ACA Reporting What Every Employer Should Do Now

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ACA Reporting What Every Employer Should Do Now
Calendar06 August 2014

Last week I promised you more information about a topic that’s rising to the top of the priority list for every employer — ACA reporting. Here’s an overview of the purpose and types of reporting, along with the action items employers should address between now and January 1.

The ACA reporting requirements, despite being an administrative burden to employers, answer three important questions for IRS enforcement.

  • Did the employer offer the requisite coverage to satisfy the employer mandate?
  • Did the taxpayer have the requisite coverage to satisfy the individual mandate?
  • Was the taxpayer eligible for subsidized coverage?

Types of Reporting

IRS Filing

Individual Statements

Who Reports?

§6055
Minimum Essential Coverage
(MEC)

Include all covered individuals enrolled in MEC.

Sent to each “responsible individual” who enrolls self or others in MEC.

Fully-insured plans: Insurer will provide MEC information on Forms 1094-B and 1095-B.


Self-insured plans: Employer will provide ESR information on Forms 1094-C and 1095-C.

§6056
Employer
Shared Responsibility (ESR)

Include each full-time employee.

Sent to each employee who was full time for at least one month during reporting year.

Employer will provide ESR information on Forms 1094-C and 1095-C.

Next Steps for Employers

One of the most stifling issues for employers is locating and aggregating the necessary HR, payroll, and health plan data, which are often in disparate locations. Here are the immediate steps employers must address between now and January 1.

1.       Make a list of the data to be reported.

The final rules and draft IRS forms have given us a good idea of what is required. But, we are still waiting on the final piece of the puzzle — the instructions. You’ll have to revisit your list and the steps below when the IRS releases the instructions.

2.       Locate the data.

Many employers will find that the required HR, payroll, and health plan data must be captured from multiple vendors and systems. Using your list from step 1, identify who has the data that will be required to complete your reporting. Give special thought to the data you can’t locate. For example, many employers don’t have dependent social security numbers. Create and implement an action plan to get your missing data.

3.       Ask how your vendors will support you.

Determine if your vendor partners will complete the MEC and/or ESR reporting or merely provide data reports. Our clients are seeing a mix of responses. To proceed to step 4, you’ll need to know what data each vendor will provide. If you work with a vendor that is committed to providing reporting services, get the specifics about the scope of their offering and proceed to the next step.

4.       Decide who will aggregate the data.

According to the recent ERIC Survey of Large Employers on ACA Reporting, 28% of employers say that integrating data from two or more different systems is their greatest first-year challenge in meeting the ACA’s reporting requirements. You’ll need a plan to accept data feeds from the systems identified in step 2, aggregate the data, and populate the forms if you choose to do this internally. If you choose to outsource this function, you need to identify and begin implementation with that third party.

5.       Begin tracking January 1, 2015!

Although the first ACA reporting deadline isn’t until Q1 2016, the forms require you to report data on a monthly basis. Tracking data as you go will be much easier than trying to pull 12 months of historical data in January 2016.

Update:

The final instructions and Forms 1094-C and 1095-C are available on the IRS Forms and Instructions page.

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