Benefit Plan Setup focuses on three areas of the ACA – Form 1095-C Box 14 and Box 16, affordability
analysis, and safe harbor calculations. This setup information is also used to monitor least-cost plans
and to identify the plan being offered as a self-insured plan.
It is important to be sure that you have set-up plan information for the entire calendar year. The first
illustration below demonstrates the setup for a calendar year health plan. The second, illustrates a
non-calendar year health plan setup that is self-insured with a Rate of Pay Safe Harbor.
Example of Non-Calendar Year Plan:
Health Care Benefit Plan: Select the Benefit ID. The drop-down list will provide a list of benefit plans
that were checked during the Benefit Code Setup. Choose the Least Cost to the Employee Plan.
The medical plan may span multiple years of coverage. For each year, a record is maintained for that
specific plan date range as defined in the Start Date and End Date. For each plan year, a record needs
to be entered.
Creating a New Plan: If manually setting up a plan without using the implementation wizard, be sure
to click on “Add New Record” and populate the following:
Plan Sponsor: The Plan Sponsor function is an override function used only in certain circumstances.
Normally, when an employee receives more than one 1095-C (works for multiple companies within an
ALE) parts II and III of the 1095-C are reported by the company for which the employee has the most
service hours. The plan sponsor override function allows you to manually set which company will
report dependent coverage on part III of the 1095-C. Please note that part II of the 1095-C reporting is
not affected by this setting. Most of the time this setting will be left as default, set to “none”.
Qualifying Offer (1A): Select Yes or No in the drop-down list.
A qualifying offer is “an offer of minimum value coverage providing minimum value offered to full-time
employee with employee contribution for self-only coverage equal to or less than 9.56% mainland single federal
poverty line and at least minimum essential coverage offered to spouse and dependents.”
Min Essential Coverage: Check if plan provides minimum essential coverage.
Minimum essential coverage (MEC) is defined by the ACA as most group health plans offered by a
large or small employer, or health coverage provided by the government. If a plan meets the requirement of
being offered as group health coverage within a state, that plan usually offers minimum essential coverage.
Min Value: Check if plan provides Minimum Value.
Minimum Value is an ACA requirement that ensures health insurance policies and plans provide
coverage at or above a threshold level. Minimum Value is met when a plan pays on average at least 60% of
the actuarial value of the total allowed cost of benefits under the plan. Keep in mind that a plan may offer
minimum essential coverage but not provide minimum value.
Employee: Check if an employee is covered under this plan.
Spouse: Check if a spouse is covered under this plan.
Conditional: IRS rules for 2017 allow for new codes 1J and 1K for offer of coverage. These codes
reflect the conditional nature of some offers of coverage to spouses. The codes cover the following
scenario (see also IRS rules for 1095-C)
1J. Minimum essential coverage providing minimum value offered to employee and at least minimum essential
coverage conditionally offered to spouse; minimum essential coverage not offered to dependent(s).
1K. Minimum essential coverage providing minimum value offered to employee; at least minimum essential
coverage offered to dependents; and at least minimum essential coverage conditionally offered to spouse.
In ACA Plan Setup, if the conditional checkbox is marked then the Spouse checkbox must also be
marked since conditional offers are related to the spouse. The presence of an offer to dependents or
not in conjunction with a conditional offer to spouse is what drives the difference between the plans
for 1J and 1K.
Before checking the conditional checkbox confirm that the plan offered is indeed spouse conditional.
Dependents: Check if a dependent, other than a spouse, is covered under this plan.
Start Date: Input the start date of the plan year. For a non-calendar year plan, as shown in the
example above input the start date of the year before the 2017 plan begins. Then add an additional
record with the 2017 plan year dates. This is done to display the full 12 months of the current year’s
End Date: Input the end date of the plan year. For a non-calendar year plan, as shown in the example
above, input the end date of the year before the 2017 plan begins. Then add an additional record with
the 2017 year dates. This is done to display the full 12 months of the current year’s plan.
Safe Harbor: Drop-down list. Select applicable safe harbor or none if no safe harbor is used for that
plan year. You may also select “None” if no safe harbor is being used. Here are the safe harbor options:
W-2 Income (2F): Select if employer will be using Box 1, W-2 wages for determining affordability. When using this
method, the W-2 Form for the current year is used. That is, the total W-2 compensation for 2017 (from a particular
employer) determines the maximum monthly amount that employer can charge the employee for self-only coverage.
Choosing this Safe Harbor will require that you upload non-hour $ amounts for bonuses, tips, and commissions as well
as deductions for medical.
Rate of Pay (2H): Select if employer will use Rate of Pay safe harbor for this plan. Under this safe harbor, employer
provided coverage is treated as affordable for a calendar month if the employee’s required contribution for the
calendar month for the lowest-cost self-only coverage that provides minimum value does not exceed 9.56% of an
amount equal to 130 hours multiplied by the lower of the employee’s hourly rate of pay as of the first day of the
coverage period (generally the first day of the plan year) or the employee’s lowest hourly rate of pay during the
calendar month. Under this rule, an employer can elect to use the lowest paid employee wage as the base for the
calculation or can use the minimum wage rate in effect at the first day of the plan year. For example, $11.00 per hr. X
.0956 x130=$136.71/mo. as the self-only cost to the employee.
Federal Poverty Line (2G): Select if the employer will use the federal poverty line to determine affordability. Under
this safe harbor, employer-provided coverage is treated as affordable if the employee’s required contribution for the
calendar month for the lowest-cost self- only coverage that provides minimum value does not exceed 9.56% of a
monthly amount determined as the federal poverty line for a single individual for the applicable calendar year, divided
by 12. This safe harbor is intended to provide employers a predetermined maximum amount of employee contribution
that in all cases will result in the coverage being deemed affordable.
Multi-Employer IR (2E): The Multi-Employer Interim Guidance applies to an applicable large employer member that is
required by a collective bargaining agreement or an appropriate related participation agreement to make
contributions, with respect to some or all of its employees. Union contracts often call for employers to contribute to
member health coverage.
The ACA does not allow a company to change a safe harbor option within a plan year. However, a
company can change options when a new plan year starts. A company can also use a different safe harbor for
different plans. By maintaining this information on a historical plan, you will be able to see how the plan may
have changed over the years.
Validate Safe Harbor: This is used to ensure the employee qualifies for the W-2 safe harbor for all 12
months of the reporting year. The system will ensure that the insurance is affordable to the employee
for each month of the year. If the affordability test fails for any month of the year, Line 16 will be left
blank for all months. It is important to understand that reporting in this manner will make you subject
to an Employer Shared Responsibility Payment for that employee should the employee decline
coverage. This validation process requires that all taxable wages & employer-provided benefits and all
tax-sheltered deductions are uploaded to the system.
Self-Insured: Check this box if this plan is a self-insured plan. By selecting this option you will be
required to keep information on all Dependents who are covered under the plan. The information for
all individuals will include, at a minimum, first name, last name, relationship to employee, individual’s
SSN and birthdate.
Self Only Cost: Enter the cost for self-only employee coverage for the plan year.
Waiting Type: This is where you should select your company’s waiting period for medical benefits.
Here are the options:
Use Company: The system will automatically default to this option. This option should be used if
you would like to use the waiting period information that was entered on the Company set-up
Days: Select this option if employees are eligible after a certain number of days
Months: Select this option if employees are eligible after a certain number of months
Start of Month: Select this option if employees are eligible at the beginning of the month
Waiting Days/Months: Enter the number of days or months that employees are you required to
wait until they are enrolled in benefits
If all of your employees are eligible for the same lowest-cost plan option and required to
complete the same waiting period; you will only need to set-up one plan. However, you have
multiple waiting periods for different groups of employees; you will need to set-up a plan for each
If you are unfamiliar with these plan concepts, consult your insurance broker for further guidance. They
should be able to provide you the necessary guidance for filling out the selection options here.
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