An IRS reporting form titled "Transmittal of Health Coverage Information Returns," the 1094-B summary form that accompanies the more detailed 1095-B which provides coverage plan information about employees to the IRS.
Filers will send form 1094-B (transmittal) with form 1095-B (returns) to the IRS.
An IRS reporting form titled "Health Coverage," form 1095-B is used to report certain information to the IRS and to taxpayers about individuals who are covered by minimum essential coverage and therefore aren't liable for the individual shared responsibility payment.
An IRS reporting form titled "Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns," the 1094-C is the employer's filing cover sheet sent to the IRS to summarize the 1095-C. Form 1094-C must be filed when an employer files one or more Forms 1095-C. The 1094-C summarizes and accompanies the 1095-C.
An IRS reporting form titled "Employer-Provided Health Insurance Offer and Coverage," the 1095-C provides information about health insurance and is sent to both employees and the IRS.
Applicable Large Employer Members (ALE - employers with 50 or more FT employees in the previous year are required to file Form 1095-C. Every employee of an ALE who is eligible for insurance coverage should receive a 1095-C.
ACA Eligible or Full-time
To be ACA Eligible an employee must average at least 30 service hours per week or 1560 per year during the Initial or Standard Measurement Period. A new employee who is expected to be full-time is ACA Eligible from the date of hire, but, like all employees, is subject to re-evaluation.
Allow Edit ACA Eligibility
AllowEditACAEligibility is a Config Option within Avionté that controls whether a user can edit the ACA Eligibility for employees. If set to True, the dropdown becomes available in the ACA Eligibility screen and the ACA Eligibility information is recorded at the individual Employee level.
Note: In addition, the Config Form for ACA Eligibility must be set to IsVisible for the user.
The Admin Period must last at least 30 days and no more than 90 days. It begins when a new full-time employee is hired, or when an existing employee has been evaluated and determined to be full-time. The employee must be offered a Healthcare plan and, if accepted, they must be enrolled before the Admin Period ends. Following the Admin Period employees begin the standard measurement and determination rotation.
Advance Warning Timeframe
The AdvancedWarningTimeframe is a Config Option within Avionté. It is a set number of days prior to an ACA Eligible employee’s last day of the Admin Period. ACA Eligible employees must be offered a healthcare plan and, if the plan is accepted, enrolled by the end of the Admin Period. Therefore, when the set timeframe is reached the employee will be listed on the Enrollment Deadline (ACA) counter, notifying you that action is needed.
The counter is initiated using the following calculation and example time frames:
Measurement Period (12mos) + Admin Period (90days) – Advance Warning Time Frame (30days) = Add to Counter (30days prior to the end of the Admin Period)
Note: To place an employee on the Enrollment Deadline counter as soon as he becomes eligible, set the Admin Period and the Advanced Warning Time Frame to the same number of days.
When setting the warning period, take into account that you may begin collecting benefit premiums one month prior to coverage.
Sometimes referred to as a Break-In-Employment, if an employee has not received a paycheck from your company for a set length of time (91 days) or has not received a paycheck in more than their previous continuous period of employment in days (Minimum 28 days), they undergo a break in service and are treated as a new hire when placed on their next assignment. Their ACA status will automatically be set to Undetermined, and all existing ACA measurement data will be deactivated.
The Affordable Care Act requires every state to offer its citizens different level plans, which also differ in cost and benefit coverage. The bronze plan is considered the lowest regular plan offered under the Affordable Care Act and will generally cover 60% of the costs associated with a claim.
The Consolidated Omnibus Budget Reconciliation Act of 1985, enables the ability of a person or a person’s dependents to maintain the health insurance policy that they had with their employer, without interruption, even after they stop working for that employer. Typically, if a person does decide to do this, they will be required to pay all of the costs associated with the monthly premium for the policy and are usually only allowed to stay on the policy for 18 months after they leave their employment.
Each employee is evaluated to determine their full-time or variable hour status and ACA Eligibility. In the case of a new variable hour employee the determination follows the Initial Measurement Period. In all other instances the determination follows the Standard Measurement Period. After determination, all employees continue to repeat the standard measurement and determination rotation as long as they are employed.
Effective Insurance Date
The date that an employee must be offered healthcare the first time they are found to be ACA eligible. The start of the employee's first Stability Period.
Under the Affordable Care Act, people must enroll in health insurance either through the state or federal marketplace or through a private health insurance company during a set period of time every year. If a person has no health insurance at the close of the enrollment period, they will be not in compliance with the Affordable Care Act. The 2015 open enrollment period for regular health insurance was November 15, 2014 to February 15, 2015.
Essential Health Benefits
The Affordable Care Act now requires all insurance policies to cover ten essential health benefits to insurers. Although the amount of copayment and coinsurance may vary per insurance policy, an insurance company may not deny coverage for one of the following benefits: 1) Ambulatory Patient Services, 2) Emergency Services, 3) Inpatient Hospitalization, 4) Maternity and Newborn Care, 5) Mental Health and Substance Abuse Services, 6) Prescription Drug Coverage, 7) Rehabilitative and Habilitative Services, 8) Laboratory Services, 9) Preventative and Wellness Services and Chronic Disease Management, 10) Pediatric Oral and Dental Care
A person who belongs to a specific group of people who have been designated by the Affordable Care Act as being exempt from complying with the law not only do not have to get healthcare that complies with the law, but will also avoid being taxed for not having insurance. The exempted group of people are: Native Americans and Alaskan tribes, a member of a recognized healthcare sharing ministry, a member of a religious sect that opposes health insurance, someone who is incarcerated, someone living in the U.S. unlawfully, people who have been without healthcare for three months or less, people who are 25 years or younger can remain on their parent’s health insurance until their 26thbirthday, people who are exempt from filing a federal income tax return due to their income level, if the lowest priced bronze plan offered to you is more than 8% of your household income, if you qualify for a hardship exemption.
Exemption Certificate Number (ECN)
If you apply and are approved for an exemption by the federal government, you will be assigned an ECN, which you must cite on your federal income taxes to indicate that you are exempt from complying with the law.
The Affordable Care Act requires that the federal government create a website that would act as an information hub and a place for Americans, who live in a state that is relying on the federal government to administer the law, to shop for health insurance. The federal marketplace can be found on Healthcare.gov.
An employee that has been evaluated as averaging 30 service hours or more per week during the Initial or Standard Measurement Period is considered full-time.
The Affordable Care Act requires that multiple plan levels be offered to citizens in each state. Each plan level costs a different amount of money and includes different benefits. The Gold Plan will cover 80% of healthcare costs and the insured person will cover the remaining 20%. The Gold Plan is typically a better plan and may require higher monthly premiums, but lower copays, coinsurance and deductibles.
If a person does not make their monthly premium payment on time to their insurance company, they will be given a grace period to make all pending premium payments before the insurance policy is canceled. Under the Affordable Care Act, the grace period is ninety-days, which means that insurance companies cannot cancel your policy until you are more than ninety-days delinquent on paying your premium.
Healthcare Plan Offered
HealthcarePlanOffered is a Config Option within Avionté; if set to True, it indicates a healthcare plan is offered by the employer. If no plan is offered, the value should be set to False, and Avionté then calculates penalty taxes owed by the employer (if apply based on company size).
The federal Health Insurance Portability and Accountability Act of 1996 was intended to make it easier for people to keep health insurance, protect the confidentiality and security of healthcare information and help the healthcare industry control administrative costs.
Include in ACA Hours
Hours of paid leave, such as FMLA, Military and Workers Compensation count toward hours of service when determining employee ACA Eligibility. To make this happen automatically, the IncludeInACAHours property must be set to True for these transaction types.
The Affordable Care Act requires that all individuals who do not otherwise have insurance through an employer or private health insurance company that complies with the new standards and requirements of the law, to obtain health insurance by the end of the open enrollment period every year. People who fail to obtain health insurance by the end of the open enrollment period each year and who do not otherwise qualify for an exemption or special enrollment period, will be penalized by paying a tax. This new requirement has been coined the Individual Mandate part of the Affordable Care Act. In June 2012, the Supreme Court reviewed the issue as to whether it was Constitutional for the federal government to impose a penalty for an individual’s failure to obtain health insurance under the Individual Mandate requirement and determined that it was permitted under the federal government’s right to tax its citizens.
Initial Measurement Period
The Initial Measurement Period must be at least three months and no more than 12 months in length. This period is used to determine the ACA Eligibility of a new variable hour employee. If the employee’s determination, at the end of the period, confirms that they are ACA Eligible (or full-time) they must be offered a healthcare plan. If the plan is accepted, they must be enrolled within 30 days of the end date of the Initial Measurement Period. The employee then begins the standard measurement and determination rotation.
Large Group Health Plan
In general, a group health plan that covers employees of an employer that has 101 or more employees. Until 2016, in some states large groups are defined as 51 or more.
Limited Cost Sharing Plan
A plan available to members of federally recognized tribes and Alaska Native Claims Settlement Act (ANCSA) Corporation shareholders regardless of income or eligibility for premium tax credits. People enrolled in this type of plan:
- Don’t pay co-payments, deductibles, or coinsurance when getting care through an Indian health care provider
- Do need a referral from an I/T/U when getting essential health benefits through a Marketplace plan to avoid paying co-payments, deductibles, or co-insurance
- Can get limited cost sharing with a plan at any metal level on the Marketplace
- Don't need to have their income verified in order to enroll
MEC - Minimum Essential Coverage
Healthcare coverage that fulfills all the necessary requirements for an individual to comply with the individual mandate.
Specific coverage requirements for meeting MEC are subject to change. Visit the IRS web page regarding MEC for current guidelines.
MVP - Minimum Value Plan
MVP is the acronym for Minimum Value Plan, and refers to a comprehensive health insurance plan with at least 60% actuarial value, meaning that, on average it pays at least 60% of the costs of claims submitted by policyholders in the group. In ACA parlance, MVPs with 60% actuarial value are referred to as Bronze Plans, 70% value as Silver, 80% as Gold, and 90% as Platinum.
Specific offer requirements for meeting Minimum Value are subject to change. Visit the IRS web page regarding MEC for current guidelines.
The Measured eligibility is determined by the number of service hours worked during a measurement period. If an employee averages 30 hours or more per week, the measured eligibility is Full-time. If the average is 29 or less per week the measured eligibility is Non-full time.
Notice of Health Exchange
Also referred to as Notice of Exchange (NOE).
This term refers to insurance policies that are offered directly from insurance providers either directly through their company website, through a third-party website or through a licensed agent or broker. A person who enrolls in a policy Off-Exchange would not use the state or federal Marketplaces to apply and shop for insurance. The opposite of Off-Exchange is On-Exchange business, which describes policies offered on the state or federal Marketplaces. Please note that often the policies sold on-exchange are the same ones sold off-exchange.
This term refers to health insurance policies that are offered either through the state or federal Marketplaces. The opposite of this would be “Off-Exchange” business, which are insurance policies that are offered directly from an insurance provider and through the provider directly, through a third party website that aggregates every plan available in a geographic region, or through a licensed insurance agent or broker.
Open Enrollment Period
For both Medicare and regular health insurance through the Affordable Care Act, there are certain periods of time each year that a person can enroll or change their health insurance policy. According to the Affordable Care Act law, if a person does not have health insurance by the end of the open enrollment period, they may be penalized with a tax.
Generally, a person who works 29 or less hours per week for an employer is considered a part-time employee. Under the Affordable Care Act, employers do not have to provide health insurance to part-time employees.
Penalty Annual Amount
The Penalty Annual Amount is an annual dollar amount paid as a penalty tax to the US government. This amount is charged, per qualifying full-time or full-time equivalent employee, if employees are not covered by a healthcare plan. The field is editable as amounts will change in coming years.
Under the Affordable Care Act, Americans in every state must be offered multiple levels of coverage that increases in coverage and costs as the levels increase. The Platinum Plan is the highest level of coverage offered. Platinum Plans will cover 90% of healthcare costs, which means lower annual deductibles, copays and coinsurance; however the premiums are typically higher per month.
A person who has a health condition that existed before the start date of that person’s health insurance. Under the Affordable Care Act, an insurance company can no longer deny a person health insurance coverage or deny covering claim because of a pre-existing condition.
Qualifying Life Event
Under the Affordable Care Act, every person must be enrolled in health insurance either through an employer or through a private insurance company by the end of the open enrollment period every year or else they will receive a tax penalty for violating the law.
The exception to this rule is if the person lost their health insurance policy due to a Qualifying Life Event that triggers a Special Enrollment Period and allows the person to enroll in health insurance on the federal marketplace, outside of the open enrollment period, without penalty.
Examples of Qualifying Life Events according to the Affordable Care Act are: moving to a new state, getting married or divorced, giving birth or adopting a child, a change in income that either qualifies the person or disqualifies the person for financial assistance, Medicaid or CHIP, or the person loses their present health insurance for some reason like they have lost their job.
Rehabilitative Services are one of the ten essential health benefits now required to be included by every health insurance policy by the Affordable Care Act. A Rehabilitative Service is a service offered to a person who wants to reacquire a skill or activity that they should have, but lost due to an illness or disease. An example of this would be if a person had a stroke and lost the ability to use their hand, they would get rehabilitative services to help them regain movement and flexibility in their hand. These types of services could be occupational or physical therapies or even speech therapy.
A term used to describe when an employer has offered insurance to an employee at an acceptable rate as to avoid federal fines; the employer is safe from fines.
Employers are required to offer insurance at an "affordable" rate to the employee but, since employers typically don’t know employees’ household incomes, companies affected by the employer mandate have three options to determine ACA affordability. As long as the employer offers full-time employees (and their dependents) the opportunity to have minimum essential coverage under a plan that meets minimum value requirements, the employer can use one of three affordability calculations, called “safe harbors,” to make sure that plan meets requirements.
Employers must choose which safe harbor calculation to use for all employees, or each “reasonable category” of employees (such as salaried or hourly), as long as the calculation is applied uniformly throughout the category.
|Federal Poverty Line Safe Harbor||The Federal Poverty Line (FPL) calculation has been described as the simplest and easiest to use. This is done by calculating 9.66% of the one-person household federal poverty figure for 2016 ($11,880) and dividing that by 12 to get the monthly employee premium, which would be $95.63. If you offer a plan that costs less than that for employee-only coverage, your company meets ACA affordability criteria.|
|Rate of Pay Safe Harbor||
To calculate ACA affordability based on employee compensation, multiply an employee’s monthly salary by 9.66%, which gives you the maximum amount you can charge that employee this year for qualifying coverage. For hourly employees, assuming 130 work hours in a typical month, calculating affordability is based on the lower overall figure when the two following options are calculated:
|W2 Form Safe Harbor||
An employee’s W-2 wages for an entire or part of a calendar year may also be used to calculate minimum ACA affordable coverage. Simply take an employee’s W-2 wages for the month and multiply by 0.0966 (in other words, 9.66%). That number defines the monthly maximum that the company could take from the employee’s wages each month to pay for a minimally qualifying health plan. If, for example, an employee’s W-2 showed monthly pay of $1,500, then:
1500 × 0.0966 = $144.90
To meet affordability requirements under the W-2 calculation, an employer would need to offer one plan for which the employee’s monthly contribution was no more than $144.90.
Determining Which ACA Safe Harbor Calculation to Use
Your company will have to consider the options to determine which is best based on factors like how employees are compensated, how much administrative simplicity you need, and which method would deliver the highest household income proxy so your plan would have the best chance of qualifying as “ACA affordable.”
According to the IRS article Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act,
Use of the affordability safe harbors is optional. While it generally makes sense to use a safe harbor if it’s easy to do so, in some cases the administrative hassle of determining whether the safe harbor applies outweighs the benefit of using it.
You may either use the same affordability safe harbor for all employees or different safe harbors for different reasonable categories of employees. You cannot choose a different safe harbor for each individual employee.
In order to enter an affordability safe harbor code on a particular employee’s 1095C you must have elected to use that safe harbor and verify that particular employee actually satisfies the safe harbor. Depending on the safe harbor, the employee’s earnings, and your contribution structure any given safe harbor may apply to all, some or none of your ACA-FT employees.
- The affordability safe harbors are “last resort” codes — you only use these codes if no other Line 16 code applies. If an affordability safe harbor code does not apply (or you are not using an affordability safe harbor) then Line 16 will be blank.
FPL is generally the easiest of the three safe harbors to use but is only available if the lowest cost single MV coverage available to employees is less than the FPL safe harbor threshold. For a calendar year plan the FPL threshold is $94.75 for all months in 2016; for a non-calendar year plan the FPL threshold is $93.77 for the months of the 2015 plan year that fall in 2016 and $95.63 for the months of the 2016 plan year that fall in 2016.
Rate of Pay safe harbor is next easiest. The way most employers use Rate of Pay is to determine if the lowest paid ACA-FT employee can satisfy the safe harbor. If the lowest paid employee satisfies the Rate of Pay safe harbor (and assuming the lowest cost single coverage is the same for all ACA-FT employees) then all employees should satisfy the safe harbor.
W-2 is usually the least desirable of the safe harbors. The 2016 W-2 safe harbor is calculated using the employee’s 2016Box 1 W-2 income — which you won’t know until after the end of the year. Moreover, the W-2 safe harbor assumes the employee was employed and offered coverage for the entire calendar year; if either of those is not true for a particular employee, you must prorate that employee’s W-2 income and annual cost of coverage before doing the W-2 safe harbor calculation.
Service hours are the hours counted when determining ACA Eligibility. In addition to the hours actually worked, FMLA, Military and Workers Compensation qualify as service hours.
Shared Responsibility Payment
The formal name for the tax payment penalty assessed by the Internal Revenue Service to any person who was supposed to obtain health insurance under the Affordable Care Act, but failed to do so by the end of the open enrollment.
This is the medium level insurance plan offered under the Affordable Care Act. Under the law, Americans are supposed to be given options of insurance policies that meet different levels and therefore different amounts of coverage for different prices. The Silver Plan will cover approximately 70% of the costs associated with healthcare claims and the insured person will cover the rest. This usually means that while copays, coinsurance and annual deductibles are a little higher, the monthly premium amount may be less than higher plans.
Special Enrollment Period
If a person loses their health insurance due to a Qualifying Life Event after the open enrollment period closes, that person can sign up for health insurance on the federal marketplace, so long as it is done within sixty-days (60) of the Qualifying Life Event first occurring.
A measurement period which follows an admin period, where if an employee chose to previously accept healthcare, it cannot be revoked regardless of hours worked. At the end of this period the employee's eligibility status is re-evaluated and healthcare can coverage can be removed if they fail to meet the hours of service requirements.
Standard Measurement and Determination Rotation
The standard measurement and determination rotation is the Standard Measurement Period, followed by a re-evaluation of the employee’s ACA Eligibility status. This rotation continues as long as they are employed.
Standard Measurement Period
The Standard Measurement Period must be at least three months and no more than 12 months in length. If the HealthcarePlanOffered property is set to True, Avionté will automatically calculate this period and when met, determine ACA Eligibility for all existing employees. The employee ACA Eligibility status is then automatically set to Yes or No. After determination all employees, both full-time and variable hour, continue to repeat the standard measurement and determination rotation as long as they are employed.
Standard Measurement Start Date
The Standard Measurement Start Date is the month and date when the standard measurement period begins. The period will normally begin on 1/1 each year. If your insurance plan was grandfathered your start date may differ.
Subsidy Annual Amount
The Subsidy Annual Amount is an annual dollar amount paid as a subsidy tax to the US government. Employers pay the subsidy tax for those employees who elect to use a different healthcare plan than offered by the employer. The field is editable as amounts will change in coming years.
Note: This tax does not apply to those employees who are covered under their spouse's healthcare plan.
The name for the healthcare program provided to active and retired military people and their families.
Variable Hour Employee
Using ACA standards, a variable hour employee (or part-time employee) is one who, during their determination, is evaluated to have averaged 29 service hours or less per week throughout their Initial or Standard Measurement Period.
The Warning Period is the length of time prior to the end of the Admin Period that an ACA Eligible employee, who does not have healthcare set up, appears on the Enrollment Deadline (ACA) counter within the Avionté Core Application. The length of the warning period is determined by your company’s workflow and is set in the AdvancedWarningTimeframe Config Option within Avionté Admin Tools.
Zero Cost Sharing Plan
A plan available to members of federally recognized tribes and Alaska Native Claims Settlement Act (ANCSA) Corporation shareholders whose income is between 100% and 300% of the federal poverty level and qualify for premium tax credits. People enrolled in this type of plan:
- Don’t pay co-payments, deductibles, or coinsurance when getting care from an Indian health care provider or when getting essential health benefits through a Marketplace plan
- Don’t need a referral from an Indian health care provider when getting essential health benefits through a Marketplace plan
- Can get zero costs sharing with a plan at any metal level on the Marketplace
- Must agree to have their income verified in order to enroll