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Is ACA Reporting More Payroll or Benefits Related?

A common question in the marketplace is ‘what exact information is necessary to complete the Affordable Care Act (ACA) reporting’, which is required for employers for the first time regarding the 2015 calendar year.  To assist, we have created a list below of the types of data necessary as well as who will likely have that information.  

Many employers and benefit brokers originally made the assumption that ACA reporting would best be performed as an additional function of a company’s payroll provider.  However, now as the time comes to actually perform the reporting they understand that ACA reporting requires much more benefits information than payroll.  

Basic information to the company whom both the Benefit Broker & Payroll provider have
·         Company name, address, contact information and EIN
 
Payroll Information / Payroll Provider
·         Number of part time and full time employees
·         Payroll employee names, SSN, address, hire and termination dates
 
Benefits Information / Benefits Provider
·         Is this your first year offering medical coverage?
·         Renewal dates
·         Type of plan funding structure (fully insured, self insured, multi employer plans)
·         Waiting periods and if there are multiple waiting periods for different employee classes
·         Did your medical plans offer minimum essential coverage?  When?
·         Did your medical plans offer minimum value coverage?  When?
·         Full detailed understanding of 4980H Transitional Relief
·         Medical plan start and end dates
·         Medical plan offerings to various classes of employees, and costs of these plans
·         Eligibility by employee class for Federal Poverty Line safe harbor
·         Eligibility by employee class for Rate of Pay Safe Harbor
·         Eligibility by employee class for W2 safe harbor
·         Medical plan employee contributions by month and class
·         Plan offering Criteria, Qualifying offer Method, Qualifying offer Method with Transitional Relief, 98% offer method
·         Was an HRA offered?  Was it integrated with medical plan enrollment?
·         Certifications of unchanging workforce size for plan purposes as well as consistent employer contributions.
·         Months Offering MEC coverage to 70% of FT Employees
·         Full information on employees including name, SSN, DOB and address
·         Full information on dependents of employees including name, SSN, DOB and address
·         Medical plan coverage start and end dates for all persons on the medical plan
·         Medical plan offering details including start and end dates by employee class
·         Designated governmental entity information
·         Aggregated group information, and full details on control groups
 

ACA Reporting Extensions … What you need to know

Just like most things Affordable Care Act (ACA) related, there is a significant amount of confusion about how the ACA reporting extension works.  Hopefully this article will help …

The first thing you need to know is that there are actually TWO DIFFERENT extensions employers need to know about.

  • First, you can receive an extension by sending the required ACA reporting to the IRS
  • Secondly, there is a completely separate process to request an extension regarding providing the forms to your employees

1).  As an Applicable Large Employer (ALE), employers must file the appropriate forms 1094 and 1095 with the IRS.  Should you need additional time submitting the data to the IRS by the March 31st e-filing deadline, you can receive an automatic 30-day extension by completing Form 8809.  More information here…

2).  The form 8809 does not apply to providing forms to employees however.  To ‘possibly’ receive any extension in providing the appropriate forms 1095 to your employees, and employer must send a letter to the IRS requesting an extension  (full instructions on how at the bottom of this article).

Finally, many are relying upon the ‘Good Faith Effort’ provision that the IRS has issued in regard to their 2015 ACA form filings.  However, it is important to know that this provision does not apply to timely providing forms to recipients or the IRS.  For employers who do not provide timely notices to the IRS or recipients, they will face the penalties prescribed by the law.


Instructions on Extensions of time to furnish statement to recipients. You may request an extension of time to furnish the statements to recipients by sending a letter to Internal Revenue Service, Information Returns Branch, Attn: Extension of Time Coordinator, 240 Murall Drive, Mail Stop 4360, Kearneysville, WV 25430. The letter must include (a) filer name, (b) filer TIN, (c) filer address, (d) type of return, (e) a statement that extension request is for providing statements to recipients, (f) reason for delay, and (g) the signature of the filer or authorized agent. Your request must be postmarked by the date on which the statements are due to the recipients. If your request for an extension is approved, generally you will be granted a maximum of 30 extra days to furnish the recipient statements. For purposes of requesting an extension of time to furnish the statements, the term filer means the ALE Member, or the Designated Government Entity, if applicable.

Payroll Vendor ACA Reporting Causing More Benefit Broker Work …

If you are a benefit broker you might be in for a special 2015 Christmas surprise but not in a good way.  A question for you:

  • Did any of your clients use their payroll vendor to do this reporting? (answer is usually yes)
  • Have you heard from these clients yet? (answer is usually no)

You need to know that you will hear from them very soon. Why? The reason is twofold.

First, the payroll vendor almost never has all of the information necessary to complete the reporting from a medical plan standpoint.  Instead, they require their clients to enter that data and do not provide much support to assist them (unless you consider forwarding along the IRS regulations as ‘support’).  The clients of course do not know how this all works…

Surprise! You as a broker end up doing the work to help your clients while the payroll vendor receives their compensation for ‘doing’ the ACA reporting.

Secondly, with many payroll vendors they require the employer to actually determine and enter the codes in lines 14 and 16 of form 1095-C. The employer of course thinks that they have paid someone else to do this reporting, so what are they doing? You guessed it – they are sending it back to their broker to do.

This is creating major issues for brokers because often times they made the referral for the payroll company to perform this reporting not understanding that the reporting requires much more benefits information that it does payroll information.  Adding additional pressure, it is now late December 2015 and there are very few vendors in the marketplace still taking clients.


So what can you do about it?

  1. Determine which clients are using payroll vendors and call them immediately to make sure they have begun the process and understand everything that is required.
  2. Evaluate where you are in terms of your clients ….. and what will be needed to get their required information completed.

Need help?  Contact us at customer support via the link above OR learn more about our ACA consulting services for groups have had had their ACA reporting completed by another vendor, by contacting support.

Designated Governmental Entity (DGE) Did Not Fully Report on ACA To IRS …

Many municipal and other governmental entity types have been surprised by the fact that their Designated Governmental Entity has not reported all of the necessary information to the IRS as they assumed would happen.  Under the Affordable Care Act (ACA), Applicable Large Employer (ALEs) must report to the IRS on the type of plans that were offered to their employees, the costs of these plans, and who was covered under the plan.  For some governmental groups (we will call these ‘primary’) they might have a separate governmental entity that has some of their employees covered and who have agreed to perform the ACA reporting on behalf of the ‘primary’ group.

Example:  A school district has all of their teachers covered under the State medical plan, but all other staff covered under a separate plan.  The State has told the school district that ‘we will perform the reporting for you’. This is normally very misleading to the school district because the State health plan normally only intends to report to the IRS who was covered under the medical plan, and NOT the offer of coverage.

For those of you familiar with ACA reporting, the State health plan in this instance normally will report medical plan enrollment but NOT report the other necessary Offer of Coverage that shows up in lines 14, 15 and 16 of form 1095-C.  The end result is that the school district has not reported fully to the IRS and are now subject to penalties.


So what can you do ….

#1.  If you have a Designated Governmental Entity that is performing some of your reporting, you need to ask them if they are reporting for the Enrollment on the plan, OR ALSO the offer of coverage.  Understand it is unlikely they will report the Offer of Coverage.

#2.  If the DGE is only reporting enrollment, they will complete that on form 1095-B.

#3.  The underlying school district in our example still must complete forms 1095-C on these teacher employees, sections 1 and 2.


Need assistance?  Reach out to our customer service department by clicking contact us at the top of the page.

ACA Reporting Software Provider [15 Question Quiz]

Let’s face it, the marketplace is confused when it comes to ACA Reporting.  Since this is the first year of mandatory reporting, how can you know if your vendor ‘knows their stuff’ when it comes to ACA Reporting?  To help employers, we have created a quiz to assist you in researching ACA Reporting Software providers.  These questions are specifically designed to help an employer determine if their vendor has the necessary knowledge to support them through the ACA reporting process.

  1. Do fully insured employers need to report?  If so, what type of reporting do they need to do [what forms, etc]?
  2. Who ultimately gets a reporting form from us as an employer?  How does that change based upon if we are fully insured or self insured?
  3. If we have multiple plan designs, how does the reporting work?
  4. Does ACA reporting involve protected health information (PHI)?  If so, does your company enter into a Business Associate Agreement with its clients?
  5. When was your last HITECH audit?
  6. Is your ACA reporting solution even built yet?
  7. Does your ACA reporting software generate the codes for form 1095C?  Does the software create the correct codes, or do we input these manually for each person?
  8. How long will the data be stored?
  9. Could you explain the ACA reporting safe harbors?
  10. If a group offers a Health Reimbursement Account (which is considered a self-funded plan), in coordination with a traditional fully insured plan, how will this work in terms of ACA reporting?
  11. Can an employer qualify for multiple forms of transitional relief?
  12. Is it necessary for an employer to track enrollment declination?
  13. Does each employer need to request a transmitter control code (TCC) from the IRS?  If so, how?
  14. If we have an opt out bonus, how is that calculated and accommodated for in the ACA reporting?
  15. How does non-calendar year transitional relief work?

We hope you find this quiz beneficial.  For answers to these questions and more, simply contact us from the support tab.

ACA Reporting to Become Your Broker?

With the rise of employee benefit brokerage firms having full service HR administration capabilities (such as Zenefits), it shouldn’t be surprising that these firms are using ACA reporting as a wedge to become the broker on all lines of business for large employers.  We speak with dozens of benefit brokers every week, and in the past 30 days this sales pitch has picked up significant steam.  Recently we interviewed one of the senior most employee benefit experts in the country to see what his thoughts were on this trend.

“It was just a matter of time.  The marketplace, and many benefit brokers, are really confused when it comes to ACA reporting.  In fact, there are still brokers out there who believe that fully insured large groups do not even need to do anything.  It should be no surprise that some firms are making a lot of headway in growing their businesses by using ACA reporting.  The opportunity for benefit brokers today is greater than I have ever seen it.  We all knew that the Affordable Care Act would bring about a consolidating of employee benefit broker firms, and I believe we are beginning to see this trend as the smaller firms are having a hard time keeping up.”

We are also seeing payroll companies and PEO’s are also using ACA reporting as a wedge between the incumbent benefit broker and their clients as well.  As a benefit broker in today’s marketplace, you simply cannot afford to be non-educated on this topic.  If you are willing to go just a little bit further, then it actually would be quite a catalyst to grow your business.

Need to Learn ACA Reporting Quickly?

This 45 minute ‘non-attorney’ webinar will help you know exactly what you need to know.  The last 15 minutes covers our most frequently asked questions.


Evaluating ACA 6056 Employer Reporting Software?

Employers & Benefit Brokers Evaluating ACA 6056 Reporting Software

If you are a large employer or employee benefit broker, chances are you have spent a lot of time trying to determine the best ACA 6056 reporting and compliance solution for your clients.  We do not sell software – but rather full service reporting.  However, we have researched almost a dozen different ACA employer reporting and compliance vendors and we thought we would pass along what we learned.

Beginning Questions To Ask Yourself

As an employer or benefit broker, this is how the ACA reporting question breaks down for you.

1).  Some employers will have their online enrollment (benefits administration) and payroll with the same vendor.  In those cases, as long as the client is willing to pay for it, it will likely make sense to just perform the required ACA reporting of IRS forms 1094 and 1095 with that vendor.

2).  Some employers will not have an outside benefits administration or payroll vendor.  They do everything in-house.  For these employers, there is going to be a lot of ACA work to be done and obviously you will need a stand alone solution.

3).  Finally, you have some employers who have payroll and benefits administration with different vendors.  This would include the scenario where one of these functions is performed in house.  In these cases you will either need to consolidate both payroll and benefit plan elections with one vendor, or you will need a stand alone solution.

Basic Conclusion:  If you are an employee benefit broker with various types of employer clients, we don’t see a scenario where you can get away with not having a stand alone ACA reporting solution to help your clients meet their ACA Reporting Requirements.


What do you need to know in evaluating ACA stand alone software vendors?  Things to keep in mind as an employee benefit broker if you want to do this on your own.

Employee Benefit Brokers, Ask Yourself These ACA Reporting and Compliance Questions

1).  Security?  What if all of the social security numbers of your client’s employees was stolen?  Can you imagine the fall out?  Many of the systems we reviewed were severely lacking in terms of security.  What level of encryption is being used for the data?

2).  Branded to your company?  Many different ACA reporting vendors offer the ability to brand a portal to your company that your employer clients will be able to login from.

3).  Is the system mainly a benefits administration system?  The differences in these systems can be extreme – from very low level to incredibly high level.  Will this add additional costs for the ACA reporting module?  Also with many benefits administration systems, there are additional charges for EDI (electronic data interface – where election data is sent to insurance carriers).  Will additional fees apply with this new ACA reporting?

4).  Is the ACA reporting solution even built yet?  Many of the ACA reporting module demo’s we sat in on were from vendors who do not even have the software built yet.

5).  How long will your data be stored?  The IRS has said that audits will begin starting in about 18 from months from the filing date, and that can last for 7 years total.  If you do not have a methodology to get back to your data at the time of inquiry, you are stuck.

6).  Is your vendor set up to file with the IRS?  Did they just lie to you and say yes to that question?  As of the writing of this blog, no one is set up to file with the IRS electronically (efile) for forms 1094 and 1095.  The IRS has literally just issued the guidelines to begin getting started with this.

7).  Variable hour tracking?  Do you need variable hour tracking to determine eligibility?  For many employers a simple spreadsheet will do the trick.  Many vendors have quite robust capabilities in this area, and for some employers this will definitely make sense.

8).   The ‘Gotcha Moment’.  This comes at the end of a great presentation where they tell you there is an additional $3 to $5 per employee to file the forms with the IRS.  Generally this will make the costs of this solution not competitive.

9).  ROBUST ACA LOGIC.  We cannot tell you how important this is!  If you have spent as much time looking at these forms as we have (especially in terms of form 1095c lines 14, 15 and 16) you will know that performing this reporting is MUCH MORE than just uploading a spreadsheet.  The codes for these lines are based upon logic.  Most systems do not have this logic built into their system, but rather it will be up to you as an employer or benefit broker to figure this out.  For most employee benefit agencies, you can count on this little ‘bug’ shutting down your operations in January.

What if you decide to just file them incorrectly?  When your largest client has 100 employees bring them letters from the IRS, you will then realized this was a very bad idea.

Also, without robust logic built into the system there will be no accommodation for situations such as someone terminating in November/December and then electing COBRA in January.  The codes for these situations are different.

10).  Are forms stored for future access and corrections?  Bottom line – there is going to be issues with the reporting from time to time.  Do you have the ability to go back into the system and create a new/corrected 1094 or 1095 form on behalf of the employee?  Many systems that rely solely on a census upload would require you to basically start over in order to make this one fix.  OR, your staff can just manually create one in .pdf which will take a lot of time.

11).  Do you have to pay for the whole system up front, or are there monthly options?  Do you need to commit to multiple years with the software vendor?  Do you have to pay onging for the solution or only once?  Are there implementation costs?  Are there separate fees for the IRS form file reporting and all other functions in the system?

12).  Can the employee elections be uploaded via census, or do you need to type it all in?

13).  Will they have adequate customer support between January 1st and January 31st so that you can KNOW you will be able to get this all done?

14).  Do you want to just let the payroll vendor do this for your client?  Do you really want to recommend your client that they should have another function performed by someone who wants nothing more than to take your business away from you?

. . . OK, that is enough!  We hope you find this helpful.  In the case that you would like someone to be fully hands on and provide great service to get all of this reporting done, we will be here to help!

Municipalities, School Districts, Governmental Entities – ACA Reporting

Across the country municipal government, cities, towns and school districts are beginning to learn their responsibilities for Affordable Care Act (ACA) reporting to the IRS under Internal Revenue Code 6055 and 6056.  We speak to these municipal groups every day, and this often is a complete shock to them.  What do you mean I have a self funded plan?

For municipal groups and school districts under the state health plan in their given state, they are being notified that they are actually on a self funded plan.  The reason for this is the manner in which the states generally arrange these plans and file with their department of insurance.  Since these plans are self funded, they have very specific reporting requirements under the ACA.  The largest shock for these groups is that the states are not performing the reporting on their behalf, but rather it is the responsibility of each individual municipality, school district and other governmental entity.

Due to these facts, it is imperative that these organizations understand what their requirements are, preferably in a simple and easy manner.  To assist with the learning curve, we have recorded a free webinar that can be accessed on demand.  The goal of this webinar is to tell you only what you need to know, and to do this in less than 45 minutes.  The feedback for this session has been excellent, so we hope you find it helpful.  Simply press play below to get started.


Session Overview Notes:

  • Overall Presentation 40 minutes (the last 10 minutes covered most frequently asked questions)
  • Session was a quick (non-attorney) overview of ACA Reporting
  • What did the Affordable Care Act Accomplish?
    • Individual mandate to have health insurance  (IRS 6055)
    • Employer pay or play rules (IRS 6056)
  • How will the IRS ensure individual and employer compliance?
  • What are employers options when it comes to ACA Reporting

All Large Employers MUST Complete ACA Reporting (Even Fully Insured Groups)

This comes as a surprise to many, but YES – if you are an employer with 50+ employees (or full time equivalent employees), you must complete ACA Reporting to the IRS (forms 1094 and 1095).

But I’m Fully Insured . . . My insurance carrier will take care of this right?No!

You might have thought that your insurance carrier was going to take care of this, but they only report the portion that they are required to report as an insurance carrier.  Employers still have additional responsibilities.  


The easiest way to think about this is by considering what the Affordable Care Act accomplished:

  • Individual Mandate – all US citizens must now have health insurance or pay a penalty
  • Employer Mandate – all large employers (50+ employees) must offer coverage and that coverage must be affordable
  • The IRS is in charge of making sure these things happen.

So how does the IRS make sure that an individual did have health insurance and doesn’t owe an individual tax penalty?

This is accomplished through the IRS receiving specific forms from the various places that an individual could have coverage:

  • The exchanges send the IRS the ‘A’ Forms (1095A)
  • The insurance carriers send the ‘B’ Forms (1095B)
  • And self insured employers must report everyone covered under their plan for the year using the ‘C’ Forms (part 3 of 1095C)

How does the IRS make sure each large employer (a) offered coverage and (b) that the coverage was affordable?

This is accomplished through the IRS receiving a completed form 1095 by ALL LARGE EMPLOYERS.  Specifically, part 2 of form 1095C is used to accomplish this task.

So as you can see this is not something that will be fulfilled by insurance carriers, and the penalties for not filing are substantial.  (IRS Fines)

Have questions?  Contact us from the support tab.  Thanks!

Top ACA service vendors implement cutoff dates for new clients!

Supreme Court Rules In Favor of Subsidies

Last Thursday (June 25th) the Supreme Court approved federal subsidies for health insurance under the Affordable Care Act. So the result? The ACA and all the mandates that go with it are not going anywhere soon. This is forcing employers to ask themselves the hard hitting question, “Are we ready for the ACA mandate”?

Are Employers Really Ready for ACA?

The reality is that the majority of employers have not yet begun to implement a strategy to comply with the new ACA compliance requirements. With the first reports being due by January 2016, many employers are left scrambling for a solution. According to a recent survey roughly 85 percent of mid-sized employers do not have a solution in place that will allow them to submit the required data. With all of this stress pressing down on employers, who will they turn to for the answers? That’s right, they are looking to their Benefit brokers and Payroll providers.

Time is running out for ACA Employer Reporting!

Yes, you read that correctly. The demand for ACA reporting services are growing so quickly that large technology vendors are saying “no more” to new clients after the cutoff dates. The service providers below have announced their cutoff dates for this year:

  • Equifax – August 2015
  • Equifax e(fx) – July 31, 2015
  • ADP National – Mid-July 2015
  • ADP Major – June 17, 2015

If you are still looking for a solution for your 6056 reporting and filing needs, then you are clearly running out of time. So not only is the timeline for implementation diminishing, but the availability of quality vendors is also dwindling.

Are you concerned yet? You don’t have to be. We are still here to help. Let our ACA specialists assist you in determining the reporting solutions that are right for you.