E-File of ACA 1095 Forms … What Can Go Wrong?

Under the Affordable Care Act (ACA), Applicable Large Employers are required to report to the IRS the type and cost of the medical plans offered to their full time employees. For many employers, the creation of these forms can be done by an internal system or though a HRIS system which they use in their business. It is common however for these systems to not have the ability to transmit the data to the IRS electronically, which is known as E-File.

For this reason many companies look to outside professionals to assist them in this transmission of their forms 1094 and 1095 to the IRS through the IRS’ AIR system. The process would seem straight forward, however there are many areas in which employers are experiencing problems. These problems are expected to increase for 2016 reporting due to the fact that the ‘Good Faith Effort’ provision under ACA is expiring. In short what this means is that you as an employer will be responsible for the accuracy of your created ACA forms.

The reason this is a challenge for many E-File vendors is the simple fact that they truly don’t understand ACA reporting. The overwhelming majority of ACA E-File vendors are companies who transmit 1099’s to the IRS and entered the ACA business as an extension of their normal business practices. The challenge with this from an employers perspective is that these vendors do not fully understand the reporting in the first place and thus are not prepared to assist employers with ensuring they are reporting correctly.  This would include errors in their coding, incorrect forms, avoiding ACA penalties, who should actually receive a form 1095, etc.  A simple quiz of your ACA E-File software vendor will likely reveal exactly how much they understand about the reporting.

And don’t forget about ACA E-File compliance!  Yes, forms 1095 contain Protected Health Information (PHI) and thus requires you as an employer to maintain HIPAA and HITECH compliance.  This includes how you transmit the data to your vendor (must be securely, encrypted), entering into a Business Associate Agreement, etc.  Learn more about ACA E-File HIPAA compliance.

The most important thing to remember as an employer is that this is all YOUR responsibility, and you cannot delete any of the fines for being wrong.  Use this ACA reporting software quiz to help you make sure you have the right vendor for your organization.

 

2016 Changes to ACA Transitional Relief in Reporting

For 2015 employer mandate reporting under the Affordable Care Act (ACA) there were various pieces of transitional relief which changed the way in which data was reported to the IRS on forms 1094-C and 1095-C.  As we begin the 2016 ACA reporting season, it is important to understand what has changed to ensure your compliance with the reporting requirements.  This is specifically important because for 2016 the ‘Good Faith Effort’ provisions will be expiring.  This means that employers who reporting incorrectly will be penalized and fined.

Here is a quick overview of the pieces of Transitional Relief which no longer apply moving forward as of the 2016 ACA reporting season:

  • 2015 Qualifying Offer Transitional Relief
    • This changes line 22 (B) of form 1095-C
    • This also changes form 1095-C line 14 in that no longer can code 1I be used
  • 2015 MEC Coverage Transitional Relief Expired
    • During 20105 reporting, on form 1094-C an employer would indicated in part III if they offered Minimum Essential Coverage based upon a standard of this MEC coverage being offered to 70% of their full time population
    • For 2016 reporting, this standard has increased to 95%
  • 4980H Transitional Relief Still Applies in Certain Circumstances
    • For 2015 reporting the ACA reporting rules allowed for two pieces of Transitional Relief commonly referred to as ’50 to 99′ and ‘100+’ Transitional Relief.  These were indicated on line 22 of form 1094-C and then again as appropriate in section III of the form 1094-C.  Specifically they were designed to eliminate or reduce penalties for certain employers who qualify should they be subject to employer mandate penalties.
    • For the most part these are expiring for 2016 reporting.  However, for employers who maintain a non-calendar year plan, they can continue to use these pieces of Transitional Relief until the end of their 2015 plan year.

There are also a number of other various changes which are important to understand.  If you would like to go more in-depth to fully understand the reporting differences between 2015 and the proposed instructions by the IRS for 2016 ACA reporting, visit the recorded webinar section of our website.  Specifically the 2016 ACA Reporting – Planning For The Updates and New Forms by clicking here.  In this recorded session we cover the following topics:

  • New deadlines for 1095-C form distribution
  • New E-filing deadline
  • No more ‘Good Faith Effort’ clause
  • Transitional relief changes
  • New codes for line 14 of form 1095-C
  • New MEC coverage guidelines
  • How to determine if you are an applicable large employer (ALE) and need to report

ACA 1095 Reporting Deadlines, For 2016

As an Applicable Large Employer (ALE) there are several deadlines which must be met in order to correctly comply with the Employer Mandate rules under ACA.  These dates have changed from 2015 into 2016 as shown below, which is causing employers the need to get started early for their 2016 ACA reporting.


Forms 1095-B and 1095-C due to employees

  • 2015 Deadline:  March 31st, 2016
  • 2016 Deadline:  January 31st, 2017

 

Forms 1094-B, 1095-B, 1094-C and 1095-C due to IRS if mailing forms*

  • 2015 Deadline:  March 31st, 2016
  • 2016 Deadline:  February 28th, 2017

 

Forms 1094-B, 1095-B, 1094-C and 1095-C due to IRS if e-filing forms

  • 2015 Deadline: June 30th, 2016
  • 2016 Deadline: March 31st, 2017

 

*Only available for employer with fewer than 250 forms.

ACA Part-Time Hourly Tracking for Staffing & Hospitality Industries

Employers in these and other similar industries have had an extremely difficult time complying with the ACA requirements regarding reporting and the measurement of employee hours worked to ensure coverage is offered appropriately.  As these employers know, operating a company in the staffing and hospitality industry is unlike any other business.  They have highly specific needs that very few people fully understand.

It was specifically for this reason that we launched StaffACA.com.      Staff ACA is an Affordable Care Act (ACA) reporting company with specific expertise in industries who’s workforce is somewhat non-traditional.

Through our experience in working with these employers, we ultimately found the fundamental issue that is causing 90%+ of all the problems. For most organizations, the issue comes down to how they calculate employee hire and termination dates. Simply put, the ACA rules regarding how to calculate these dates do not match up with the manner in which these type of organizations operate their businesses.

As an example let’s consider an employer in the Staffing Industry. Further, this employer hires a new employee and then put them on assignment. Let’s further assume that assignment ends after 4 months. The overwhelming majority of companies would continue to keep this person on their ‘books’ as an employee rather than go through the process of formally terminating them. After all, they could go out on another assignment at any time. However this methodology then causes the employees ACA reporting to be completely wrong, and as you likely know you as an employer are ultimately on the hook for penalties due because of incorrect reporting.

This is only one simple example, but it goes to show the ultimate problem of how non-traditional workforces operate their businesses in a manner that makes ACA compliance and reporting extremely difficult.

Learn more at StaffACA.com

New 2016 ACA Reporting Codes on Form 1095-C

The draft regulations for 2016 ACA reporting have been released and with those instructions have come two new codes for consideration in part II of the form 1095-C.  Specifically these are for line 14 of the form 1095-C, the offer of coverage, and they introduce a new concept to the reporting of a conditional offer of coverage.

A conditional offer of coverage is an offer of coverage that is subject to to certain conditions which would impact the availability of coverage for the spouse of an employee.  One example of a conditional offer of coverage would be if an employer offered health coverage to an employee and their spouse, unless the spouse was otherwise eligible for another group health plan sponsored by another employer.

Code 1J

Code 1J is used on line 14 of form 1095-C when an employee was offered coverage for all days of the month which:

  • Provided minimum essential and minimum value to the employee, and
  • Provided at least minimum essential coverage to their spouse that was a conditional offer, but
  • Did not provide coverage to the dependents of the employee

Code 1K

Code 1K is used on line 14 of form 1095-C when an employee was offered coverage for all days of the month which:

  • Provided minimum essential and minimum value to the employee, and
  • Provided at least minimum essential coverage to their spouse that was a conditional offer, but
  • Did provide coverage to the dependents of the employee

IRS releases 2016 Updates to ACA Reporting

As compared to the 2015 reporting rules which employers followed, there are a number of changes and updates for 2016.  Many of these are simply because of the fact that transitional relief is going away from its use in 2015.  Others are the expiration of ‘accommodation rules’ which the IRS used in this past year to assist employers with their first year of reporting.

2016 ACA Updates Webinar & Open Q&A Sessions.  Learn more & Register…

Here are a few of these changes:

  • Updates in how you determine if you are an ALE and need to report – a different calculation
  • Good faith effort reporting for 2015 is no longer in force – and therefore industry experts are expecting significantly more penalties for this upcoming years reporting.
  • In 2015 for reporting employers had transitional relief in terms of offering coverage and penalty reduction.  These were referred to as ’50 to 99 Relief’ and 100 + Relief’.  This transitional relief is expiring.  However, employers can continue to apply this relief for the remaining months in the 2016 calendar year of their 2015 plan year.
  • ALE must cover 95% of their full time employee population in order to avoid the ‘A’ series of penalties.  In 2015 this was 70%.
  • For 2015 the IRS offered an extension for providing 1095 forms to employees as well as E-filing extensions.  These are no longer in force.  Therefore, employers must provide the 1095 forms to employees no later than January 31st, 2017.

There are several other changes as well. Join us for one of our scheduled open Q&A sessions.

2016 ACA Updates Webinar & Open Q&A Sessions.  Learn more & Register…