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This newsletter provides an overview of our roles under
the Affordable Care Act's employer shared responsibility (ESR)
provisions. Not complying with these provisions may result in an IRS
penalty. For each item listed below there is a link to detailed
information. The information below includes both new and old
information.
1. Offer of coverage. Agencies must determine if an employee is eligible for an offer of coverage, what offer, and when. All agencies must:
- Offer
health coverage to full-time state employees in accordance with both
the applicable labor agreement or compensation plan and ESR.
- Offer health coverage to part-time employees according to the applicable labor agreement or compensation plan.
- Keep
the ACA Employee Eligibility SEMA4 page up-to-date for each employee in
your agency. This step is critical because this page is one of the main
generators of the IRS Form 1095-C and it is how the IRS determines an
employer will be assessed a penalty.
- See updated Instructions for the ACA Employee Eligibility
SEMA4 page on the SEGIP website. A section called “Background
Information” has been added. It provides summary information and links
to information on determining and changing employee insurance
eligibility.
2. Appendix A.
This is a worksheet that individuals use to apply for coverage and a
tax credit or cost sharing reduction through a Marketplace (Exchange).
This is new information.
- Employees may ask their agency HR department to help complete this form or they may choose to complete it themselves.
- Whatever employer address entered on this page is where the Marketplace will send its Employer Notice.
- These
instructions provide all the information necessary to complete Appendix
A. This is a new document that has recently been posted to the SEGIP website.
3. ACA Reporting. This is about IRS Form 1095-C and the related submission to the IRS.
- Your role is to keep accurate records in SEMA4, especially the ACA Employee Eligibility page.
- MMB will provide the Form 1095-C to all eligible employees each January.
- MMB
will also submit the 1095-Cs to the IRS along with information that
explains the state’s compliance with offering health coverage to 95
percent of all full-time employees. This information is used by the IRS
to assess penalties under ESR.
4. Employer Notice.
An Employer Notice is issued by MNsure, or another public Marketplace
(Exchange), to inform an employer that one of its employees has
qualified (or might qualify) for a tax credit (or subsidy) to purchase
health coverage through a Marketplace.
- This
is not notice of a penalty. Rather, it tells the employer that an
employee may be eligible for a tax credit and that the employer may
receive a penalty if that employee was not, but should have been, made
an offer of health coverage.
- Marketplaces use the information provided by the individual to make its determinations.
5. IRS appeal notice.
This is a notice that an employer has been assessed a penalty. The IRS
has not yet issued these notices. We do not know what they will be named
or look like. We believe they will all be directed to MMB because it
submits to the IRS Form 1095-C and 1094-C for all agencies. The IRS will
not assess penalties until 2017, after employers have submitted IRS
Forms 1095-Cs for 2016 and individuals have filed their 2016 tax
returns.
Here is a reminder of the ESR penalties:
1. Employer fails to offer health coverage to 95 percent of its full-time employees
(and their dependent children) and at least one full-time employee
receives a tax credit or cost-sharing subsidy in a federal or state
Marketplace then the employer will pay a penalty for every full-time
employee (even those who were offered coverage. The penalty is:
- $2,160 times the number of full-time employees divided by 12 (months).
250 full-time employees, at least one employee purchased coverage through a Marketplace and received a tax credit.
x $2,160 (2016 rate)
$540,000 penalty per year (or $45,000 per month)
2. Employer provides coverage that is not affordable or does not provide minimum value coverage
and at least one full-time employee receives a tax credit or
cost-sharing subsidy then the employee will pay a penalty for every
full-time employee who receives a tax credit or cost-sharing subsidy.
- Coverage is unaffordable if the employee costs are more than 9.66 percent of their household income for the employer coverage.
- The
State’s coverage is of minimum value and the full employer contribution
is affordable for all employees. Agencies will only be subject to this
penalty if they fail to offer coverage to a full-time employee or if a
full-time employee is only offered a partial employer contribution and
one employee receives a tax credit or cost-sharing subsidy and purchases
coverage through a federal or state Marketplace.
- The
penalty is $3,240 for each full-time employee receiving a tax credit
(2016 rate). The penalty is assessed on a monthly basis.
3. An employer will NOT receive a penalty if an employee receives a tax credit or subsidy and is a:
- Full-time and was offered the full employer contribution but waived coverage.
- Full-time and was offered the full employer contribution and enrolled in the coverage.
- Part-time
employee (on average provides less than 30 hours per week) receives a
tax credit and purchases coverage through a Marketplace.
- Seasonal
basis employee (is anticipated to work 6 months or less) receives a tax
credit and purchases coverage through a Marketplace.
- Employee covered by Medicare is ineligible to receive a tax credit, and therefore generally will not lead to a penalty.
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