Landing / Table of Contents Search Table of Contents Click to Expand Affordable Care Act (ACA) Section I. ACA Introduction A. Overview Section II. Definitions A. Affordability B. Affordability Safe Harbors B-1. Federal Poverty Level Safe Harbor B-2. Rate of Pay Safe Harbor B-3. W-2 Safe Harbor C. Applicable Large Employers (“ALEs”) D. Dependent Coverage E. Full-Time Employees (“FTEs”) F. Full-Time Employee Equivalents (“FTEs”) G. Limited Non-Assessment Periods H. Minimum Essential Coverage (“MEC”) I. Minimum Value (“MV”) J. PCORI K. Penalties L. Reporting on Forms 1094 and 1095 Section III. Affordable Care Act Penalties A. The Penalty Scheme A-1. Penalties under Section 4980H(a) A-2. Penalties under 4980H(b) A-3. More on the Awful Penalty, Section 4980H(a). A-3 Example. Jessie and the Awful Penalty A-4. More on the Bad Penalty, Section 4980H(b) A-4 Example. Tom and the Bad Penalty B. Negotiating with the IRS C. The Need for Written Offers D. Notice from MNsure of Employer Shared Responsibility E. Takeaway Section IV. Applicable Large Employers A. Introduction B. Basic Calculation for Identifying Applicable Large Employers C. Special Rule for First Year as an Applicable Large Employer (ALE) D. Instructions for Determining Applicable Large Employer Status D-1. Consider Controlled Group Rules D-1(a). Parent-child Subsidiary Control Groups D-1(a) Example. Phil’s Failure to Identify Controlled Group D-1(b). Church Plan Parallels D-1(c). Brother-Sister Groups and Affiliated Service Groups E. Determine Who is an Employee E-1. Employees versus independent contractors E-2. How to Classify a Worker E-2(a). Behavioral Control E-2(b). Relationship of the Parties E-3. Staffing Companies, Temporary Agencies, and Professional Employer Organizations (PEOs) E-3(a). Temporary Agencies and Leased Employees E-3(b). Professional Employer Organizations (PEOs) E-3(c). Bus Drivers, Cafeteria Workers, and Staffing Companies E-3(d). Outsourced Workers who should be Counted in Determining Large Employer Status E-3(e). Outsourced Workers who Should be Offered Coverage by Applicable Large Employees E-3(f). Health Plans offered by Co-Employers and Staffing Firms E-3(g). Volunteer Firefighters, Emergency Medical Technicians, and other “Bona Fide Volunteers” E-3(h). Student Employees E-3(i). Seasonal Employees E-3(j). Retroactive Reclassification E-4. Count Hours of Service E-4(a). What is an Hour of Service? E-4(b). What is excluded from an Hour of Service? E-5. Coaches and other after-school activity volunteers E-6. How do you Count Hours of Service? E-6(a). Counting Hours of Service for Hourly Workers E-6(b). Counting Hours of Service for Salaried and Other Non-Hourly Workers E-6(b) Example. Service Crediting Method for City Employees, including Freddie F. Applicable Large Employer Worksheet Section V. Full-time Employees Entitled to an Offer of Coverage A. Introduction B. The Monthly Measurement Method B-1. Count Hours of Service B-2. Payroll Period/Weekly Method B-2 Example. Dianna and the Payroll Period/Weekly Method B-3. Waiting Periods B-4. The 90-Day Rule B-4(a). Orientation Period B-4(b). Duration of the Orientation Period B-4(c). Application to Rehires B-4(d). Waiting Periods under the Employer Shared Responsibility Rule (4980H) B-5. Reconciling the Waiting Period Rules B-5 Example. Manuel and the Waiting Period Rules B-6. Summer Interns and Seasonal Employees under the Monthly Measurement Method B-7. Accidental Mid-Year Eligibility for Part-Time Workers under the Monthly Measurement Method B-7 Example. Managing Part-Time Hours during a Wolverine Breakout C. The Look-Back Measurement Method C-1. Introduction and Overview C-2(a). Standard Measurement Period C-2(b). Administrative Period for Ongoing Employees C-2(c). Stability Period C-2(d). Length of stability period C-3. Different Rules for Different Classes of Employees C-4. Our Recommendations on which Rule to Use for Counting Hours C-5. Special Unpaid Leave C-6. Employment Break Periods for Educational Institutions C-7. Break in Service Rules C-7(a). Break in Service Rules for Cities, Counties, and other Non-Educational Governmental Entities C-7(b). Break in Service Rules for Educational Institutions C-7(c). Rule of Parity C-7(c) Example. Angel’s Knee and the Rule of Parity C-8. Application of the Look-Back Measurement Rule to New Employees C-8(a). Full-Time Employees C-8(b). Initial Measurement Period C-8(b) Example. Saul’s Barbeque Skills and the Initial Measurement Method C-8(c). Treatment of New Employees C-8(d). Part Time, Seasonal and Variable Hours Employees C-8(d) Example. When Fish set your Schedule, you’re Probably a Variable Hours Employee C-8(d) Example. Waiting too Long for Mac-N-Cheese C-9. Putting all Together with the “Best Deal” Rule C-9 Example. C-10. A Recap of Limited Non-Assessments Periods D. AI Expert In Determining Employees from Independent Contractors Section VI. Affordability Mandate A. When is Coverage Affordable for Purposes of the ACA? A-1. The Basic Rule A-2. Household Income B. The Family Glitch B-1. Overview B-2. A Fix to the Family Glitch B-3. Downside to the Fix B-4. Minnesota’s Correction to the Family Glitch in MinnesotaCare C. The Expansion of Premium Tax Credits C. Example D. Cash-in-lieu of Coverage D-1. Cash-in-Lieu and Death Spirals D-2. Cash-in-lieu and Affordability Safe Harbors D-3. Eligible Opt-Out Payments D-3(a). Eligible Opt-Out Payments where Employees Must Pay Premiums D-3(b). Eligible Opt-Out Payments where the Employer pays 100% of Premiums. Section VII. Affordability Safe Harbors A. Overview of Affordability State Harbors A-1. The Federal Poverty Line Safe Harbor A-1(a). Calendar Year Plans and the Federal Poverty Line (FPL) Safe Harbor A-1(b). Non-Calendar Year Plans and the Federal Poverty Line (FPL) Safe Harbor (Warning: it gets weird) A-2. The Rate of Pay Safe Harbor A-2. Example A-3. The W-2 Safe Harbor A-4. Use of Safe Harbors in Form 1095-C Section VIII. PCORI Fees A. Overview B. Determining which Fee Applies C. How to Measure Average Covered Lives in the Prior Plan Year (Full-Text) C-1. Actual Count Method C-2. The Snapshot Method C-2. Example C-3. The Snapshot Factor Method D. PCORI Fees for Health Reimbursement Arrangements (HRAs), including VEBA-HRAs, and Health Flexible Spending Accounts (FSAs) (Full-Text) D-1. When are medical savings accounts exempt from PCORI fee? D-1(a). FSAs D-1(b). HRAs and VEBA-HRAs D-2. When are medical savings accounts subject to PCORI fees? D-2(a). FSAs D-2(b). HRAs and VEBA-HRAs E. Changing Group Health Plan Year and PCORI Fees Section IX. Minimum Essential Coverage (MEC) and Minimum Value (MV) A. Overview B. Minimum Essential Coverage (MEC) (Full-Text) B-1. Interaction of MEC with the Penalty Scheme B-2. Interaction of MEC with HRAs B-3. Interaction of MEC with Retiree HRAs (including VEBA) C. Minimum Value (MV) D. Interaction of MV with Penalty Scheme (Full-Text) D-1. Excepted Benefits D-2. Benefits that are not health coverage D-3. Limited excepted benefits D-4. Noncoordinated excepted benefits E. Excepted benefit employee assistance plans Section X. Reporting on Forms 1094 and 1095 A. Overview (Full-Text) A-1. Filing Deadlines A-2. Additional Reporting Relief on Forms 1095-B and C Section XI. Forms 1094-B and 1095-B for Small Employers A. Sample completed Form 1094-B B. Sample Completed form 1095-B (Full-Text) B-1. The untold story of D.B. Cooper B-2. D.B. Cooper gets divorced C. SSN or other TIN versus Date of Birth D. Reporting Health Reimbursement Arrangements (including VEBA-HRAs) on Form 1094-B (Full-Text) D-1. Exceptions to reporting D-2. When must HRAs and VEBA accounts be reported on Forms 1095-B and C? D-3. What forms should employers use to report HRAs and VEBA accounts? Section XII. 1094-C for Applicable Large Employers A. 1094-C for Applicable Large Employers (Full-Text) A-1. 1094-C, Part 1, Line 1 A-1(a). Name of ALE Member A-1(b). Obligations of ALE Members A-2. 1094-C, Part 1, Line 9 A-3. 1094-C, Part 1, Lines 18, 19 A-3(a). Line 18. Total number of 1095-Cs submitted A-3(b). Line 19. Is this the Authoritative Transmittal for this ALE Member? A-4. 1094-C, Part II, lines 20, 21, and 22 A-4(a). Line 20. Total number of 1095-Cs filed by or on behalf of ALE Member (Line 20) A-4(b). Line 21. Is the ALE Member a member of an Aggregated ALE Group? (Line 21) A-4(c). Line 22. Certifications of eligibility (select all that apply) (Line 23) A-5. 1094-C, Part III A-6. 1094-C, Part IV Section XIII. 1095-C for Applicable Large Employers A. Overview B. Elimination of Good Faith Relief C. Reporting Basics D. Part I of Form 1094-C E. Part II of Form 1095-C: The Fun Begins (Full-Text) E-1. Top of Form E-2. Line 14: Code Series 1—Offer of Coverage F. Line 15: Employee Required Contributions G. Line 16: Code Series 2—Section 4980H Safe Harbor Codes and Other Relief for ALE Members H. Part III of Form 1095-C Section XIV. Special Coding Rules and Miscellaneous Q&A Q-1 How do you Code Offers of COBRA or Minnesota Continuation Coverage? Q-2 How should information about an offer of coverage for the month in which an employee is hired be reported on Form 1095-C? Q-3 How do you report for retired and former employees enrolled in COBRA, retiree coverage or VEBA but were not employed on any day of the year? Q-4 Married employee. One waives and one accepts. How do we code them? Q-5. Employee waives insurance. Which do we put in Line 16? 2F, 2G, or 2H? Q-6. PEIP. Are they a multiemployer plan? Q-7. What codes do you use in Form 1095-C for an employee who has coverage under a multiemployer plan? Q-8. Must we report retirees with accounts in the VEBA? Q-9. We use the same EIN as another ALE. Will that be permitted in the Form 1094-C or 1095-C filings? Q-10. What happens if a retired employee returns to work? For example, what if a teacher retires and returns as a substitute teacher? Q-11. If a collective bargaining agreement settles in 2016 that affects group health insurance affordability for the 2015 plan year, may the employer report contributions retroactive to the 2015 plan year? Q-12. If an ACA full-time employee is hired mid-month and is offered coverage on the date of hire, what is the appropriate codes for Line 14 and Line 16? Q-13. How does the employer report changes in the required employee contributions on Line 15 that may result from mid-year elections related to a change in status, an age-based plan, or a change in cost or coverage? Q-14. What codes should we use for employees on leaves of absence? Q-15. How should employers report on employees with long term unpaid leaves of absence? Medical Saving Accounts Section I. Medical Savings Accounts Introduction A. Our Approach B. Overview and Goals Section II. A Short Primer on Medical Savings Accounts A. Internal Revenue Code Basics B. High Level Summary of Medical Savings Accounts (Full-Text) B-1. Health Savings Accounts (HSAs) B-2. Health Flexible Spending Arrangements (health FSAs) B-3. Health Reimbursement Arrangements (HRAs) B-4. Voluntary Employee Benefits Associations (VEBAs) B-5. The Health Care Savings Plan (HCSP) Section III. An In-Depth Review of HSAs A. Tax Benefits of HSAs B. Tax Disadvantages of HSAs (Full-Text) B-1. HSA distributions not used for medical expenses B-2. Excess Contributions B-3. Full Contribution Rule Example 1. Henry and his Full Contribution to an HSA C. Establishing an HSA (Full-Text) C-1. Establishment Date C-2. Customer Identification for HSA Accountholders D. Employer Involvement with HSAs E. HSA Contributions F. Comparable Contributions G. HSAs and Continuation Coverage H. Who is eligible to establish an HSA? H-1. AI HSA Eligibility Consultant I. What is a “high deductible health plan J. What other insurance and health-related benefits can you offer below the deductible of an HDHP? (Full-Text) J-1. Permitted Insurance J-2. Other Insurance J-3. Discount Cards J-4. Preventative Care J-5. Telemedicine (temporary) J-6. Employee Assistance Programs (EAPs), disease management programs, and wellness programs that do not provide “significant care in the nature of medical care” J-7. On-Site Clinics K. Disqualifying Coverage (Full-Text) K-1. Medicare K-1(a). Retroactive Medicare Coverage and HSAs – the Medicare Mousetrap K-1(b). How to Manage the Medicare Mousetrap Example 2: Jake retires at 70 and is caught in the Medicare mousetrap Example 3. Jake’s younger brother Jeramiah retires at age 65 ½ and avoids the Medicare Mousetrap K-1(c). Sample Medicare Notice for Employees with HSAs K-2. TRICARE K-3. VA Benefits Example 5: Dave seeks VA benefits after getting hit by a golf ball K-4. Interaction of HSAs with Health FSAs, HRAs, and VEBA HRAs K-5. Coverage through a spouse’s employer L. Correcting mistaken employer contributions M. Death, divorce, bankruptcy, and family-related issues (Full-Text) M-1. Death M-2. Divorce M-3. Beneficiary Designations M-4. Bankruptcy and Garnishment M-5. Switching from Family to Single Coverage M-6. Embedded Deductibles M-7. HSA Advances Example X: Archie and Veronica Take Full Advantage of HSA and VEBA Advances M-8. Allocating HSA contributions between spouses M-9. Contribution maximums where family coverage includes ineligible individuals M-10. Contribution maximums where one spouse has single HDHP coverage and the other spouse has family HDHP coverage M-11. Fourth Quarter Carryover N. Distributions from HSAs (Full-Text) N-1. Mistaken distributions N-2. Prohibited Transactions N-3. When both spouses have HSAs, may one spouse use their HSA to reimburse medical expenses of the other? N-4. Is there a time limit for reimbursement of medical expenses? N-5. Reimbursement of Long Term Care Premiums N-6. Reimbursement of COBRA and Minnesota Continuation Coverage Premiums O. HSA Tax Reporting P. HSA Custodians (Full-Text) P-1. Omnibus Accounts P-2. FDIC Insurance Coverage P-3. Electronic Communications P-4. Uncashed Checks P-5. Escheatment P-6. Customer Identification Process (CIP) P-7. Data Privacy P-8. A Note on HIPPA P-9. Contracting with HSA Custodians P-10. SIGIS Section IV. HRAs and VEBAs A. Background B. Legal Requirements (Full-Text) B-1. No direct or indirect employee contributions B-2. VEBAs, HRAs and Continuation Coverage B-2(a). Continuation coverage chart B-2(b). How to determine the “applicable premium” for continuation coverage under an HRA or VEBA B-2(c). Continuation Coverage on VEBAs B-2(d). Spend-down HRAs and VEBAs B-2(e). Penalties for violations of continuation coverage laws B-2(f). Continuation Coverage on HRAs B-2(g). Who Elects Continuation Coverage? Section V. Nondiscrimination Rules for VEBAs and HRAs A. Introduction B. Highly compensated individuals (Full-Text) B-1. Shareholders B-2. Officers C. The Benefits Test D. Eligibility Test (Full-Text) D-1. Percentage Test D-2. Excludable Employees E. Excluding Unions from Nondiscrimination testing (Full-Text) E-1. School superintendents E-2. School Principals F. The Reasonable Classification Test (Full-Text) F-1. The Fair Cross Section Test F-2. The Nondiscriminatory Classification Test G. Disaggregation and Aggregation H. Controlled Groups I. VEBA Contributions at Retirement J. Effect of Nondiscrimination Rule Violations Section VI. Medicare Secondary Reporting on VEBAs, and HRAs Section VII. VEBA Payments on Death and Beneficiary Designations Section VIII. Health FSAs A. Cafeteria Plans Generally (Full-Text). A-1. Introduction A-2. Maximum Contribution to Health FSAs A-3. Nondiscrimination Rules for Health FSAs A-4. Nondiscrimination Rules for Dependent Care FSAs A-5. External Nondiscrimination Rules Generally B. Cafeteria Plan Nondiscrimination Rules (Full-Text). B-1. Introduction B-2. Definitions B-2(a). Highly compensated individuals (HCIs) B-2(b). Highly Compensated Participant (HCPs) B-2(c). Key employees B-2(d). Compensation C. Specific Nondiscrimination Tests (Full-Text). C-1. Eligibility Test C-2. Key Employee Concentration Test C-3. Contributions and Benefits Test D. Nondiscrimination tests for dependent care FSAs (DCAPs) (Full-Text). D-1. Introduction D-2. Defining “highly compensated employees” D-3. Nondiscrimination tests required for DCAPs D-4. The 55% average benefits test E. When the tests must be run F. Simple Cafeteria Plans (Full-Text). F-1. Introduction F-2. Eligibility and Participation F-3. Excludable Employees F-4. Contribution Requirements F-5. Lets get real G. AI tool for nondiscrimination testing. H. Health FSAs and COBRA (Full-Text). H-1. General Rule H-2. Grade Period H-3. Carryovers Section IX. Reimbursable Medical Expenses A. Introduction B. Medical Expenses under Section 213(d) of the Code (Full-Text). B-1. Introduction. B-2. Medical expenses for diagnostic services B-3. Preventative Care B-4. Structure and Function of the Body B-5. Edge Cases B-6. Using Smart Cards with Medical Savings Accounts B-7. Practical Tips for Identifying Medical Expenses B-8. AI Tool for Medical Expenses Section X. HSA, HRA/VEBA, Health FSA Cheat Sheets A. HSA Cheat Sheet B. HRA/VEBA Cheat Sheet C. Health FSA Cheat Sheet Section XI. Sample Employment Policies A. Minnesota Service Cooperatives VEBA Plan (Full-Text). A-1. Overview A-2. Health Plan Fact Sheet for Active Employees A-3. Health Plan Fact Sheet for Non-Active Employees A-4. Notes to employer on IRS nondiscrimination rules for VEBA contributions Compliance Data Index
