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

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.

 

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
 

 

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 clicking here.

10 Quick Reasons To Partner With ACA Reporting Service

 

Often when speaking with Payroll Companies we get the question, “Why would we not just build our own internal ACA reporting capabilities for our clients?”.  Here are a few quick reasons:

    1. Your major competitors (ADP, Paychex, etc) already have a system and they are trying to poach your clients by showing that they already have a solution.
    2. Your clients really want a solution – NOW.
    3. Developing ACA Reporting capabilities takes a lot of time and money.
    4. Instead of spending your resources building additional technology, you could have all of the technology and still get all of the profits you expected to get.
    5. By partnering with ACA Reporting Service, you likely will be more profitable than if you developed the technology on your own.
    6. ACA Reporting Service offers a FULLY WHITE LABELED SOLUTION for your payroll company.  Your clients will see us as You!
    7. We are ACA experts already.  Do you really want to learn all that is required to be an expert?
    8. By partnering with us, your clients will also have access to a full employee benefit enrollment system if they desire.
    9. We have built a proprietary process based upon our discussion with the IRS and in-depth knowledge of forms 1094 and 1095.
    10. ACA Reporting Service will deliver to your clients an incredible customer service experience.