Affordable Care Act 201: Recordkeeping for Required IRS Reporting
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Find more educational content at www.acafluent.com We will provide an overview of the record keeping necessary for the required IRS reporting around the ACA’s employer mandate. We will cover what you need to do annually in filing season (Form 1095-C) and more critically, what you should be doing continuously and on a monthly basis all year long.
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Affordable Care Act 201: Recordkeeping for Required IRS Reporting
- 1. Presented by Gary Schmidt, Customer Care Representative Recordkeeping for Required IRS Reporting
- 2. Integrity Data’s leadership in human capital management since 1996 More than 8,000 organizations worldwide use our technology to improve businesses processes 2 Engaged by Microsoft to author payroll and human resources upgrades to the ERP system known as Microsoft Dynamics® GP We have been immersed in ACA compliance software since 2012 © Integrity Data 2016. All rights reserved.
- 3. Affordable Care Act Reporting 201 Recordkeeping for Required IRS Reporting
- 4. ELIGIBILITY DETERMINATION PAY-OR-PLAY STRATEGY RECORDKEEPING FOR REQUIRED IRS REPORTING The three pillars of preparation for employer ACA compliance
- 5. The ACA employer mandate: two levels of compliance for Applicable Large Employers 1) Comply with the COVERAGE MANDATE Be timely in offering health insurance of a certain quality to full-time employees 2) Comply with IRS REPORTING REQUIREMENTS Prove the right offer was made to the right employee at the right time 5 © Integrity Data 2016. All rights reserved. All year long, on a monthly basis At year-end, in monthly breakdowns
- 6. 6 Regulatory reporting: Intensified © Integrity Data 2016. All rights reserved. Form W-2: Summary data for a year Form 1095-C: A year’s worth of monthly breakdowns
- 7. 7 The maddening factor – a 1095-C concern, especially for self-insured employers © Integrity Data 2016. All rights reserved.
- 8. Continuous to-do Keep records of every employee’s hours of service TIME TO INCLUDE: • Jury duty • Military deployment • FMLA absence • Leave of absence • Vacation • Holiday • Illness • Incapacity • Layoff 8 Required for: Exempt employees Non-exempt employees Account for: Hours that an employee is available to the employer In addition to paid hours on the job © Integrity Data 2016. All rights reserved.
- 9. © Integrity Data 2015. All rights reserved Monthly to-dos © Integrity Data 2016. All rights reserved. Identify which employees are ACA-defined as ‘full-time’ and thus eligible for coverage Review the list of employees newly eligible for health insurance Test that the health insurance offered meets ACA affordability standards by tracking the self-only cost of each employee’s coverage Keep records of every calculation and each determination 9
- 10. © Integrity Data 2015. All rights reserved Year-end to-dos © Integrity Data 2016. All rights reserved. Produce a 1095-C form for every full-time employee to show whether they were offered health insurance and, if so, at what cost and of what quality If you are self-insured, also produce a 1095-C form for everyone you covered File copies of these employee forms with the IRS (using a 1094-C transmittal) PAY ATTENTION to: • The requirement for electronic filing when you have 250 or more submissions of Form 1095-C • Filing rules for controlled and affiliated groups 10
- 11. ACA form deadlines for Tax Year 2016 January 31, 2017 Furnish Form 1095-C to employees February 28, 2017 Mail its transmittal, Form 1094-C, to the IRS March 31, 2017 E-file Form 1094-C with the IRS 11 © Integrity Data 2016. All rights reserved.
- 12. ACA enforcement: The AIR system Via the Affordable Care Act Information Returns interchange, the IRS will know for every employee: • Whether he or she has health insurance and if it was subsidized [return from Applicant] • What coverage the employee has [return from Insurance Provider] • If the employee’s coverage came from an exchange, and when [return from Exchange] • In what month the employee was eligible for coverage at work and if – at that time – he or she was offered by his or her employer an ACA-compliant plan [return from Employer] 12 © Integrity Data 2016. All rights reserved.
- 13. Q&A 13
- 14. Learn more! Educational resources www.acafluent.com © Integrity Data 2016. All rights reserved.14 Videos in Integrity Data’s ACA Reporting 101 series • Does your business have to comply with the ACA? Are you an ALE (Using Santa Claus as an example) • How do I comply with the ACA? And when? • What is a 1095-C? • Why comply? What are the penalties for employers? • Is the IRS ready? Downloadable e-book on “Affordable Care Act: Employer Essentials for IRS Reporting” Downloadable ACA checklist for 2016 Blogs • ACA jolt: IRS nonfiling fine now $500 per required 1095-C • FAQ from self-insured employers: Why is Part II of 1095-C conflicting with Part III? Want to learn the easy way to be IRS-compliant with the Affordable Care Act? Join us for a live demonstration of our ACA Compliance Solution.
- 15. Thank you for your time. To get on the fast and sure track to ACA compliance, please contact us: sales@integrity-data.com 888.786.6162 Integrity Data’s publications and presentations are designed to make employers aware of IRS reporting requirements under the Affordable Care Act, best practices for compliance with those requirements, and the consequences of noncompliance. This material is intended to provide accurate information as of the date posted. It is provided with the understanding that neither Integrity Data, nor the authors and presenters, are rendering legal or accounting advice. With respect to your organization’s decision making for Affordable Care Act compliance, review the information presented with legal counsel specializing in employment law.
Editor's Notes
- Introduction of Gary Please enter any questions relevant to the topic in your chat window. We will address questions at the end. As a reminder, a copy of the slide deck and recording will be sent to you in the next 48 hours.
- And now a quick introduction about Integrity Data – We’ve been a leader in human capital management since 1996, celebrating our 20 year anniversary this Fall. More than 8,000 organizations worldwide use our technology to improve business processes. We were engaged by Microsoft to author payroll and human resources upgrades to the ERP system known as Microsoft Dynamics GP. And we’ve been immersed in ACA compliance software since 2012.
- The Affordable Care Act is a massive piece of legislation – even trying to make sense of the just the employer responsibilities under the ACA can get confusing. Our goal in this webinar is an overview of the recordkeeping needed for the required IRS reporting around ACA.
- To put this into context: being prepared for employer Affordable Care Act compliance requires preparation – we’ve organized preparation into these three pillars: Eligibility Determination - which we talked about two weeks ago. Deciding on a Pay-or-Play Strategy last week. Recordkeeping for the Required IRS Reporting which we are talking about today. Remember: all steps toward compliance are interrelated. Choices you make for one affect another. And this cycle never ends. It is a continuous process year after year. Now, let’s dive into recordkeeping
- Before we dive into the recordkeeping, let’s quickly recap the employer mandate. There are 2 levels of ACA compliance for employers: 1) First level is the coverage mandate: offering the right coverage to the right employees at the right time. This is also referred to as the “pay-or-play rules”. 2) Second level are the IRS reporting requirements: documenting for these employees and the IRS that you did (or did not) offer what you were supposed to offer, and you did so when you were supposed to do so (or not). You may hear this requirement referred to in terms of the IRS form that the ACA created – the dreaded 1095-C.
- A 1095-C packs a year’s worth of payroll and benefits data. Unlike a W-2, which reports on summary data, a 1095-C delivers month-by-month detail. And whereas a W-2 form goes to all employees, a 1095-C form is required for only some employees: Fully insured employers must produce this form for every ACA-defined full-time employee. Self-insured employers must produce this form for every covered employee. So even though you may hear IRS Form 1095-C referred to as the ACA version of a W-2, the only similarity in these two forms is their production time: January.
- Because of all the monthly detail on this form – and the confusing calculations behind many of the numbers – many professionals working with a 1095-C compare it more to an NCAA tournament bracket than a W-2 form. That’s particularly the case at organizations which are self-insured. These employers need to provide additional information on a part of the form that is specific to them. Because this information can often appear to conflict with information elsewhere on the form, it’s important – if you are self-insured – to learn about the differences between Part 2 and Part 3 reporting on a 1095-C. Part 2 informs the IRS as to the employer’s compliance with the employer shared responsibilities under ACA. Part III validates the individual mandate the employee must meet in verifying they and their dependents had coverage for each month of the year when the employer is offering self-insured coverage. Originally, employers offering self-insured health coverage were required to produce both a 1095C and a 1095B. During the public comment period of this guidance, employers pushed back noting that the reporting requirements had become too complicated. The 1095C form was revised to cover both requirements. You need to look at Part II and Part III has two different reports.
- Accurate recordkeeping all year long makes that yearly IRS reporting requirement easier. So what recordkeeping do you need to do? First, the law requires continuous and accurate recording of every employee’s hours of service. “Every” means exempt employees in addition to non-exempt employees. The only exceptions the ACA allows for are students on a work-study program and members of a religious order that have taken a vow of poverty. To be compliant with a requirement that no service hour be left behind, you have to find ways of recording hours that are not captured on a time clock. Also, as you are recording each employee’s hours of service, you have two ways of tracking those hours in order to confirm an employee as full-time – the monthly measurement method and the look-back measurement method. Check out our blogs and recorded webinars for more information on this topic.
- As we’ve said, monthly tracking is key to ACA compliance. Remember, when you report to the IRS through the Form 1095-C you are reporting on activity from the previous year. It is too late at that time to manage penalties. Because penalties for noncompliance with the coverage mandate are significant and will be assessed monthly, it’s a best practice to monitor your payroll and benefits data monthly in order to make coverage decisions proactively. The takeaway here is that all changes in eligibility and affordability are calls-to-action, and that every action and data leading to the decision for it must be documented. Your monthly reports should become your system of record for ACA decision-making.
- At year-end, you’ll have prove to the IRS what you have – or have not – been offering all year long with respect to health benefits. You must: provide a 1095-C form to every full-time eligible employee or, if self-insured for everyone individual covered under the plan send copies of all your 1095-Cs – rolled up in their transmittal, Form 1094-C – to the IRS This is a requirement for all Applicable Large Employers, including: - Employers choosing a “pay strategy” = accepting a penalty for not offering coverage to eligible employees - Employers offering compliant coverage to all employees at no cost to any employee. Let’s translate this to 2016 reporting
- The monthly data being tracked in the current tax year will be populating ACA forms that, in 2017, will be due on the original deadlines – dates that are the same as those for W-2 forms.
- If you’re wondering whether the IRS will really hold you to all this reporting – stop wondering, They ARE ready. To facilitate the data collection in order to monitor both the individual and employer compliance, the IRS has created the AIR system – Affordable Care Act information Returns. It is a massive XML clearinghouse for feeds from insurance providers, the exchanges, individuals and employers. This system integrates the exchanges, social security administration , the insurance carrier, employers and the individual tax returns into one system where information can be cross referenced. For employers, the 1095-Cs are crossed referenced with the monthly ACA feeds from the Exchanges to see if any eligible employee got coverage through an exchange and received a tax credit. It takes the act of just one eligible employee that got coverage through an exchange and got a tax credit, to turn on the potential penalty phase for employers.
- GARY! Add a couple of existing FAQs for recordkeeping, in case no one asks anything on the webinar. What Now? 1095-C forms are done but what do I need to bring in monthly for ACA eligibility reports? KB14-039 How do I setup and report for Shared Employees between companies? KB14-030
- Obviously this webinar covers only part of the ACA complexity – there is so much more to learn – make sure to visit acafluent.com for more educational resources. Watch our 101 educational videos that cover whether you have to comply, how to comply, and penalty details. Each video from the 201 educational series will be available for on-demand viewing. Download our eBook, “Employer Essentials for IRS Reporting” and our printable infographic, “ACA checklist for 2016 reporting.” Quickly link to IRS resources from our site and hear it straight from the source. Access our blog feed as it continually updates with new hot topics. Learn the easy way to be IRS-compliant with the Affordable Care Act – join us for a live demo.
- Thank you for joining us. We hope you found this presentation informative. And do let us know how else we can help you.