Changes for 2016 Reporting
For those of you who have not used ACA reporting with us previously, you will see that the 1095 is broken down by employee. If you’ve ever seen the actual 1095 Form in itself, it consists of 3 parts. When you look at part 2, all you need to look at are the codes for each month of the year. This is the tedious part of the system. We have to determine where the employee falls in this process. Were they offered coverage? Were they enrolled? Were they in a waiting period? There’s a whole lot of different variables that go into determining these codes. You will notice in 2016 reporting is that there are some new codes. There were some vague responses from the IRS in terms of what codes need to be used where in what scenarios, so there is a lot left up to interpretation. They have tried to update the descriptions to give us a little more clarification, but there is still some areas that are difficult to understand; we are more than happy to walk through those scenarios with you.
This section of the platform is something you can either complete on your own or have us do for you, depending on which pricing model you would like to go with. Different careers or vendors might provide information for you to complete this much easier. We do have a data import which will allow you to complete these forms via an excel import, so if you've been able to receive an enrollment spreadsheet from your carrier, that would be easily transferable into a data import of our template and into our system with very little manipulation. This is definitely something I would recommend if you have reporting capabilities. Our system certainly has lots of reporting capabilities in terms of creating a generalized custom export out of our system, which is something I would be more than happy to walk you through. This will help you determine who should receive a form based on hours and status and will help you filter through which employees should be classified with which code. If you have that data import ability, I strongly recommend it as it’s a great way to go.
The other tool we have is a bulk edit, which will allow you to complete a mass amount of employees all at once. This typically works very well for employees in a salary group, so you can go through and filter out all salaried employees. It’s possible that you have a higher population of salary employees who have been with you and enrolled all year. This way you can go through their codes and complete all of those employees at once rather than individually, which saves time and a little bit of manual work on your end. There are a variety of ways to alleviate some of that manual work on the back end.
Are You Self-Funded?
If you are self-funded, Section 3 of the 1095 is provided so you can pull up the employee's enrollment and designate the which of the employee’s dependents were covered in which month. There are a lot of tools that we want to make sure you’re aware of to assist you with this. Along with the 1095, there is a 1094 screen where we can complete this electronically. Again, we have the contact information that we can edit, the certification of eligibility and a monthly group. This states all of the accounts that we have to go through. This is a great thing to remember because sometimes these 1094s and 1095s can sneak up on you, so make sure you are paying attention to them.
You will also be able to see who consented to print their own 1095s rather than having you print it for them, much like our W-2 consent. Once that is complete you can go through the approval and printing process.
One of the biggest changes for 2016 is that employees must receive a copy of their 1095s before January 31st, 2017, or the first business day thereafter. This is somewhat different from last year. Previously, we were scheduled to have those released to employees by January 31st, but the IRS made some delays. We will be filing to the IRS before March 31st, which we were successfully able to do in 2016 so that deadline will not be a problem for us and is not something you will have to worry about. Once you complete those 1094s and 1095 we are all set to file so we will handle that on your behalf.
Starting in 2016, all companies with 50 or more FTEs must insure 95% of their full-time employees. This past year the number was 70 percent. Before there were no penalties for those of you in that mid-sized range. If you were under 100 employees you weren’t going to be penalized, even though you still had to file. This year there will be penalties if you don’t, so make sure you know where you fall in the FTE count, and remember if you are over that 50 threshold you have to offer affordable qualified health insurance to 95% of your employees.
Exchange Subsidy Notices
Another big thing that we were notified about having changed was the Exchange Subsidy Notices. The Marketplace Exchange, where citizens can go to receive their own health coverage, started sending out subsidy notices to employers who should have offered employees coverage because of their full-time status. These are subsidy notices telling the employer that they did not offer coverage to a certain employee and will be penalized for it. While this is for the previous year’s reporting now, they will come into play in subsequent years down the road. You do, however, have the ability to fight the subsidy notice and say you did offer the employee coverage, and that they simply chose the route to go to the marketplace and get their own coverage. So be on the lookout for those, and if you have received a notice I recommend either letting your broker know or letting us know and we can help direct you in that process.
For plan years beginning in 2016, affordability is based on 9.66%, which has changed from 9.56% last year. This is mostly due to inflation, so there won’t be too much change here, but it does come into play when you are looking at your tiers for employee-only coverage and how much you can charge an employee for that single coverage. This also comes into play when you are determining different affordability methods: whether you are using rate of pay, the W-2 wages or the federal poverty level.
I would recommend you start this process by determining your ALE stats. Your large employer status is based on last year's employee hours, so we’re going over three different years here when we’re filing. You’re determining your eligibility based on 2015 data, so if you were over that 50 threshold in 2015 you are required to offer insurance in 2016 for a 2017 reporting.
Qualified Health Plans
It’s probably a good idea to talk to your insurance broker to make sure you are offering a qualified health plan, and make sure that you are going through your coverage to ensure that you have minimal essential coverage that qualifies as minimal value. Start by determining a way to track employee hours and decide whether or not they are full-time, part-time, etc. Keep in mind, whether you consider them full-time or not does not necessarily mean they are full-time according to the IRS. If 32 hours on average is required for eligibility for your company’s health insurance, that does not necessarily mean that’s what the government thinks. 30 hours per week on average is how we determine a full-time employee.
If you have time, take a look at the look-back period calculation in our platform or the insurance eligibility tool to determine who should be offered coverage going forward. It would also make sense to keep a record of who is enrolled in coverage. This is something you can utilize our Benefits Administration platform for, so you could certainly do that going forward. We also do have customized reporting where we can help you determine who actually had deductions for those health plans. It might not necessarily signify enrollment, but if you do not already utilize a Benefits Administration platform and you need a place to start determining who enrolled, running a custom report on active deductions might be a great way to go. Interested in a more in-depth look at what Benefits Admin can do for your ACA reporting? Request a demo here.
There are also different designations for employees, so it would be smart to go through your employees and see where they land: whether they are new hires, terminated employees, COBRA or retirees. All of these types of employees get different codes so it is good to start noticing where your employees fall. Now there will be some safe harbor rules and transition relief, but those are changing. As of 2017, there won't be as many transition relief offers out there, so again, start doing some research and make sure you know where your employees fall and where your health plan falls in terms of eligibility for transition relief.
We do have a couple of different pricing methods, so those of you who did not have ACA reporting with us last year, please let us know and we can contact you directly with more information.