Employee Benefit Brokers, ACA Reporting. Huge Prospecting Opportunity, OR Administrative Pitfall?


The Million Dollar Question most employee benefit brokers are considering currently is should our firm try to perform this ACA reporting via an in-house technology solution that we purchase, or recommend having our clients use an outside vendor (such as us here at ACAReportingService.com).  The reality is that every operation is different, has different needs and have promised their clients different things.  Some brokers take a full service approach and look to take administrative burdens off of their clients.  Other brokers take a more consultative approach.  Neither avenue is ‘wrong’, but each works for different type of benefit broker operations.

Regardless of which option you choose, here are some things you should be thinking of as you consider the question:

  • Do we have the necessary resources internally to do a good job with this IRS form filing function?
  • Do we have the knowledge internally to complete the job well?
  • What approach will be most comfortable to our clients?
  • What are the security ramifications of the solution we choose?  (Knowing that having employee social security numbers compromised could be a disaster for your company.)
  • If you decide upon an outsourced solution, will you want to refer your clients to someone who also competes with your company as a benefit broker?
  • Do we need a solution to talk with employers about right now?  What is gained or lost by waiting longer into the year before bringing a good solution to the table?
  • How much time, money and staff will it take to deploy our solution?
  • Would our time be better spent prospecting for new clients during this time using this issue as opposed to trying to manage the process internally?
  • Which option is more profitable to our business?
  • What is the logic of the system we intend to use?  Are the codes and amounts for 1095c lines 14, 15 and 16 automatically generated?  Will our staff or clients be responsible for completing these fields without the assistance of smart technology to intuitively figure out what the codes should be?
  • How will customer service be handled for this whole process?

Often the reality for an employee benefit broker is that a mixture of different solutions makes best sense for their operation.  When it comes to full service ACA 6056 reporting and efiling, we are here to help.  

If you are interested to learn more about things you should be thinking of as a broker, click here for a prior blog post which has proved to be quite helpful.

Full Service ACA Hourly Tracking Service

The Affordable Care Act requires applicable large employers (ALEs) to offer appropriate and affordable health coverage to their full time employees who work 30 or more hours per week (130 hours per month). Employers are also required to measure the hours worked of part time and variable hour employees to determine if they should be offered coverage as all other full time employees. There are two methods available to employers for use in measuring: Monthly Measurement Method, and the Look-Back Method.

The monthly measurement method proves difficult in application since an employee must be offered coverage in any month which they worked over 130 hours, yet the employer might not know this until the end of the month. Many employers are unaware of this fact and apply the method incorrectly, measuring one month and then making the offer in the following month. This is an incorrect application of the rules.

It was for this reason that ACA Reporting Service released our Full Service ACA Hourly Tracking Service.

Our solution to this problem is extremely simple. Clients who engage our Full Service Variable Hour Tracking as an add on to ACA reporting follow a simple process of sending us us their payroll files with the following information (below):

  • Name
  • Social Security #
  • Payroll Period Dates
  • Hours Worked

Learn more or view the Full Service ACA Hourly Tracking Pricing.


This New/Confusion World of ACA Reporting

Why was this so painful & how has It changed the employee benefits marketplace?

by Mark Combs, CFA, CFP, REBC, RHU, GBA, ChFC, CLU

Mr. Combs is CEO of ACAReportingService.com, (a Sky Insurance Technologies Company) is a company dedicated to providing employers and their consultants with best-in-class solutions regarding their employee benefit programs. Visit ACAReportingService.com

The employee benefit marketplace continues to be in quite a state of frustration and confusion as the final deadlines for applicable large employers (ALEs) to provide forms 1095-B and 1095-C to their employees has arrived.

Despite this reporting rewuirement remaining in the national spotlight through virtually every employee benefit publication over the past 18 months, there still remain some employee benefit brokers and employers who are not even aware of the reporting requirements.

Others still believe that they do not have any requirements because their fully insured carrier is taking care of the reporting, which is of course only ½ of the truth. This is creating huge opportunities for the most prepared brokers.

How do I know this?

As the CEO of a firm who performs this type of reporting (ACAReportingService.com), we have had a front row seat from the very beginning. This has given us an interesting perspective into how this reporting is changing the game in a way that nothing has in the past.

I can say this with confidence because I have spent nearly 20 years in this industry making employee benefits sales, managing a $1M block of business, and growing an agency to become one of the most successful in the southeast.

Later we sold the company to a large national broker, and I turned my attention to developing solutions for this industry. Bottom line – I know what it is like to be an employee benefit broker, how to make sales and how to grow an agency aggressively. With all of that said, brokers should understand that it is my strongest belief that ACA reporting is changing the employee benefit marketplace in a way that few could have predicted and this is how it happened.

In the beginning …

In early 2015 when employers were faced with Affordable Care Act (ACA) reporting for the very first time, they asked their benefit consultants and CPAs how to best perform the reporting. These advisors then turned to the IRS guidance on reporting and began to explore what was necessary to correctly report.

After a bit of time in review, they quickly realized that creating this reporting themselves manually would be extremely complex. It was at this time that a rumor began to circulate in the marketplace that this reporting would be best performed by payroll companies. From the outside it seemed to make sense and so most employers received advice to engage their payroll companies to perform the required ACA reporting for 2015.

But there was a major problem on the horizon that very, very few people saw coming. As it turns out, the payroll information necessary to correctly perform ACA reporting is only about 20% of the total information needed. ACA reporting is in essence group medical plan reporting, and thus requires an intensive knowledge of how employee benefits work. You can learn more about what exactly this means by reviewing a blog post we recently released entitled “Is ACA Reporting

More Payroll or Benefits Related?”

As employers began to actively work with their payroll vendors to begin completing the reporting, the wheels began to come off of the bus. They quickly learned that in most cases their payroll vendors had almost no answers for even the most basic of employee benefit questions.

To further complicate things, the process developed by payroll companies has revealed how little they know about how employee benefits work. Also, very few payroll companies have staffed appropriately. This has left employers quite anxious and frustrated over their choice of ACA reporting vendors. You might enjoy this letter that was recently written that outlines how this impacted one employee benefit advisor in the marketplace.

HIPAA & HITECH Compliant? Many CPAs and Payroll Firms Are Not …

it is my strongest belief that ACA reporting is changing the employee benefit marketplace in a way that few could have predicted

There has also been quite a stir recently as some CPAs and payroll companies who decided to perform this reporting just became aware that they must be HIPAA and HITECH compliant. The reason most payroll companies and CPAs forget about this detail is that they normally work with employee specific information regarding payroll records.

For payroll record specific information, HIPAA privacy rules have an exception that allow for the data to not be considered Protected Health Information (PHI). When it comes to ACA Reporting however, there is no similar exception.
The information that is necessary to complete ACA reporting (list here) contains employee Social Security Numbers that are connected with medical plan enrollment details. For this reason, the data necessary to complete ACA Reporting must include PHI and thus the HIPAA and HITECH Compliance rules come into effect.

These rules require many various things, including the following:

  • Employers must enter into a Business Associate Agreement with any vendor they share PHI to in order to complete ACA reporting.
  • Once the vendor comes into contact with the PHI, they have responsibilities to encrypt and safeguard this information.
  • Any communication that includes PHI (emails, etc) must be sent encrypted in order to ensure compliance
  • Once the payroll company or CPA receives the data, they must maintain all other HIPAA and HITECH compliance items regarding how the data is accessed and stored.

What Does It All Mean?

Because of this frustration and confusion, employers have begun to do what they always do when they need help … they turned back to their employee benefit brokers.

The role of these advisors moving forward to assist employers will be enormous and there is a great unwinding of employers away from their payroll vendors and CPAs for ACA reporting. Employers will also enjoy a much higher level of service from the advisors they already have a working relationship with, not to mention the costs are typically much less expensive than what payroll vendors and CPAs charge.

Because of our front row seat, we hear from benefit brokers across the country every single day about accounts they are taking from other unprepared brokers because of ACA Reporting. It is our opinion that more business will change hands via broker of record letters in the next 2 years because of ACA reporting than over the past 7 years prior to the reporting. This is creating a huge opportunity for the prepared brokers. However, they are now facing steep learning curves and resource curves to ensure they meet their client’s needs.

How to Get Prepared …

The best advice you could ever receive is to take this opportunity to grow and write new business! Instead of trying to spend the time and money necessary to become ‘the’ expert in this reporting, simply follow the lead of the best brokers in the marketplace.

The top 1% of brokers are partnering with vendors to assist them in having full capabilities for ACA reporting. The regulations are very complex and changing, and by partnering they can always ensure they have adequate up to date resources to meet their client’s needs.

Also, and this should be obvious by now, but we would strongly recommend you try to find a solution that is not tied to any one payroll vendor. This makes a lot of sense, not only because of their fees and client’s experience with this year’s reporting, but never forget that most payroll vendors also sell employee benefits and thus are also your competitor.

Next for your client’s sake, use a company that provides customer support, not just regarding their product or offering, but on the overall ACA reporting requirement. Third, choose a company that determines the codes on lines 14 and 16 on behalf of your client. This will lower their stress levels as well as yours.

Use a service based company with a history of providing a great client experience. Lastly, consider a company with a history in employee benefits. Use someone who is familiar with the industry already rather than still attempting to “get up to speed”. ◊

– See more at: http://www.lifehealth.com/new-confusing-world-aca-reporting/#sthash.Tj3ENPP3.9WyqF1DO.dpuf

What are the ACA Reporting Penalties?

When an Applicable Large Employer (ALE) fails to comply with their ACA reporting requirement, they will then be subject to various penalties.  These penalties apply both for not providing forms timely to employees as well as not filing timely to the IRS.

The penalties are as follows:

  • Did you fail to file a return, and on-time?  The penalty will be $250 for each return up to a maximum of $3,000,000.
  • Did you fail to provide your employees with their statements, and on-time?  The penalty will be $250 for each return up to a maximum of $3,000,000.

If there ever is intentional disregard of the requirement to provide employee statements, the total penalties stand to be increased from the base fines listed above.
The waiver of penalty and special rules under section 6724 and the applicable regulations, including abatement of information return penalties for reasonable cause, may apply to certain failures under section 6721 or 6722.

Payroll Vendor Doing ACA Reporting … MUST be HIPAA Compliant


For payroll companies performing ACA reporting, we are increasingly finding that they forgot one very important detail … HIPAA and HITECH Compliance.

The reason most payroll companies forget about this detail is that they normally work with employee specific information regarding payroll records.  For payroll record specific information, HIPAA privacy rules have an exception that allow for the data to not be considered Protected Health Information (PHI).

When it comes to ACA Reporting however, there is no similar exception.



The information that is necessary to complete ACA reporting (list here)  contains employee Social Security Numbers that are connected with medical plan enrollment details.  For this reason, the data necessary to complete ACA Reporting must include PHI and thus the HIPAA and HITECH Compliance rules come into effect.

These rules require many various things, including the following:

  • Employers must enter into a Business Associate Agreement with any vendor they share PHI to in order to complete ACA reporting.
  • Once the vendor (payroll company in this case) comes into contact with the PHI, they have responsibilities to encrypt and safeguard this information.
  • Any communication that includes PHI (emails, etc) must be sent encrypted in order to ensure compliance
  • Once the payroll company receives the data, they must maintain all other HIPAA and HITECH compliance items regarding how the data is accessed and stored.

….So one quick question you can ask yourself is, “Did I sign a Business Associate Agreement with the payroll company I hired to do my Affordable Care Act Reporting?”.  If the answer to that is No, then you might have a problem.


This link is a blog article from the American Institute of CPAs that you might find helpful on this topic. (link here)


If you are curious how we handle HIPAA Compliance for our clients, you can learn more here.

 

ACA Reporting Q&A Sessions


Employers, CPAs and employee benefit brokers are working hard to complete the new ACA reporting requirements required under the Affordable Care Act Employer Mandate.  There is certainly no shortage of questions … but very few answers.

To help, we are holding open sessions for Questions & Answers.  Simply register and we will spend our time together answering the submitted questions.  The sessions are free.  Simply click the link below:

 


 

CSR 24

 

ACA Affordability Safe Harbors must work for Everyone in a Class …

The IRS regulations for ACA reporting require an employer to show that they offered the ‘right type of plan’ at the ‘right type of cost’ or else face penalties.  This means that an employer must have offered minimum essential coverage and minimum value coverage at a cost no greater than 9.5% of the employees household income.

Problem!  When you hired an employee you didn’t hire their whole household, so how are you to know what that number actually is?  To deal with this issue the IRS allows for employers to make assumptions on what the household income is for an employee.  It is important to note however, the Affordability Safe Harbor MUST work for everyone within a class of employees in order to use it.  Lets take an example …

Example:  The employer has a class of hourly employees that they are applying the rate of pay safe harbor for affordability purposes.  There are 100 employees in this class.  The safe harbor works for 99 of the employees but does NOT work for 1 person.  This safe harbor cannot be used for ANY employees in this class.  Instead, line 16 of their form 1095-C would simply be left blank and the IRS would use the final, actual household income of the employee to determine if a penalty could apply.

Of course for our clients, we perform all of this analysis on their behalf.  If by chance you used a different vendor for reporting and need assistance, we can assist you through our consulting services.  Find out more by clicking here …


To see specifically where this information and guidance comes from, you can visit this link here to see the Federal Register Vol.79, No.29.  On page 57 of this document you will find the following language:

(i) Conditions of using an affordability safe harbor. An applicable large employer member may use one or more of the affordability safe harbors described in this paragraph (e)(2) only if the employer offers its full-time employees and their dependents the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan that provides minimum value with respect to the selfonly coverage offered to the employee.  Use of any of the safe harbors is optional for an applicable large employer member, and an applicable large employer member may choose to apply the safe harbors for any reasonable category of employees, provided it does so on a uniform and consistent basis for all employees in a category. Reasonable categories generally include specified job categories, nature of compensation (hourly or salary), geographic location, and similar bona fide business criteria.  An enumeration of employees by name or other specific criteria having substantially the same effect as an enumeration by name is not considered a reasonable category.

1095-C Code Calculator Released


Recent Blog:  Payroll Vendor Doing ACA Reporting … MUST be HIPAA Compliant


The most confusing portion of the entire Affordable Care Act employer reporting comes to bear when considering the lines 14, 15 and 16 for form 1095-C.


There are nearly 100 various logic combinations to create the codes necessary for the IRS reporting to be completed correctly.  To assist employers and organizations in checking the validity of the logic of these lines 14, 15 and 16 of form 1095-C, we have created a calculator.


Here is how it works … Simply select the codes below for lines 14 and 16 below and then press ‘search’.  You will then see the full logic as to why certain code combinations work or do not work.

Click here to load this Caspio Online Database.