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, (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

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 (, 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:

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


Evaluating ACA 6056 Employer Reporting Software?

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.  At ACA Reporting Service, 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!



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 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 types 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 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 proven to be quite helpful.