ACA PAY OR PLAY – REPORTING (Part 2 ACA series)

In our last blog post, ACA Pay or Play – Act Now, we took a look at the big picture of why healthcare reform exists and why you shouldn’t think that it will just go away. Today our focus is the deliverables you need to provide to the IRS and your employees to show your compliance status – reporting.

You will file an IRS form that will provide the government information on your situation as an employer. Not only that, but the insurers (health insurances issuers, self-insured plan sponsors, government-sponsored programs, and any other entity that provides minimum essential coverage), the Exchanges, and the individual (during their own tax filing) will all report to the IRS as well. The reporting results will provide the whole picture of what an individual’s coverage situation is-what coverage they have, with what health insurance carrier, where he/she is employed, did the employer offer coverage, etc.

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Final regulations for the reporting requirements were released on March 5, 2014. While the actual IRS forms are not yet available, the regulations provide enough of an outline in terms of data requirements to allow for planning and preparation. Required information includes, but is not limited to:

• Employer’s name, address, EIN/TIN, and calendar year for which the information is provided;
• Name and phone number of an authorized contact person at the employer
• Certification as to whether the employer offered its full-time employees (and dependents) the opportunity to enroll in employer-sponsored coverage—information provided by calendar month;
• Number of full-time employees for each calendar month during the calendar year, reported by calendar month;
• For each full-time employee, the months during the calendar year for which coverage under the plan was available;
• Each full-time employee’s share of the lowest-cost monthly premium for self-only coverage, by calendar month;
• Name, address and TIN of each full-time employee during the calendar year and the months, if any, during which the employee was coverage;
• Indicator codes for whether the coverage offered provides minimum value and whether dependent coverage for spouses was offered;
• Indicator code for total number of employees, by calendar month;
• Indicator code for whether an employee’s effective date of coverage was affected by a permissible waiting period under the pay or play rules (i.e. waiting periods cannot exceed 90-days), by calendar month;
• Indicator code as to whether the employer is a member of a controlled group;
• If using a third-party to report, the name, address and ID of that third party would be required.

As you can see quite a bit of information about each employee, the coverage offered, and the employer is required for reporting. It is critical to begin capturing and tracking this information well in advance of the reporting period so that your data is accurate and audit-worthy when you report. Waiting to act until the last minute will likely be a very painful experience in terms of trying to acquire and/or recreate data to satisfy the reporting requirements. It may be difficult to guarantee that the data at this point has been tracked and documented in a manner that would satisfy auditors should your filing be audited.

While the first mandated reporting is required in the first quarter of 2016 for the 2015 calendar year, voluntary reporting is recommended in the first quarter of 2015 for the 2014 calendar year. The IRS is beta testing their reporting systems to make sure that they have everything they need in place. We can’t stress enough that you should take advantage of this reporting period to make sure that you have everything you need in place for proper reporting, be it personnel, systems, or a third-party reporting partner. This is the time to find the bugs and glitches and the problems with your processes and procedures. It gives you time to implement corrections to any issues identified. If you wait until it is required to file, you may find yourself in a situation that you cannot fix and which may result in a penalty.

Whether during the voluntary period (recommended) or the first mandated period, employers will file form 1095-C with the IRS, as well as completing an employee statement to provide information to their employees about what coverage was offered and provided in the prior year. That information will be used to determine whether employees can claim a premium tax credit on their tax returns for coverage purchased through the Exchange. If just one employee receives subsidized coverage through the Exchange, it opens the employer up to penalties for non compliance. Employers that fail to comply with the reporting requirements may be subject to general reporting penalties as well (for failure to file correct information returns and failure to furnish correct employee statements).

Don’t delay in determining what data you have readily available to assist you in the reporting process and what data requirements may be a challenge to gather.

Next week we’ll be taking a step back and looking at how to test your compliance.