Five Year-End ACA Tips - Workforce Consultants

Five Year-End ACA Tips

1095-image

The coming year will bring a new administration to Washington, D.C., and the future of the Affordable Care Act will be debated again. Regardless of the uncertainty about next year, employers still need to submit ACA reports for the 2016 tax year.

As you know, in 2015 federal regulators introduced a transition period to ease the burden for the first-time implementation of certain reporting requirements tied to the ACA.

Now that transition period has expired. But just last week, the IRS extended the deadline for furnishing form 1095 from the original date of January 31 to March 2, 2017. Some penalty relief, allowed last year, will be extended if there is a good faith attempt to comply with reporting requirements. However, the March 31 deadline to file form 1094 electronically (or the February 28 deadline to file by paper) has not changed.

Consider these other year-end changes to Affordable Care Act rules:

  1. More than 50 employees? You must report your offer of coverage The ACA has called for employers to provide coverage if they have 50+ employees. Last year was kind of a gimme for some smaller employers with less than 100 employees. (A “mulligan” if you like golf terms.) No reporting was required for smaller employers (50-99) that met certain requirements. This year is different. If you have 50+ employees, you must have offered coverage to your full-time people or face fines. And full-time means any employee averaging 30 hours per week.
  2. Must offer FT coverage for 95% of employees For the transition period, coverage had to be provided to 70% of full-time employees. This year the figure goes up to the intended 95%.
  3. Coverage must have started January 1. The previous transition year allowed for coverage to start anytime in January of 2015. This year coverage must have begun January 1 2016.
  4. New codes for conditional offers. There are new codes this year for conditional offers of coverage. That’s when coverage is offered to a spouse only if he or she is not eligible for Medicare or coverage under another employer’s plan. The conditional spousal coverage code is 1J if children are not eligible. The code when children are eligible is 1K.
  5. Most errors found in dependent SSNsWhen we examined our clients’ 2015 error data, we found about 95% of the errors were with Tax Identification Numbers. And nearly all errors were with dependent data. It’s not hard to see how this happens. Employees, of course, are entering data for spouses and children. All it takes is for one number to be off or transposed for an error to occur. We’ve been talking to employers about this for a few months. Hopefully, efforts to clean up the data will be successful, and make for a cleaner experience this coming reporting season.

Parting thoughts on the future of ACA reporting

Many employers go to great lengths to measure and report on their variable hour employees. Our data found that about 2.4% of all employees became covered as a result of variable hour rules.

Of course, many other employees became covered under the federal rule that dropped the work hour threshold to 30 hours to be considered a full-time employee.

Assuming the new administration acts on the promise to “repeal and replace” the ACA, it will be interesting to see what elements of coverage mandates and related reporting survive in the long run.

About our ACA & 1095 Compliance Suite: Affordable Care Act Employer Tracking & Reporting Automation.

About us Workforce Benefit Solutions: As a full service employee benefit broker we go a few steps further than the typical broker. Our W-2 salary paid team will enroll your employees in all benefit plans for open enrollment and every single new hire. We manage eligibility, audit monthly invoices and file your employees claims. Our best-in-class technology is backed by a dedicated team of benefit and health care experts who not only provide knowledgeable customer service, but also share industry insights, best practices, ideas and suggestions for making your benefits — and your business.