Affordable Care Act Reporting 101: How do I comply with the ACA?
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Find out what you need to do continuously, monthly and detailed requirements at year-end to comply with the Affordable Care Act employer mandate. Visit www.acafluent.com for more educational content.
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Affordable Care Act Reporting 101: How do I comply with the ACA?
- 1. © Integrity Data 2017. All rights reserved Affordable Care Act Reporting 101 What do you need to do to comply with the Affordable Care Act? And when? August 2017
- 2. © Integrity Data 2016. All rights reserved monthly data
- 3. © Integrity Data 2017. All rights reserved The two levels of ACA compliance for 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 All year long, on a monthly basis At year-end, in monthly breakdowns
- 4. © Integrity Data 2017. All rights reserved 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 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
- 5. © Integrity Data 2016. All rights reserved Monthly to-dos 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 © Integrity Data 2017. All rights reserved.
- 6. © Integrity Data 2016. All rights reserved Year-end to-dos 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 © Integrity Data 2017. All rights reserved.
- 7. © Integrity Data 2016. All rights reserved January 31, 2018 Provide Form 1095-C to all ACA-defined full-time employees February 28, 2018 Mail its transmittal, Form 1094-C, to the IRS March 31, 2018 E-file Form 1094-C with the IRS © Integrity Data 2017. All rights reserved. ACA form deadlines for Tax Year 2017 https://www.irs.gov/pub/irs-drop/n-16-70.pdf
- 8. © Integrity Data 2016. All rights reserved ACA employer penalties The sledgehammer coverage penalty for no offer of coverage $180 a month, times all eligible employees minus 30 The tack hammer coverage penalty for noncompliant coverage $270 a month, times the number of eligible employees who got a subsidy on an exchange The non-filing penalty $500 per required return – for intentional disregard of a reporting obligation © Integrity Data 2017. All rights reserved.
- 9. © Integrity Data 2017. All rights reserved You have choices • ‘PAY’ – Offer no health plan = Accept full risk of the bigger penalty • ‘PLAY’ with lower table stakes – Offer non-compliant coverage that is not affordable = Accept full risk of the lesser penalty and minimized risk of the bigger penalty • ‘PLAY’ with higher table stakes – Offer non-compliant coverage that is affordable = Accept minimized risk of both penalties • ‘PLAY’ after anteing up – Offer compliant coverage that is affordable = Accept managed risk of both penalties You need collaboration – ASAP Discuss and seek counsel for ACA compliance requirements now – not at year-end • Put processes in place to address questions as they arise • Identify which measures require blessings from senior management • Get those blessings and guidance – pronto!
- 10. © Integrity Data 2016. All rights reserved Is the ACA applicable to you? What happens if you don’t comply? integrity-data.com/aca-education © Integrity Data 2017. All rights reserved.
- 11. © Integrity Data 2016. All rights reserved 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. © Integrity Data 2017. All rights reserved.
- 12. © Integrity Data 2017. All rights reserved
Editor's Notes
- Now that you have done the head-count calculations for last year’s workforce and know for sure that you are an ALE – an Applicable Large Employer – you know the Affordable Care Act applies to you. So what does that mean? - What are the requirements? What do you have to do to meet those requirements? And when?
- All ACA compliance efforts center on two words … monthly data! A monthly view of your data – payroll data and benefits data - is key in decision making for ACA compliance. Let’s talk about the compliance requirements that these important monthly views of your data are for.
- Employer responsibility under the Affordable Care Act goes beyond finding a suitable group-health plan. There are in fact 2 levels of ACA compliance for employers: First level: offering the right coverage to the right employees at the right time Second level: documenting for these employees and the IRS that you did offer what you were supposed to offer, and you did so when you were supposed to do so. The first level is called the coverage mandate. You may hear this mandate referred to as the “pay-or-play rules”. The second level of ACA compliance for employers is the related reporting obligation for what coverage was or was not offered. You may hear this requirement referred to in terms of the IRS form that the ACA created – the 1095-C. To comply at both levels, you need to find ways of getting at your data monthly in order to know: - who you should make an offer to - when you should make that offer - and whether cost of that offer fits within the affordability guidelines for each of your eligible employees. Now that you know more about what the requirements are, what do you need to do to meet them? And when?
- 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 for more information on this topic. When an employee’s service hours reach 130 in any month of a calendar year, he or she is considered full-time – and eligible for employer-sponsored health insurance.
- As we’ve said, monthly tracking is key to ACA compliance. 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 employee 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 - And Employers offering compliant coverage to all employees at no cost to any employee. Let’s translate this to 2017 reporting
- The monthly data being tracked in the current tax year will be populating ACA forms that, in 2018, will be due on these deadlines– dates that are the same as those for W-2 forms. Now, the IRS *may* extend those deadlines so stay tuned by reading our blogs!
- As you can see, penalties for ACA noncompliance can add up quickly. These penalties are indexed so they go up every year. And the non-filing penalty for not filing a 1095-C stands regardless of whether the employer mandate is enforced or not – it is similar to the penalties for not sending out a W-2!
- Do NOT delay in connecting with other departments – and professional advisers – about choices and strategies for ACA compliance. This compliance burden should not fall solely on the shoulders of the person who drew the short straw. Choices about benefits workforce decisions and employee communications must be made collaboratively and with respective guidance from an insurance broker and a lawyer who specializes in employment law. As soon as possible.
- Here’s a link with more resources for you, such as blog posts that explain the 2 methods for eligibility determination more educational videos an easy ACA to-do checklist An e-book with much more information - and IRS resources, so you can fact-check the guidance we’re giving.
- Here’s a link with more resources for you, such as blog posts that explain the 2 methods for eligibility determination more educational videos an easy ACA to-do checklist An e-book with much more information - and IRS resources, so you can fact-check the guidance we’re giving.