Affordable Care Act (ACA) Reporting for 2015: Final Thoughts and Tips

All of us at Creative Benefits send our best wishes for a healthy and happy 2016! The IRS gave all of us a holiday gift — it extended all of the filing deadlines for the ACA reporting.

The new deadline for applicable large employers (ALEs) to provide forms to their full-time employees is March 31, the deadline for a paper filing to the IRS is now May 31, and the electronic reporting deadline is now June 30.  We have seen that our clients have a natural learning curve for both the content and mechanics of reporting. The IRS must have realized this as well and has provided this extension for employers to comply.  red ribbon wrapped box with hourglass counting inside vector

ACA reporting is not complicated, but it is complex.  We have worked diligently to prepare our clients for reporting, but many didn’t realize how daunting the process would be.  IRS regulations describe reporting requirements fairly well, but there are many moving parts, and companies must process substantial volumes of employee data to determine how to classify employees for reporting. Adding to the difficulty is that the data comes from a variety of sources, and a good and reasonably priced way to synthesize it doesn’t yet exist.

Despite the filing extensions, we strongly encourage our clients to continue working toward a goal of completing all ACA reporting as soon as possible.  We know that this has been a tremendous distraction.  Everyone will be more productive once they’ve cleared their desks of this first round of ACA reporting.  Also, this first time through will set a process for future reporting cycles.

In addition to the new timelines, the IRS understands 2015 is a transition year and will allow more latitude in interpreting the regulations and transmitting the data.  Our clients’ understanding of the process varies, but — no matter where they are in this process — we are working with them not only to complete 2015 reporting but to develop strong templates to use going forward.  Additionally, we have dubbed 2015 the “do the best you can” year to provide much-needed perspective.

For those who have not yet finished their 2015 reporting, here are a few important final tips for 2015.

Who reports what?

a) Fully-insured Applicable Large Employers – submit a 1095-C, Parts I & II to each full-time employee and provide a copy of all of those 1095-Cs to the IRS with a 1094-C transmittal sheet.  The insurance carriers provide the 1095-C, Part III.

b) Self-insured Applicable Large Employers – submit a 1095-C to all full-time employees, including Part III coverage of dependents, and provide a copy of all of those 1095-Cs to the IRS with a 1094-C transmittal sheet.

Who is this reported to?

All ALEs must provide the 2015 forms to employees by March 31, 2016.  ALEs with fewer than 250 employees must submit copies of the 1095-Cs along with the 1094-C transmittal sheets to the IRS by May 31, 2016; employers with more than 250 employees must submit their 1095-Cs and accompanying 1094-C transmittal sheet electronically by June 30, 2016.

Miscellaneous reporting tips:

• Employers with 50-99 employees are eligible for 2015 transition relief only if 1) they did not limit the number of employees in 2015 simply to avoid offering coverage and, 2) if they are making preparations to provide affordable coverage in the next coverage period.

• Reporting software and software used to track variable hour employee hours are not the same.  You must use two separate modules for forms of calculation.

Be sure you have determined your appropriate safe harbor affordability.  Is your employee’s coverage affordable as a percentage of household W-2 wages, rate of pay, or below 9.5% of the Federal Poverty Line (FPL), which is currently $24,250 for a family of four?  Code accordingly.

About the author: Ann Duke, Esq. is General Counsel with Creative Benefits, Inc. She provides consultative services to employers and their employees.