Why Should Benefits Managers Know How to be ACA Compliant?
Failure to comply with ACA mandates could lead to penalties
Whether the Affordable Care Act, often referred to as “Obamacare,” is repealed this year or not, benefits managers are still required to meet filing deadlines under the law or their employers could face severe penalties. Companies employing 50 or more full time equivalent (FTE) workers that haven't filed on time face fines from the Internal Revenue Service (IRS)—which will continue to enforce the act. A recent report states that those not in compliance with the Affordable Care Act could face $31 billion in penalties for last years’ tax reporting period alone. Benefits administrators should make certain they’re in compliance before they are swamped with open enrollment, experts say. “Employers would be ill advised to take a wait-and-see approach,” Ashley Gillihan, a tax attorney at Alston & Bird’s employee benefits and executive compensation group told The ACA Times. “Reporting will continue in large part.” The need for accurate benefits management to aid this process is great. Fortunately software can help. But first, here’s how to stay compliant:
First: Identify Full-Time Employees
Benefits managers must first determine and track which of their employees are actually working full-time. Last year, businesses with 50 or more FTE workers were required under the ACA to offer minimal essential coverage to 95 percent of their full-time employees. The IRS offers this formula for employers to determine the total number of full-time equivalent workers. Generally, a full-time employee is anyone who worked 30 hours weekly or 130 hours per month. A comprehensive benefit management system integrated with a time system will accurately track hours worked.
Second: Keep Proof that Coverage Was Offered
After identifying full-time employees, track and document compliance by making sure employer-mandate requirements were met by having proof that coverage was offered to all eligible full-time staff. Use your benefits management system to log dates each employee was offered health insurance and when they may have waived that coverage.
ACA compliance will be easier if benefits managers make certain they’re organized and are tracking data all year long. Be sure to review the proper IRS forms and their instructions to make certain data is on hand in case of government audits.
Third: Note Insurance Costs on Form W-2
“The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan,” the IRS website states. For companies who filed more than 250 W-2s in the previous year, that cost must be reported on Box 12 Code DD of Form W-2 (it is optional for companies who filed 250 or less W-2s). This is so employees know the complete cost of their individual health care plan for them and their dependents, if applicable. The IRS lists some ACA W-2 reporting exemptions for businesses that provide retired or former workers health insurance. Benefits managers should remember to calculate the total contributions for both the company and the employee.
Fourth: Educate Employees About Their Health Benefits
ACA compliance may confuse employers and workers alike. This year, the IRS issued new drafts of forms 1094-C and 1095-C. Make sure employees know the purpose of the applicable form and what it contains. Have them review the form before it arrives and tell them why it matters. Make certain employees have all the information they’ll need about proof of their coverage and their benefits.
Lastly: Software Can Help
Benefits managers concerned about making mistakes may want to turn to Benefits management software to aid this process. Primepoint offers such tools; click here for more information.
Deadlines for ACA reporting are:
- The 1095-C schedules must be delivered to employees by Jan. 31, 2018.
- Paper filing for 1094-C/1095-C schedules with the IRS is Feb. 28, 2018.
- eFiling deadline with the IRS is March 31, 2018.
Note: Businesses with more than 250 employees must file electronically. Primepoint electronically files 1094-C/1095-C forms for all customers, regardless of size.