relief for reporting incorrect or incomplete information for 2018 filings?• The IRS Information Reporting Program Advisory Committee (IRPAC) has recommended

the IRS provide organizations more time to submit IRS filings mandated by the ACA for the 2018 tax reporting year to individuals (as it did for 2016, 2017 tax year filings)

• IRPAC also recommends the IRS extend “good faith efforts” penalty relief for reporting of incorrect or incomplete information for 2018 tax year filings. Such penalty relief was available for IRS filings made for the 2015 , 2016 and 2017 tax years, but has not yet been approved for 2018 tax year reporting.

• In addition, IRPAC recommends that IRS issue guidance as soon as practical regarding changes, if any, to reporting requirements due to the reduction of the Individual Shared Responsibility Payments to $0 for calendar year 2019.

• Form 8809 – IRS Application to request extension to file Information returns , must be sent prior to earliest due date to request a 30 day extension.

• Where to find IRS Notice if filing due date is extended:

https://www.irs.gov/tax-professionals/aca-information-center-for-tax-professionals

Contact Us!

benefits@dominionpayroll.com

Additional ACA Resources- links you may find helpfulGeneral Information:

ACA Times – News and Information https://acatimes.com/

Kaiser Family Foundation – Summary of Affordable Care Act www.kff.org/health-reform/fact-sheet/summary-of-the-affordable-care-act/ , https://www.kff.org/health-reform/

Kaiser Health News - Daily Health Law news summaries https://khn.org/

SHRM.org https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/Pages/HealthCareReform.aspx

Authoritative Instructions for Compliance:

IRS.gov www.irs.gov/affordable-care-act/affordable-care-act-tax-provisions

IRS.gov www.irs.gov/affordable-care-act/employers/aca-information-center-for-applicable-large-employers-ales

IRS.gov www.irs.gov/pub/irs-pdf/i109495c.pdf 2018 Instructions for Forms 1094-C, 1095-C

IRS.gov www.irs.gov/affordable-care-act/employers/questions-and-answers-on-employer-shared-responsibility-provisions-under-the-affordable-care-act#Making Q & A Shared Responsibility Payments

Other agency sites:

DOL.gov www.dol.gov/agencies/ebsa/laws-and-regulations/laws/affordable-care-act

HHS.gov www.hhs.gov/healthcare/

CMS.gov www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/index.html

IRAPAC 2018 Report www.irs.gov/pub/irs-pdf/p5315.pdf

ACA Instructional Videos:

Reviewing and Approving Your ACA Formshttps://www.youtube.com/watch?v=xuWg0oiUlt8

ACA Compliance Tools and Reportshttps://www.youtube.com/watch?v=mrlWVTh_lHA

Overriding ACA 1095 Formshttps://www.youtube.com/watch?v=WADU5UUv2pk

iSolved ACA Overview https://infinisource.wistia.com/medias/7qeasc7gx9

“ACA” extra segment

What triggers IRS Letter 226J?Failure to successfully appeal or electing to not appeal an Exchange Notice may result in your receipt of IRS Letter 226J

Letter 226J

IPPA Response Recommendations

Form 14764, officially named the ESRP Response, includes sections for the employer to:Request a response extension via phone call with the IRS• Agree with the assessment and include a payment with their response (or)• Disagree in part or full with the assessment

The Employer only has 30 calendar days to prepare a response. It’s best to request an extension early on in the process. This will give more time to gather materials, research the original filing, and/or consult with your resources to craft the most effective response

If you disagree with the proposed ESRP, the response should consist of:• A signed statement detailing why you disagree with the fine and what

corrections you would like to make to your filing• Form 14764 indicating their disagreement• Form 14765 (PTC Listing) with code adjustments, if applicable• Any supporting documentation you would like to provide

Form 14765

Form 14765, the Employee Premium Tax Credit (PTC) Listing, identifies the full-time employees who were granted a PTC for enrolling in medical benefits through their state’s health benefits exchange.

The most common Form 1094-C mistake is an erroneous indication that the company did not offer affordable medical benefits to the required percentage of their full-time employee population when such an offer was indeed made. Other potential errors include (1) failing to indicate transitional relief that, if applicable, would excuse your plan from a fine for noncompliance, and (2) miscalculating full-time employee counts, leading to higher than appropriate assessments.

Potential Form 1095-C errors that result in PTCs are (1) offer code blanks in Line 14, (2) safe harbor blanks in Line 16, (3) accidentally including forms for part-time or variable hour employees who were not eligible for coverage, and (4) misusing the union-specific safe harbor code in Line 16.

Record the name and ID number of the IRS representative who grants the extension, along with the date of the request, as it’s rare for the IRS to generate formal paperwork confirming the extension. You should refer to the extension in the finalized response.

Response

It’s best for you to utilize your broker, tax and legal resources if you are not familiar with the complexities of transitional relief or the coding regulations for Forms 1095-C. An effective, thorough ESRP response has the potential to eliminate the fine, while an inaccurate or incomplete response could leave you responsible for the full penalty.

* Information returns do not require refiling or amendment the response process forms are is used to correct informational – reporting errors.

Response Continued