The passing of April 15 — tax day — is a reminder of the extra form(s) all our employees will have to attach to their Form 1040 next year. And a further reminder that the clock is ticking for preparing for the new ACA reporting requirements.
A few weeks ago, we hosted a webcast on the ACA reporting requirements. You might be interested to know that almost 80% of our listeners had not yet started or were just starting to plan for how they will deliver the required reporting to employees and the IRS. Only 2% had already nailed that down or were getting close. So the good news is that if you are just getting started, you are not alone. The most important thing to keep in mind is that you must track and report monthly data starting January 2015. So you don't want to get too far into the year only to find you aren't capturing everything you will need for reporting.
In past blog posts, we suggested a process to follow:
- Review the required data elements for reporting.
- Locate your data (warning: it will not all be on one system).
- Review the capabilities of your various partners (payroll, benefits administration, in-house IT department) to support reporting.
- Decide who will aggregate your data and complete the IRS forms.
- Begin tracking!
During the webcast, we covered the requirements in general, but we also did a deep dive on the simplified reporting options. Going into the webcast, our national survey results suggested more than 80% of employers were expecting to use the 98% offer method. Employers will qualify for the 98% method if they offer affordable, minimum-value coverage for all 12 months of the year to at least 98% of their employees for whom they are filing a Form 1095-C employee statement and offered minimum essential coverage to those employees’ dependents. For employers that are confident they offer coverage to virtually all full-time employees, this method eliminates the need to count every employee’s hours and specifically identify who is full-time.
But employers considering this method need to be confident they are offering minimum essential coverage to “substantially all” (70% in 2015) of their full-time employees and aren’t at risk for paying the $2,000 (indexed) employer shared responsibility assessment, despite not counting hours. Because this alternative doesn’t require identifying which employees are full-time, many employers will over-report — that is, provide 1095-Cs to all benefit-eligible employees, whether full-time or not. We polled participants after the review of the methods and less than a third indicated they would use the 98% method.
So consider this a friendly nudge to work on planning for reporting — starting with who will do it for you and what reporting method will you use.