Seven Questions Employees Will Ask About the ACA 1095s

You did it! Your 1095 forms are ready and going out to employees. Now what?

You guessed it: Employee confusion. You’re going to get some questions. If you’re the one in charge of providing the answers, remember a great offense is the best defense. You’ll want to answer the most common questions before they’re even asked.

We’ve put together a list of some basic things employees will want to know, along with sample answers. Tailor these Q&As as needed for your organization. and then send them out to employees using every channel you can (mail, e-mail, employee meetings, company website, social media, posters). Tell employees how to get more detailed information if they need it.

Employee questions about the 1095s:

1.    What is this form I’m receiving?
A 1095 form is a little bit like a W-2 form. Your employer (and/or insurer) sends one copy to the Internal Revenue Service (IRS) and one copy to you. A W-2 form reports your annual earnings. A 1095 form reports your health care coverage throughout the year.

2.    Who is sending it to me, when, and how?
Your employer and/or health insurance company should send one to you either by mail or in person. They may send the form to you electronically if you gave them permission to do so. You should receive it by March 31, 2016. (Starting in 2017, you should receive it each year by January 31, just like your W-2.)

3.    Why are you sending it to me?
The 1095 forms will show that you and your family members either did or did not have health coverage with our organization during each month of the past year. Because of the Affordable Care Act, every person must obtain health insurance or pay a penalty to the IRS.

4.    What am I supposed to do with this form?
Keep it for your tax records. You don’t actually need this form in order to file your taxes, but when you do file, you’ll have to tell the IRS whether or not you had health insurance for each month of 2015. The Form 1095-B or 1095-C shows if you had health insurance through your employer. Since you don’t actually need this form to file your taxes, you don’t have to wait to receive it if you already know what months you did or didn’t have health insurance in 2015. When you do get the form, keep it with your other 2015 tax information in case you should need it in the future to help prove you had health insurance.

5.    What if I get more than one 1095 form?
Someone who had health insurance through more than one employer during the year may receive a 1095-B or 1095-C from each employer. Some employees may receive a Form 1095-A and/or 1095-B reporting specific health coverage details. Just keep these—you do not need to send them in with your 2015 taxes.

6.    What if I did not get a Form 1095-B or a 1095-C?
If you believe you should have received one but did not, contact the Benefits Department by phone or e-mail at this number or address.

7.    I have more questions—who do I contact?
Please contact _____ at ____. You can also go to our (company) website and find more detailed questions and answers. An IRS website called Questions and Answers about Health Care Information Forms for Individuals (Forms 1095-A, 1095-B, and 1095-C) covers most of what you need to know.

PTO Use May Be Required During Inclement Weather

It doesn’t usually sit well with employees, but they can be required to use their accrued paid time off (PTO) during inclement weather events, wage and hour attorneys say.

“Unless there is a state law restriction or a written policy to the contrary, employers may require employees to use their PTO to cover absences,” said Paul DeCamp, an attorney with Jackson Lewis in Reston, Va., and a former administrator of the Department of Labor’s Wage and Hour Division.

Relevant Policies

It’s important for an employer to have an inclement weather policy spelling out the rules that apply to exempt and nonexempt employees when the employer is open during inclement weather vs. when it is closed.

The rules for nonexempt employees are straightforward—they are paid only for the time worked. If the employer closes for some of a workweek due to inclement weather, it must pay an exempt worker their usual salary if the employee performs any work during the workweek, even if remotely.

A PTO policy might specifically reference the employer’s ability to require the use of PTO by employees to cover weather-related absences. If an employer closes the office and requires the use of PTO to cover the day, the impact on morale is likely to be negative—more so than if the office is open but the employer allows employees who can’t make it in to use a PTO day.  If the employer decides in advance to shut down and it turns out that the expected inclement weather does not materialize, employees who are forced to use PTO on a day they could have made it in will almost certainly react negatively.

It is important that employees understand the expectations about working away from work ahead of time, along with employees being required to accurately report all time worked. Employers should also have policies about how employees can challenge the accuracy of paychecks and the consequences for not making timely challenges.

Courts have held that employees who claim to have worked off-the-clock but who have not notified the employer about that worked time are not entitled to pay for that time.

If an employer stays open despite inclement weather and an exempt employee chooses not to work, that is a personal decision and the day may be docked without jeopardizing the exempt status.

Safety Considerations

A written policy is an opportunity for an employer to underscore the importance of employees’ safety when determining closures or whether employees should attempt to report to work in inclement conditions.

Employers sometimes ask whether they may discipline employees for choosing to stay home during inclement weather. The employer does not want to allow employees to hinder operations or to force a closure, but the last thing an employer wants to see is a situation where a supervisor orders an employee to come to work in a snowstorm and the employee gets into a car accident. Employers should think very carefully before disciplining in this situation and to err on the side of employee and public safety.

PTO Deficits

One of the most common questions employers have during inclement weather is if they can force employees with insufficient PTO balances to go into a negative balance situation, or, in other words, whether they can advance the employee extra PTO and then recoup that advance over time.

Generally, an employer can do that, assuming the practice complies with state law and the employer’s written policies.

Another frequent issue that arises is how to treat PTO deficits upon an employee’s separation from employment. State law will dictate whether and when employers may deduct the negative PTO balance from the final pay of nonexempt employees.

For salaried exempt employees, whether the employer can deduct that balance from final pay depends on whether the employer could have deducted it from the employee’s pay at the time of the absence—the missed time that gave rise to the PTO deficit.

Reminder: OSHA 300A Logs Must Be Posted by Feb 1st

All OSHA 300A logs must be posted by February 1st in a visible location for employees to read. The logs need to remain posted through April 30th.

Please note the 300 logs must be completed for your records only as well. Be sure to not post the 300 log as it contains employee details. The 300A log is a summary of all workplace injuries and does not contain employee specific details. The 300A log is the only log that should be posted for employee viewing.

Please contact our office if you need a copy of either the OSHA 300 or 300A logs.

What Employers Legally Can and Can’t Ask During a Job Interview and Salary Negotiation

“Where are you from?” It’s an easy conversation starter and suitable in most settings except a job interview.

 
So too, are other common social inquiries like, “Are you married,” “When did you graduate,” or “Have I seen you at my church?” Asking a candidate the questions may signal a red flag to the prospective employee as well as signal a lack of understanding of workplace anti-discrimination laws, or worse, no concept of workplace diversity.

  
The above examples can lead to information about a candidate’s national origin, marital status, sexual orientation, age, or religion. It is illegal to ask any questions that may illicit information about any status protected by federal, state, or local laws. The interviewer’s questions should stay focused on top-level priorities related to the job’s essential duties, such as the candidate’s work history as it pertains to the position, or availability for certain work shifts.

Other inappropriate interview questions include:

• Have you ever been arrested?
• Is English your native language?
• Are you a US citizen?
• Are you planning on having children?
• Have you ever been injured on the job?
• How many sick days did you take last year?
• Why were you discharged from the military?
• Do you like to drink socially?
• When is the last time you used illegal drugs? (But not: Do you currently use illegal drugs?)

Not always so easy

A trickier area is when candidates might need a religious or disability-related accommodation. An employer has to walk a fine line of not asking improper questions about these two protected categories, while not ignoring the obvious. The Supreme Court's 2015 decision in the Abercrombie & Fitch case, involving the interplay of its dress code policy and a job candidate who wore a hijab to an interview, shows how difficult this balancing act is. 
It’s up to the candidate to speak up and request a reasonable accommodation to assist in the interview and application process (though to be clear, accommodation requests related to the job itself belong in the stage between an offer being made and the start date).

Post-offer considerations

Receiving a job offer may lead to another phase—salary negotiation.  Here, an employer is less restricted than you may think. You can ask the candidate about their salary history and salary requirements (and confirm this information by asking for W2s, if you choose), although a candidate is not legally required to provide it.

As for benefits like paid time off, a candidate should not assume they are legally entitled to them. For example, no state has passed mandatory paid vacation, so that also remains a point of negotiation. However, several states and cities have passed paid sick leave laws, and some even now include pregnancy or childbirth-related disabilities within their coverage (watch for that to be specified and explained in jurisdictions like California, Connecticut, Oregon, or Seattle and San Francisco). Make sure to put any negotiations in writing before offering the position to the candidate to avoid any future miscommunication.

Late Breaking Benefits News for 2016

Congress and the IRS were busy changing laws governing employee benefit plans and issuing new guidance under the ACA in late 2015. Some of the results of that year-end governmental activity include the following:

Protecting Americans from Tax Hikes Act of 2015 (“PATH Act”)

The PATH Act, enacted by Congress and signed into law on December 18, 2015, made some the following changes to federal statutory laws governing employee benefit plans:

• The ACA’s 40% excise tax (aka “Cadillac Tax”) on excess benefits under applicable employer sponsored coverage — so called “Cadillac Plans,” due to the perceived richness of such coverage — is  delayed from 2018 to 2020.

• Formerly a nondeductible excise tax, any Cadillac Tax  paid by employers will now be deductible as a business expense.

• Beginning with plan years after November 2, 2015,  employers with 200+ employees will not be required to automatically enroll new or current     employees in group health plan coverage, as originally required under the ACA.

• After December 31, 2015, individual taxpayers who purchase private health insurance via the Healthcare Exchange will not be eligible to claim a Health Care Tax Credit on their tax returns.

IRS Notice 2015-87

On December 16, 2015, the IRS issued Notice 2015-87, providing guidance on employee accident and health plans and employer shared-responsibility obligations under the ACA. Guidance provided under Notice 2015-87 applies to plan years that begin after the Notice’s publication date (December 16^th), but employers may rely upon the guidance provided by the Notice for periods prior to that date.

Notice 2015-87 covers a wide-range of topics from employer reporting obligations under the ACA to the application of Health Savings Account rules to rules for identifying individuals who are eligible for benefits under plans administered by the Department of Veterans Affairs. Following are some of the highlights from Notice 2015-87, with a focus on provisions that are most likely to impact non-governmental employers.

• Under the ACA, an HRA may only reimburse medical expenses of those individuals (employee, spouse, and/or dependents) who are also covered by the employer’s group health plan providing minimum      essential coverage (“MEC”) that is integrated with the HRA.

• Employer opt-out payments (i.e., wages paid to an employee solely for waiving employer-provided coverage) may, in the view of Treasury and the IRS, effectively raise the contribution cost for employees who desire to participate in a MEC plan. Treasury and the IRS intend to issue      regulations on these arrangements and the impact of the opt-out payment on the employee’s cost of coverage. Employers are put on notice that if an opt-out payment plan is adopted after December 16, 2015, the amount of the offered opt-out payment will likely be included in the employee’s cost of coverage for purposes of determining ACA affordability.

• Treasury and the IRS will begin to adjust the affordability safe harbors to conform with the annual adjustments for inflation applicable to the “9.5% of household income” analysis under the ACA. For plan years beginning in 2015, employers may rely upon 9.56% for one or more of the affordability safe harbors identified in regulations under the ACA, and 9.66% for plan years beginning in 2016. For example, in a plan year beginning in 2016, an employer’s MEC plan will meet affordability standards if the employee’s contribution for lowest cost, self-only coverage does not exceed 9.66% of the employee’s W-2 wages (Box      1).
• To determine which employees are “full-time” under the ACA, “hours of service” are intended to include those hours an employee works and is entitled to be paid, and those hours for which the employee is entitled to be paid but has not worked, such as sick leave, paid vacation, or periods of legally protected leaves of absence, such as FMLA  or USERRA leave.

• The Treasury and IRS remind applicable large employers that they will provide relief from penalties for failing to properly complete and submit Forms 1094-C and 1095-C if the employers are able to show that they made good faith efforts to comply with their reporting obligations.

The IRS Gives A Holiday Gift to Applicable Large Employers – 2015 ACA Reporting is Delayed

In the recently released Notice 2016-4, the IRS has extended the due dates for certain 2015 Affordable Care Act information reporting requirements.

Specifically, the Notice extends:

• the due date for furnishing to individuals the 2015 Form 1095-B and Form 1095-C from February 1, 2016, to March 31, 2016, and

• the due date for filing with the IRS the 2015 Form 1094-B, Form 1094-C and Form 1095-C from February 29, 2016, to May 31, 2016, if not filing electronically, and from March 31, 2016, to June 30, 2016 if filing electronically.

In the Notice, the IRS also grants special relief to certain employees and related individuals who receive their Form 1095-C or Form 1095-B, as applicable, after they have filed their returns:

• For 2015 only, individuals who rely upon other information received from employers about their offers of coverage for purposes of determining eligibility for the premium tax credit when filing their income tax returns will NOT be required to amend their returns once they receive their Forms 1095-C or any corrected Forms 1095-C.

• For 2015 only, individuals who rely upon other information received from their coverage providers about their coverage for purposes of filing their returns will NOT be required to amend their returns once they receive the Form 1095-B or Form 1095-C or any corrections.

Thus, generally, employers should not be concerned that furnishing these Forms on a delayed basis in accordance with the Notice will force employees to file amended 2015 income tax returns.

Finally, the extensions do not require the submission of any request or other documentation to the IRS and have no effect on information reporting provisions for other years.

We’ve Got Our Eyes On You: Monitoring Devices In Vehicles

While employers with a fixed worksite can observe and interact directly with their employees to promote safety and reduce risk, employers with workers who operate motor vehicles as part of their job have fewer options.

Highway accidents remain the leading cause of work-related deaths, and also carry tremendous personal, social, and economic costs. The good news is that new technologies in on-board safety monitoring systems are being developed and implemented in both commercial fleets and private vehicles to offer the potential to further improve safety. These technologies allow you to collect safety-specific information related to your drivers’ on-the-road behavior and performance.

Why Monitor?
There are numerous reasons for employers, particularly fleet operators, to consider installing driver performance monitoring devices. Such devices could result in the promotion and encouragement of safer driving practices, which benefit both you and your drivers. Additionally, data from these devices could be used as teaching tools to reduce the likelihood of future accidents.

Similarly, in case of an accident, data from a monitoring device could be used to establish how the accident occurred and confirm that the driver was not at fault. Finally, these devices could decrease unauthorized vehicle usage and unscheduled stops, vehicle theft, and unsafe driving habits.

Make Sure To Stay Legal
These devices and accessories are governed by federal regulations. The Federal Motor Carrier Safety Administration permits them if they do not decrease the safety of the motor vehicles on which they are used, and if they are equipped in accordance with specific requirements set out in the regulations. For example, the law states that devices must be mounted six inches below the top of the windshield, outside of the area swept by the windshield wiper blades, and outside the driver’s sight lines to the road, highway signs, and signals.

A majority of states have also enacted laws that govern the use of such devices and accessories. Generally, most states do not permit any device (for surveillance or otherwise) if they obstruct or reduce the driver’s view, unless a specific exemption applies. This is important for employers to note because, unlike the older cameras attached at the top of the windshield, the driver performance monitoring devices placed at the bottom of the windshield require an exemption.

Other states include additional requirements. In California, for example, a video recording device is only permitted in a vehicle if it can monitor driver performance to improve safety, and has the capability of recording “audio, video and G-Force levels continuously in a digital loop.” The device must automatically save the video when triggered by an unusual motion or crash, and cannot store more than 30 seconds of video, audio, and other data before or after the “triggering event.” The device must be outside of the airbag deployment zone and in a seven-inch square in the lower right corner of the windshield, or in a five-inch square in the lower left corner of the windshield.

Because regulations and exemptions vary from state to state, you should consult with an attorney regarding state-specific regulations and exemptions prior to installing them.

Other Considerations
You should be mindful that the federal government and most state governments have privacy and wiretapping laws that restrict or prevent recording an individual’s voice and/or image without prior consent. You should consult with counsel before proceeding, and consider establishing a written policy to notify your employees of the existence of cameras so as to not violate privacy rights.

You may also have an affirmative duty to preserve all recordings and reports for a certain length of time after a “triggering event.” Because a video recording captured by the camera, and any report associated, could be considered discoverable information in litigation and may have to be produced to the complaining party, failure to preserve may result in litigation sanctions.

You should also establish a retention policy and follow it. Remember that a complaining party potentially could request all preserved recordings and use the evidence to argue that you have a history of employing bad drivers. You could also be holding on to evidence that shows a specific driver has a history of accidents or unsafe driving practices, or that you knew or should have known that the driver exhibited risky behavior.

Do You Have Covered Employees Collecting an ACA Subsidy?

Many employers offer affordable health coverage that meets or exceeds the minimum value requirements of the Affordable Care Act (ACA). However, if one or more of their full-time employees claims the coverage offered was not affordable, minimum value health coverage, the employee could (erroneously) get subsidized coverage on the public health exchange. This would cause problems for applicable large employers (ALEs), who potentially face employer shared responsibility penalties, and for employees, which may have to repay erroneous subsidies.

If an employee does receive subsidized coverage on the public exchange, most employers would want to know about it as soon as possible and appeal the subsidy decision if they believed they were offering affordable, minimum value coverage. There are two ways employers might be notified: (1) by the federally facilitated or state-based exchange or (2) by the Internal Revenue Service (IRS).

Employer notices from exchanges

The notices from the exchanges are intended to be an early-warning system to employers. Ideally, the exchange would notify employers when an employee receives an advance premium tax credit (APTC) subsidizing coverage. The notice would occur shortly after the employee started receiving subsidized coverage, and employers would have a chance to rectify the situation before the tax year ends.

In a set of Frequently Asked Questions issued September 18, 2015, the Center for Consumer Information and Insurance Oversight (CCIIO) stated the federal exchanges will not notify employers about 2015 APTCs and will instead begin notifying some employers in 2016 about employees’ 2016 APTCs. The federal exchange employer notification program will not be fully implemented until sometime after 2016.

In 2016, the federal exchanges will only send APTC notices to some employers and will use the employer address given to the exchange by the employee at the time of application for insurance on the exchange. CCIIO realizes some employer notices will probably not reach their intended recipients. Going forward, the public exchanges will consider alternative ways of contacting employers.

Employers that do receive the notice have 90 days after receipt to send an appeal to the health insurance exchange.

Employers that do not receive early notice from the exchanges will not be able to address potential errors until after the tax year is over, when the IRS gets involved.

Employer notices from IRS

The IRS, which is responsible for assessing and collecting shared responsibility payments from employers, will start notifying employers in 2016 if they are potentially subject to shared responsibility penalties for 2015. Likewise, the IRS will notify employers in 2017 of potential penalties for 2016, after their employees’ individual tax returns have been processed. Employers will have an opportunity to respond to the IRS before the IRS actually assesses any ACA shared responsibility penalties.

Regarding assessment and collection of the employer shared responsibility payment, the IRS states on its website:

An employer will not be contacted by the IRS regarding an employer shared responsibility payment until after their employees’ individual income tax returns are due for that year—which would show any claims for the premium tax credit.

If, after the employer has had an opportunity to respond to the initial IRS contact, the IRS determines that an employer is liable for a payment, the IRS will send a notice and demand for payment to the employer. That notice will instruct the employer how to make the payment.

Bottom line

For 2015, and quite possibly for 2016 and future years, the soonest an employer will hear it has an employee who received a subsidy on the federal exchange will be when the IRS notifies the employer that the employer is potentially liable for a shared responsibility payment for the prior year. The employer will have an opportunity to respond to the IRS before any assessment or notice and demand for payment is made. The “early-warning system” of public exchanges notifying employers of employees’ APTCs in the year in which they receive them is not yet fully operational.

IRS Adjusted ACA Fee Amounts Released for the 2015-2016 Plan Year

The Patient-Centered Outcomes Research Institute (PCORI) fee was established under the Affordable Care Act (ACA) to advance comparative clinical effectiveness research. The PCORI fee is assessed on issuers of health insurance policies and sponsors of self-insured health plans. The fees are calculated using the average number of lives covered under the policy or plan, and the applicable dollar amount for that policy or plan year. The past PCORI fees were—

• $2 per life, for policy and plan years ending on or after October 1, 2013, and before October 1, 2014
• $2.08 per life, for policy and plan years ending on or after October 1, 2014, and before October 1, 2015

The new adjusted PCORI fee is—

• $2.17 per life, for policy and plan years ending on or after October 1, 2015, and before October 1, 2016

Employers and insurers will need to file Internal Revenue Service (IRS) Form 720  and pay the updated PCORI fee by July 31, 2016

Transitional Reinsurance Fee

Like the PCORI fee, the transitional reinsurance fee was established under the ACA. It was designed to reinsure the marketplace exchanges. Contributing entities are required to make contributions towards these reinsurance payments. A “contributing entity” is defined as an insurer or third-party administrator on behalf of a self-insured group health plan. The past transitional reinsurance fees were

• $63 per covered life for 2014
• $44 per covered life for 2015

The new adjusted transition reinsurance fee is—

• $27 per covered life for 2016

President Signs PACE ACT Changing Small Group Market Definition

On October 7, 2015 President Obama signed the Protecting Affordable Coverage for Employees (PACE) Act that amends the Affordable Care Act (ACA) definition of a “small employer” for the purpose of purchasing health insurance coverage.

Prior to the signing of this amendment and beginning January 1, 2016, every state was required to expand the definition of the small group market to include employers with up to 100 employees. Prior to January 1, 2016 states had the flexibility to maintain the definition of a small employer to those with up to 50 employees and most states continued to do so.

The PACE Act repeals the mandatory expansion of the small group market to employers with up to 100 employees and reverts to the prior definition of up to 50 employees, although the states maintain flexibility to define the small market as up to 100 employees if they wish.

Under the ACA, health insurance offered in the small group market must meet strict underwriting requirements and cover all essential health benefits- conditions that do not apply in the large group market. Concerns about steep price increases and loss of benefit design flexibility from many businesses with 51 – 100 employees who would be re-classified as a “small employer” prompted this bi-partisan amendment to the law.

What Happens Now?

Numerous questions surround the passage of this amendment to the ACA given the fact that the change has happened so late in 2015. Insurance carriers have already filed their small group 2016 plan rates assuming the expansion of this market space and many employers impacted by their re-classification have already secured coverage or are finalizing plans for 2016 coverage. Here are some questions that hopefully will be addressed in the near future:

• When and how will each state determine the size of the small group market (50 or 100 employees)? Will this require state legislation or some other form of action to address this issue? Currently under Florida legislation, a small group is defined as 1-50 but it has not been determined yet if Florida will continue to use this definition or if they will transition to a 1-100 definition.
• Will insurance carriers be able to modify small group rates as this market space may no longer expand?
• Will employers with 51 -100 employees be able to shop for other coverage in the large group market? Will they be able to do this for January 1, 2016 or will it be possible to modify coverage at some time during 2016?
• Will the state allow some form of transition?
• Will each state have the flexibility to determine the methodology for calculating employer size?
• Will the state be able to revert back to the prior method such as considering only “eligible” employees or will they need to use an ACA counting method to determine employer size?

Employers who are impacted by this ACA amendment should monitor the situation and determine what may be the best course of action for your employees.