Month-End Close for ACA Compliance - Integrity Data · ‘Full-time’employee … for purposes of...
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Month-End Close for ACA Compliance Critical actions for eligibility tracking using Integrity Data’s ACA Compliance Solution
Transcript of Month-End Close for ACA Compliance - Integrity Data · ‘Full-time’employee … for purposes of...
Month-End Close for ACA ComplianceCritical actions for eligibility tracking usingIntegrity Data’s ACA Compliance Solution
© Integrity Data 2015. All rights reserved
New definitions,new concepts,
multiple choices– all centered on the word
MONTHLY
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Regulatory reporting: Intensified
Monthly breakdowns:The ACA standard for workforce reporting
Before the ACA, workforce reporting
was about summaries:
Form W-2Yearly summaries
Form 941Quarterly summaries
© Integrity Data 2016. All rights reserved.
© Integrity Data 2015. All rights reserved
New definitions,new concepts,
multiple choices
Quoted text comes from Internal Revenue Bulletin 2014-9, published 2/24/2014: Shared Responsibility for Employers Regarding Health Coverage
‘Full-time’ employee“… for purposes of determining full-time employee status, 130
hours of service in a calendar month is treated as the monthly equivalent of at least 30 hours of service per week…”“The final regulations provide two methods for determining full-time employee status — the monthly measurement method and the look-back measurement method.”
‘Variable-hour’ employee“ … an employee if, based on the facts and circumstances at the
employee’s start date, the applicable large employer member cannot determine whether the employee is reasonably expected to be employed on average at least 30 hours of service per week during the initial measurement period because the employee’s hours are variable or otherwise uncertain.”
Where to start in making sense of terms for ACA concepts
• Know that ‘monthly’ is the view that’s pivotal
• Know that ‘hours’ means ‘hours of service’
• Know that classifying an employee can be tricky
• Know when to use which measurement method
Review our blog post
IRS reporting FAQ:
Which ACA eligibility measurement method should an employer use?
http://www.integrity-data.com/irs-reporting-faq-which-aca-eligibility-measurement-method-should-an-employer-use/
Hours of service – the ACA standard for calculating full-time status
Time to include:
• Jury duty
• Military
deployment
• FMLA
• Leave of absence
• Vacation
• Holiday
• Illness
• Incapacity
• Layoff
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Regulatory reporting for ACA compliance hinges on the tracking hours of service to the employer, not just accounting for paid hours of work on the job.
Every employee whose hours of service total 130 in any one month of a calendar year is considered full-time – and eligible for employer-sponsored health insurance.
© Integrity Data 2016. All rights reserved.
The two ACA methods for measuring when an employee is full-time [eligible for coverage]
Monthly measurement methodEmployer counts an employee’s hours of service for each month in a calendar year.
Requires employer to treat an employee as being full-time for coverage purposes for any month in which the employee’s hours of service total 130.
• This method is best suited for stable workforces where employees’ schedule are predictable.
• When hours don’t vary, the employer can be fairly confident about which employees are full-time and which employees are part-time.
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Look-back measurement methodAn employer may determine the status of an employee as full-time during a future period (referred to as the stability period), based upon the employee’s hours of service in a prior period (referred to as the measurement period).
• This method is the measuring tool for workforces where employees’ hours vary.
• When schedules are less certain, employers can identify full-time employees before the beginning of a potential coverage period.
© Integrity Data 2016. All rights reserved.
© Integrity Data 2015. All rights reserved
New terms for the period beforewhich an employee must be
enrolled in coverage.
‘OPEN ENROLLMENT’
A concept to forget with respect to
employer-sponsored health insurance
in the ACA era Full-time employees
have a waiting period.
Variable-hour employees have an administrative period.
Full-time employees have a waiting period.
Variable-hour employees have
an administrative period.
Each term relates to an employee’s classification.
© Integrity Data 2015. All rights reserved
Section 2708 of the Public Health Service Act provides that, for plan years beginning on or after January 1, 2014, a group health plan, or a health insurance issuer offering group health insurance coverage, may not apply any waiting period that exceeds 90 days.
Under the Affordable Care Act, an employer sponsoring a group health plan that offers coverage to the employee at or before the conclusion of the employee's initial three full calendar months of employment will not be subject to an assessable payment under Section 4980H of the Internal Revenue Code.
DIFFERING GUIDANCE FROM DIFFERENT LAWS
An ACA must-know in finding
the waiting period for
full-time employees THE DILEMMA THESE DIFFERENCES PRESENT
Sarah Jackson is hired 06/02/2015 as a full-time employee.When must she be covered?
Under the Public Health Service Act: 08/31/2015 Under the Affordable Care Act: 10/01/2015
Since most plans start at the beginning of the month, under the Public Health Service Act, Sarah would have had to
be covered on 08/01/2015.
© Integrity Data 2015. All rights reserved
ACA must-know in finding the
administrative period for
variable-hour employees
If during their measurement period, a variable-hour employee is found eligible for coverage, there are restrictions on the administrative period before he or she must be enrolled in coverage.
Administrative period on a standard measurement period can be up to 3 months.
Total of the initial measurement period and initial administrative period cannot exceed 13 months.
© Integrity Data 2015. All rights reserved
ACA must-knowsfor 12-month measurement
periods
• Having a 12-month standard measurement period statistically will yield the best results
• Initial measurement period will also be 12 months
• The ‘13-month’ rule
• Cutoff date dilemma for initial measurement period reporting
For allocating hours of
service to a period,
nowhere in the final
IRS regulations is using the check dateacceptable..
Tracking eligibility – A critical to-do on a monthly basis
RISK IDENTIFICATIONFor ACA noncompliance, the coverage penalties
will be assessed monthly.
Review our blog post
Take cover from ACA sledgehammer and tack hammer penaltieshttp://www.integrity-data.com/take-cover-from-aca-sledgehammer-and-tack-hammer-penalties/
Employers are at risk of IRS penalties
Hourly workers
Lower-wage workers
Part-time workers with
varying schedules
Frequent turnover
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ACA-vulnerable industries
HospitalityRestaurantsHotelsMotelsCasinosResorts
Employment agenciesStaffing companiesTemp-help services
Nursing careRehabilitation facilitiesSenior living centers
RetailColleges, universities,
schoolsReligious organizationsMunicipalitiesSecurity servicesFood processingTruckingConstructionAgribusinessNonprofits
This is really about part-time workers and the lowest-wage
full-time workers.”
Larry Levitt | Kaiser Family Foundation,a nonpartisan research group that analyzes major health care issues
“
© Integrity Data 2016. All rights reserved.
ACA-vulnerable workforces
Steps to take in our solution forACA month-end processing
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Resources as March 31 approaches
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© Integrity Data 2015. All rights reserved
March 31, 2016 – Employees must have 1095-Cs
May 31, 2016 – Paper copies, with 1094-C transmittal, must be mailed to the IRS
June 30, 2016 – Electronic copies, with 1094-C transmittal, must be filed with the IRS
New ACA reporting deadlines
http://www.integrity-data.com/irs-extends-1095-c-production-and-filing-deadlines/
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IRS answers to ACA questionsInformation Reporting by Employers on Form 1094-C and Form 1095-C
Information Reporting of Offers of Health Insurance Coverage by Employers (Section 6056)
Information Reporting by Health Coverage Providers (Section 6055)
Employer Shared Responsibility
Employer Health Care Arrangements
Employer Shared Responsibility Provision
Information Reporting Requirements for ALEs
Additional Information Reporting Requirements for Providers (Self-Insured ALEs)
Links from the Integrity Data site
to ACA guidance from the IRS:
ACA resources on the IRS website
IRS tax tips to receive by email
IRS handles to follow on social media
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Find slide decks and recordings from past ACA User Group lessons on this page:http://www.integrity-data.com/aca-user-group-content-library
For the password, email [email protected]
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Affordable Care Act reporting FAQs on Integrity Data’s site:• Go to http://www.integrity-data.com/knowledge-base/• Then click on ‘ACA Reporting Requirements’ or ‘ACA Compliance Solution’
Upcoming lessonsfor our ACA User Group
Thursday, January 21, 2016ACA Year-End Close
Monday, January 25, 2016ACA Year-End Close
• 2:30 p.m. Eastern• 1:30 p.m. Central• 12:30 p.m. Mountain• 11:30 a.m. Pacific• 9:30 a.m. Alaskan• 8:30 a.m. Hawaiian-Aleutian
E-filing is encouraged by the IRS, but uncertainty remains
about the testing required for individual companies’ submissions.
To get started on obtaining a Transmitter Control Code (TCC)
for the AIR system, visit
https://www.irs.gov/for-Tax-Pros/Software-Developers/Information-Returns/Affordable-Care-Act-Information-Returns-AIR-Program-Did-You-
Know%3F
If you would like us to transmit files on your behalf,
email [email protected]
Thank you for joining us
To add team members to our webinar notification list:
Email Lindy Belley
www.integrity-data.com888.786.6162
For clarifications on details presented and to suggest topics for future webinars:
Email Helen Karakoudas
Ernie [email protected]
