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Getting Serious About ACA Information Reporting Requirements

July 27, 2015

It’s time for “large” employers to get serious about complying with the ACA’s information reporting requirements.

Now that the U.S. Supreme Court, in its June 25 decision, has perhaps once and for all upheld the Affordable Care Act (ACA), it’s time for “large” employers to get serious about complying with the ACA’s information reporting requirements, which go into effect for the 2015 tax year.

All too many employers have put off addressing the requirements as they waited to see whether the Court’s ruling would make them moot. Others haven’t begun because they’re not sure whether they’re subject to the requirements or they simply don’t know what they need to do to comply. With information returns due beginning in early 2016 (reporting on 2015 coverage) and much data that must be gathered to complete them, waiting any longer to address the requirements is unwise.

Under the ACA, “large” employers are those with 50 or more full-time employees or the equivalent — generally the same employers that are subject to the ACA’s shared-responsibility, or “play-or-pay,” provision. If you’re one of the employers with 50 to 99 full-time employees or the equivalent that has met the requirements to qualify for a 2015 exemption from play-or-pay, be aware that you’re still subject to the information reporting requirements.

What are the requirements?

Affected employers must file Forms 1094 and 1095, generally for each full-time employee. The forms report information to both the IRS and the employee about health care coverage offered and provided to the employee (and his or her spouse and/or dependents, if applicable) during the year.

The IRS recently issued final versions of Forms 1094 and 1095 for 2014 information reporting (which is voluntary). While the forms and their instructions technically apply only to reporting being done in 2015 about 2014 offers and coverage, they provide a good starting point for planning for what information about 2015 offers and coverage will need to be reported in 2016. In addition, before releasing the final forms, the IRS issued guidance and Q&As to help make it easier for employers to properly complete the forms.

Here are some examples of information that must be reported:

  • The type of minimum essential coverage offered (such as to the employee only or also to spouse or dependents or to spouse and dependents)
  • The employee share of the lowest cost monthly premium for self-only coverage
  • Whether any safe harbor applies
  • The name and Social Security number (or birth date, if Social Security number is unavailable) of each individual receiving health care coverage
  • The months each coverage recipient received coverage

As you can see, there are a lot of details you’ll need to track in order to fulfill the reporting requirements. Reporting is further complicated if an employer is part of a controlled group or reports for separate divisions and when employees are hired or terminated during the year or receive COBRA offers due to termination or a reduction in hours.

KLR has partnered with ADP to offer our clients education, compliance and assistance with the ACA requirements. ADP has solutions to offload this responsibility and to help your company automate the mandatory reporting and compliance tracking that is required under this law.

There are cut off dates for ADP to be able to handle this on your behalf so please contact KLR to set up a meeting with ADP about ACA compliance.

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