The 7 Questions That Will Get You ACA Compliant
Posted by Donna Krizik on May 26, 2015
1. What’s your strategy for producing and filing the new IRS Form 1095-C and Form 1094-C?
- If you’re an applicable large employer (ALE), these new ACA forms are mandatory.
- Employers that do not submit an annual ACA return or provide individual statements to all full-time employees will be subject to a penalty of $100 per required return, with a maximum annual penalty of $1.5 million.
- IRS Form 1095-C must be prepared and given to affected employees by February 1, 2016. Distribution to individual employees and submission to the IRS mirrors the W-2 reporting deadlines.
- If an employer chooses to have a “pay” strategy – absorb the shared responsibility payment for not offering coverage – they still must produce the IRS forms to document that they did not offer coverage.
2. Are you ready today to monitor eligibility and meet affordability standards?
There are two areas that open up an employer to possible penalties – not offering coverage to eligible employees and, if coverage is offered, not meeting minimum value or affordability standards. Keep in mind that in the submission of the IRS Form 1095-C, failure, in any month, to offer either will be counted against you.
3. How have you determined eligibility for employees who must have access to employer health care coverage?
Which of the two ACA-defined measurement methods are you using to
Monthly measurement period
- If an employee works 130 hours in one month, they will be deemed as being full-time and be eligible for employer- sponsored health coverage – with coverage starting no later than the first day after two full months from the month the employee worked at least 130 hours.
Look-back measurement period
- Establishing a measurement period in which employee’s hours of service are averaged in order to determine if that employee had, on average, 130 hours a month.
- Employees meeting the full-time status during a measurement period will be provided access to health care coverage during the corresponding stability period regardless of their hours of service then.
How are you monitoring eligibility of newly hired employees who complete their initial measurement periods?
4. If you have over 250 full-time employees and full-time equivalents, you’re required to submit IRS Form 1094-C (the transmittal of their 1095-Cs) in electronic form. How will you do that?
There are e-filing requirements for the two new IRS forms related to ACA reporting. Filers of 250 or more information returns must file the returns electronically. The 250-or-more requirement applies separately to each type of return and separately to each type of corrected return.
5. The employer reporting requirements under the ACA break down activity on a monthly basis. In order to meet these requirements, are you prepared to:
- Report hours of service monthly?
- Report coverage options with regard to offers of coverage monthly?
- Accurately identify – on a monthly basis – who selected coverage?
Unlike other employer reporting of employee information to the IRS which provides summary information on a quarterly or annual basis (such as Forms 941 and W-2), IRS Form 1095-C requires recaps on a monthly basis. Every employer needs to accurately allocate hours of service and coverage options on a month-by-month basis in order to meet the submission requirements for ACA forms.
6. If your company has decided to not offer eligible employees coverage and you are considered an applicable large employer, are you aware that you still need to meet the reporting requirements?
Regardless of a company’s “pay or play” strategy, generation of IRS Form 1095-C is a requirement. Saying you’re going to just “pay” won’t make production of this form optional. Form 1095-C is a statement about the availability of health insurance at each applicable workplace. If coverage isn’t available, a document stating that still must be produced and filed.
7. If you’re counting on the IRS granting additional relief for employer reporting responsibility under the ACA, are you prepared if that relief doesn’t come?
The original start date of the penalty-assessment period for the employer mandate was January 1, 2013. Employers have had two reliefs that pushed compliance back to January 1, 2015. Chances for this happening again are slim.
The reason for the two transition reliefs was that reporting templates and formats were not available in order for employers to prepare their information systems accordingly. That’s no longer the case.
Take Action Now – work with your Account Manager to get these questions answered for your business ASAP. Call or email us for a free appointment to discuss your ACA plan. 847-394-8820 ext. 47
Need more information on ACA basics? Watch our ACA overview webinar.