ACA Reporting FAQs

ACA regulations do not specifically address the HCSP; however, under the ACA, a retiree-HRA account is considered minimum essential coverage (MEC).

Due to the similarities between a retiree-HRA and the HCSP, we assume that the IRS may consider the HCSP to be MEC for terminated & retired employees because they are able to access their funds to reimburse medical costs and health insurance premiums. It is not MEC for active employees.

The HCSP is not health coverage; it is a reimbursement arrangement considered "employer sponsored" for the purposes of minimal essential coverage. As the plan sponsor, the employer is responsible for completing and filing Form 1094/1095. MSRS is the plan administrator, not the plan sponsor.

At the employer's request, MSRS will provide the data they need to fulfill their reporting requirements. Keep in mind that Data Privacy laws prevent us from sharing some employee information.

The ACA requires that the plan sponsor report minimum essential coverage (MEC). MSRS believes that the IRS may consider HCSP MEC for terminated/retired employees because they have access to the account. Therefore, in an abundance of caution, MSRS is encouraging employers to report the HCSP for terminated/retired employees. It is ultimately up to the employer to determine if they will complete the 1094/1095 reporting requirements.

We recommend that the employer consult with a tax or legal professional to determine if they believe, as we do, that the HCSP is MEC for retired or terminated employees, and therefore, reportable.

The former employee must keep the 1095 with their tax documents. They do not submit the form as part of their personal income tax filing; however, a tax preparer may request a copy.

IRS Form 1095 reports HCSP coverage to the employee. The 1095 does NOT report the account balance, only indicates which months during the previous tax year there was an HCSP account balance of $5 or more (this is the default threshold amount determined by MSRS; employers can request a $500 or $1,000 threshold).

Form 1094 -Transmittal of Health Coverage Information Returns - reports HCSP coverage to the IRS. In addition, the employer must send the IRS a copy of the employee Form 1095.

HCSP is not health coverage; it is a reimbursement arrangement and considered "employer sponsored" for the purposes of minimal essential coverage. Therefore, we believe you should enter "B" (employer-sponsored coverage) on Line 8.

Employers who enter "B" on Line 8 are not required to complete both Part II and Part III of the form. To learn more, see the TIP on page 6 of the Instructions for Forms 1094-B and 1095-B.

Employers are encouraged to work with a tax and legal professional to determine how to complete the form. MSRS cannot provide advise on how to complete or file the 1095.

MSRS is unable to provide advice or instructions. Please contact your tax professional or see IRS publication Instructions for Forms 1094-B and 1095-B.

Starting the first week of December, email request for the HCSP data to payroll.support@msrs.us.

• Reports are automatically run using a $5 account balance minimum unless you can specify in your email a $500 or $1,000 threshold instead.

• If you do not have PSC login credentials, please provide the name of the employer contact who has current login credentials. 

Timeline to receive information:

• Once we receive your request, it may take up to two weeks to run the reports and load them on PSC or secure website for you to access. Please plan accordingly so you can fulfill your IRS reporting requirements.

• Reports will be available in late December. This timeline allows us to collect all the necessary data you need to prepare 1095 forms. Please do not ask for a report to be sent to you any earlier.

At earliest, reports will be available in late December. This timeline allows us to collect all the necessary data you need to prepare 1095 forms. Please do not ask that a report be sent to you any earlier.

Once we receive your request, it may take up to two weeks to run the reports and load them on PSC for you to access. Please plan accordingly so you can fulfill your IRS reporting requirements. Also, please allow sufficient time before the filing deadline to request a report from MSRS.

MSRS will load an Excel spreadsheet on PSC (our recordkeeper's payroll system) and notify you when it's available. The earliest reports will be available in 2020 is the later part of December. This timeline allows us to collect all the necessary data you need to prepare 1095 forms. Please do not ask for a report to be sent to you any earlier.

Only the employer's payroll or HR contact person who has PSC login credentials will be able to view/download the report.

MSRS will run a report to identify your employees who had an HCSP balance in any month during the previous calendar year. The criteria to run the report includes:

• All employees, with or without a termination date.

• HCSP account balance is $5 or more on the first business day of each month (unless employer specifies a $500 or $1,000 threshold amount).

• Under age 65 (employers do not have to report for Medicare-eligible employees).

Although we believe employers should file a 1095 for former employees only, the report we send you includes information about both active & terminated employees. All names will be provided because we don't always have the correct employment status on file. This is because:

• Employer failed to provide MSRS with the termination date when the employee ended employment.

• Employee returned to work and the termination date was not removed so we continue to identify them as a terminated employee.

This is your opportunity to clean up the files. If the employee’s status is wrong, please contact MSRS Payroll Support or 651-284-7729 with the correct information.

No. Minnesota Data Privacy prevents us from sharing the employee's current address. We realize this may be a hardship for some employers to locate employees who have not worked for them for years. Although you'll want to make every effort to ensure the 1095 is sent to the correct address, the ACA only requires that it is sent to the last known address.

There are several possible reasons the report may be missing the names of your former employees.

The employee:

• reached age 65 (you do not need to report an employee who is medicare-eligible). The employee will appear on the report until the month after their 65th birthday.

• no longer has a balance in their HCSP account because they requested reimbursements.

• is deceased. MSRS does not include deceased employees or the beneficiary who inherited the account balance. However, the employer can request the information if they feel they must file a 1094/1095 for former employees who have died. Also, we don't provide information about the person(s) who inherited the account unless they are/were your employee.

No. This amount was chosen by MSRS as the default threshold. An account with less than $5 is considered by us to be a "small balance account" and the funds are swept at the end of each quarter so there is a $0 balance in the account. 

Employers may request a $500 or $1,000 threshold amount. Please be sure to include the desired threshold amount when you request your report.

No. Employers should contact their tax or legal professional for assistance. Or see IRS Publication Instructions for Forms 1094-B and 1095-B.

No. If the employer provided retiree health insurance or covered former employees under COBRA for their 2020 filing, you do not also need to file a Form 1095 on behalf of those former employees. One filing per Social Security number is required.

No. Medicare exempts from reporting for employees who are age 65 or over, therefore, these employees do not need to receive the form.

We do not consider the spouse/dependents to be "covered individuals" because they cannot access the HCSP account on their own.The account is in the participant's name and SSN; only they can request reimbursements of eligible medical expenses incurred by the spouse or dependents.

According to the Instructions for Form 1094-B and 1095-B:

Generally, the return and transmittal form must be filed with the IRS on or before February 28 if filing on paper (March 31 if filing electronically) of the year following the calendar year of coverage.

This information is provided by MSRS as a convenience to our employers. Employers should consult with a tax professional or legal counsel to determine if this information is accurate. If there is any difference between the information provided by MSRS and the ACA policies, the ACA policies will prevail. The provisions of the law may be subject to change.