ACA Reporting and HRAs

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Section 6056 Update

Good news!  The IRS has changed their position on both of these issues!
 
We just received final 2015 versions of the instructions for Forms 1094-B, 1095-B, 1094-C, and 1095-C.
 
Reporting HRA Coverage
In the instructions for Forms 1094-B and 1095-B, the IRS states:
 
“If an individual is covered by more than one type of minimum essential coverage, reporting is required of only one of the types, if one of the following rules applies:…An employer with an insured major medical plan and HRA coverage for which an individual is eligible because the individual enrolls in the insured major medical plan is not required to report the coverage under the HRA for an individual covered by both arrangements.  If an individual is covered by an HRA sponsored by one employer and a non-HRA group health plan sponsored by another employer (such as spousal coverage), each employer must report the coverage the employer provides.”
http://www.irs.gov/pub/irs-prior/i109495b--2015.pdf
 
And the instructions for Forms 1094-C and 1095-C state:
 
“An ALE Member with a self-insured major medical plan and a health reimbursement arrangement (HRA) is required to report the coverage of an individual enrolled in both types of minimum essential coverage in Part III under only one of the arrangements. An ALE Member with an insured major medical plan and an HRA is not required to report in Part III HRA coverage of an individual if the individual is eligible for the HRA because the individual enrolled in the insured major medical plan. An ALE Member with an HRA must report coverage under the HRA in Part III for any individual who is not enrolled in a major medical plan of the ALE Member (for example if the individual is enrolled in a group health plan of another employer (such as spousal coverage)).”
http://www.irs.gov/pub/irs-prior/i109495c--2015.pdf
 
This means the following:

  • Employer with fewer than 50 FTEs who has a fully insured plan and HRA- they have no reporting requirement for those employees that have elected coverage under both.  If an employee has waived medical and elected the HRA (because they are enrolled in a spouse’s medical plan), the employer would still need to report the employee’s HRA coverage on Form 1095-B.
  • Employer with 50 or more FTEs who are fully insured and HRA- they have no Form 1095-C Part III reporting requirement for those employees that have elected coverage under both.  If an employee has waived medical and elected the HRA (because they are enrolled in a spouse’s medical plan), the employer would still need to report the employee’s HRA coverage on Form 1095-C, Part III. 
  • Employer with 50 or more FTEs who are self-funded and HRA- they have Form 1095-C Part III reporting requirement for any employee who elected either.  Obviously, they have a reporting requirement for any employee who elected coverage under the self-funded medical plan.  But they would need to remember to report any employee who waived the medical, but elected the HRA (because they are enrolled in a spouse’s medical plan).

 
COBRA Coverage
The Form 1094-C and 1095-C instructions state:
 
“An offer of COBRA continuation coverage that is made to a former employee upon termination of employment should not be reported as an offer of coverage on line 14. For a  terminated employee, code 1H (No offer of coverage) should be entered for any month for which the offer of COBRA continuation coverage applies.
 
An offer of COBRA continuation coverage that is made to an active employee (for instance, an offer of COBRA continuation coverage that is made due to a reduction in the  employee’s hours that resulted in the employee no longer being eligible for coverage under a plan) is reported in the same manner and using the same code as an offer of that type of coverage to any other active employee….
 
Do not enter code 2C in line 16 for any month in which a terminated employee is enrolled in COBRA continuation coverage (enter code 2A).”
 
So, there is no COBRA coverage reporting for terminated employees!  Woohoo!  After they terminate employment, we would use code 1H on Line 14 for no offer of coverage and code 2A on Line 16 for no longer employed.  Please note that there is still reporting responsibility for an active employee is on COBRA (for example- a part time employee who is no longer eligible for coverage but still employed).

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