Employer ACA Requirements With Respect To Multi-Employer Unions
Employers with even a small population of employees whose benefits are administered by a collective bargaining unit, sometimes known as the Taft-Hartley Plan or a Multi-Employer Welfare Arrangement (MEWA), are struggling to meet the coverage requirements set forth in Code 6055 and Code 6056 of the Affordable Care Act (ACA).
Background on Union Employees and ACA Reporting
The ACA coverage requirements are complicated overall, but the two codes that are causing the most disruption for employers are 6055 and 6056.
The 6055 is meant to help the Internal Revenue Service (IRS) regulate adherence to the Individual Mandate. In other words, this code provides taxpayers with the information needed to file their taxes appropriately and pay a fine for non-compliance with the Individual Mandate. It also provides the IRS information with which they can begin validating reporting from US citizens or determine the need to assess fines.
The 6056 is meant to help the IRS regulate an employer’s observance of the Large Employer Mandate. This information provides the IRS with the ability to determine whether an employer has complied with offering qualifying coverage to at least 95% of their full time population, as measured and determined by the ACA regulations.
Self-insured versus Fully-insured
Employers who are self-insured, meaning they are directly responsible for paying the claim dollars for their sponsored plans, are technically the insurer and thus bear the responsibility of both the 6055 and 6056 codes. While insurance companies provide the network of doctors and administrative services, ACA reporting is not their responsibility. Ultimately, the responsibility falls to the employer.
Meanwhile, employers who are fully-insured rely on the insurance company to pay the claim dollars for their offered plans. These employers receive negotiated rates on what they are required to pay into the plan. Since insurers usually manage enrollment data, the 6055 part of ACA reporting – or individual mandate side of it – is their responsibility. However, the employer is still responsible for the 6056 (large employer mandate) reporting.
Union Employees Covered by Employer Self-Insured Plan
While negotiations with unions can set the type of coverage and employee cost of plans, many employers still sponsor and self-insure the coverage offered to union employees. In these situations, the ACA reporting requirements will not differ widely from non-union employees.
Union Employees Covered by a Union Sponsored Plan
When the medical plan that covers a Union employee is administered by the union (or a third party to the union), ACA compliance becomes incredibly difficult. In these cases, the employer does not have access to key compliance information: data on the eligibility rules of the union; details of the benefits plan; confirmation that the plan offers Minimum Value and Minimum Essential Coverage; coverage for the union employee’s dependents; and details on enrollees by plan. Until this point, union sponsored plans were not entirely required to provide disclosures to the employer.
6056 or Large Employer Mandate Remains with Employer
No matter how awkward the situation, it does not remove the employer’s burden for complying with the 6056 side of the code. This means the burden of determining and reporting full-time employees (based on hours through measurement periods) is still required and must be reported to the employee and the IRS, just as for non-union employees. Additionally, the merits of the coverage must be reported: Is it affordable? Does it offer Minimum Value and Minimum Essential Coverage? Who does it cover?
Typically, employers track hours for their union employees and can easily calculate who is considered full time or part time based on ACA measurement periods. The real challenge is gaining insight into the plan itself. Does the union allow you to know whether the plan meets Minimum Value and Minimum Essential Coverage requirements? Will they tell you whether the plan allows spouses and dependents to enroll? Does the union follow appropriate eligibility requirements that comply with ACA?
The Law Must Force Them To Provide This, Right?
A small wrinkle causes severe difficulties for clients who have less-than-ideal relationships with their union: the Department of the Treasury, thus the IRS, has no authority to force Taft-Hartley unions to offer up this information. Instead, the IRS gives recommendations that are proving impossible for some employers:
- Gather the data from the union
- Allow and encourage the union to do reporting
- Have the union’s third party do the reporting
Even so, there is no responsibility for the union to comply and assist, or even take on the reporting themselves.
A Small Concession
In final regulations, the IRS gave employers some limited liability assistance. If the employer validates that the union offers qualifying plans to employees who meet eligibility, then that constitutes an offer of coverage.
Interim Guidance Regarding Multi-employer Arrangements
An employer is treated as offering health coverage to an employee if the employer is required by a collective bargaining agreement or related participation agreement to make contributions for that employee to a multi-employer plan that offers, to individuals who satisfy the plan’s eligibility conditions, health coverage that is affordable and provides minimum value, and that also offers health coverage to those individuals’ dependents or is eligible for the section 4980H transition relief regarding offers of coverage to dependents. For more information, see section XV.E of the preamble to the final section 4980H regulations.
Sounds reassuring, but if an employer can’t confirm anything about the union plans, how are they to comply? At Tango we’ve seen several examples – employers may send letters demanding the information, they may create data feeds to pull over the data, and some are even using third parties to call and gather data from the unions.
What About the 6055 Individual Mandate? Who Reports That?
The insurer of the plan is still responsible for 6055 compliance, which is letting individuals know which months they were enrolled in coverage and if any dependents were also enrolled. If the union plan is a fully-insured medical policy, the insurer has the responsibility to handle this. If the union plan is a self-insured medical policy, the union still holds that responsibility.
In our experience, organizations who work with unions likely have multiple unions with different situations, all of which need to be reviewed. Relationships may be simple or strained. The key is to begin the dialogue now and limit the scope to the information mandated by the IRS versus asking for more data than is required. Visit our ACA Solution page or if you’d like to learn more about how we’ve helped our clients with unions, contact us.
Categorized in: ACA