What do employers need to undertake related to Affordable Care Act reporting? The IRS, in February, released final forms and instructions for employers to prepare. Good news: If you’re an employer and you began your data-gathering efforts based on the draft forms and instructions previously issued, you won’t need to make many adjustments. For employers just becoming acquainted with the reporting requirements, it all needs to come together now.
If you’ve been hoping for a reprieve, there is no indication that reporting will be further delayed. Reporting is required in early 2016 with respect to calendar year 2015. The reporting forms and instructions remain detailed and complex, with many caveats, exceptions and special rules. Further complicating this, reporting continues to be based on the calendar year, regardless of your plan’s operating dates. Thus, employers with non-calendar plan years who qualify for delayed implementation of the employer play-or-pay penalties until the start of their 2015 plan year must report for the entire 2015 calendar year.
Similarly, reporting for 2015 is required of employers who are subject to the employer play-or-pay mandate, but qualify for a one-year delay because they have more than 50, but fewer than 100, full-time employees and full-time equivalents. Other items remaining unchanged include:
• The common-law employer of an employee is required to complete the reporting, even if that employer is part of a controlled group of companies and a different member of the controlled group sponsors the plan or provides coverage.
• For employers subject to the employer play-or-pay mandate, Form 1095-C is required for each full-time employee (even if coverage is declined or not offered) AND for each participant in any self-insured coverage it provides (even if not a full-time employee).
• Employers reporting self-insured coverage will need to provide detailed, month-by-month information, including a Social Security number for each enrollee.
• Employers reporting on offers of coverage to full-time employees will use one of nine codes to identify the coverage offered.
• Such employers will also use one of nine offering codes to indicate whether the full-time employee accepted the coverage offered, whether one of the three safe-harbor affordability measures applied with respect to the coverage offered to the employee, or whether the employer relied on one of the play-or-pay mandate transition rules with respect to the employee.
• Reporting shortcuts remain available and of dubious value to employers.
The draft instructions directed employers to report separately (using Forms 1094-B and 1095-B) on self-insured coverage provided to non-employees (e.g., retirees, COBRA participants, outside directors, partners and other self-employed individuals).
An example is the best way to explain the change made in the final instructions. For 2015, Joe’s employer GoodCo. is subject to the employer play-or-pay mandate and provides self-insured coverage to Joe. From Jan. 1 through May 31, 2015, Joe is a full-time, common-law employee of GoodCo., but terminates employment and elects COBRA coverage effective as of June 1, 2015. Under the draft instructions, GoodCo. apparently would have provided two different forms to Joe for 2015: a form 1095-C showing GoodCo.’s offer and provision of self-insured coverage to Joe as his employer, and a Form 1095-B showing GoodCo.’s provision of self-insured coverage to Joe as a COBRA-qualified beneficiary.
The final instructions eliminate this double-reporting, allowing GoodCo. to report the self-insured COBRA coverage provided to Joe on the same Form 1095-C on which it reports the coverage offered and supplied to Joe as an employee.
Ideally, technology will take much of the reporting burden off employers, automating significant portions of data collection and reporting. But technology needs accurate data to produce accurate reporting. In addition, while an employer’s current HR technology may capture information required for ACA reporting, it is unlikely that the employer has any one system that incorporates all of this information. It’s also very likely that gathering the information from various sources and entering it into required forms will be difficult and time-consuming. Even some of the large, sophisticated payroll and benefits administration vendors are currently unable to help employers fully meet the ACA reporting requirements. Some boutique vendors have seized upon this opportunity and can help employers meet this business imperative.
Employers that have not done so already will want to discuss with their third-party payroll and benefits admin-
istration vendors the extent to which they can handle the required information gathering and reporting.