Do you know the reporting requirements spelled out by the Affordable Care Act? Are you and your organization prepared to tackle them?
Failing to do so can result in some serious consequences, especially after the Trade Preference Extension Act of 2015, which was signed into law back in June and drastically increases the penalties for failure to file the requested information on tax returns and provide payee statements in a timely manner.
What Forms are Required?
According to the ACA, employers who provide self-insured coverage must provide a Form 1095 to each employee by February 1, 2016. That’s not all that far away. This form is an annual statement showing a monthly breakdown of the health care coverage the employee received in 2015.
Employers must also file the Forms 1095, with a 1094 transmittal form, to the IRS by March 31, 2016. The IRS will then use Form 1095-C to determine whether the employer or employees are subject to any fines.
Why It’s Important to Stay Ahead of the Curve
There are several reasons business owners will want to stay on top of these reporting requirements and avoid waiting until the last minute to comply. One reason is that the data that’s asked for on the form dates back to January 2015, so much of it is already available. Another reason is that obtaining the needed information may require collaboration between departments (i.e. HR who handles benefits and Accounting who handles tax prep) or systems that aren’t already used in sync with one another.
Yet another requirement is for employers to track “net new” data that they might not have already been keeping up with, like employee designations. So some extra digging might be required.
As a result, many employers are ill-prepared for the implementation of the reporting requirements. In a recent survey by Equifax and PricewaterhouseCoopers, L.L. P., only 10{d044ab8acbff62f209a116f8142e303cb886f535b0fcf58cb82cde7cb327d3c9} of employers already have a plan in place for complying with ACA reporting. Only 16{d044ab8acbff62f209a116f8142e303cb886f535b0fcf58cb82cde7cb327d3c9} have even given it consideration.
There’s also some discrepancy as to who employers think should ultimately handle the reporting. The survey showed that 62{d044ab8acbff62f209a116f8142e303cb886f535b0fcf58cb82cde7cb327d3c9} thought it should be an HR responsibility, while 14{d044ab8acbff62f209a116f8142e303cb886f535b0fcf58cb82cde7cb327d3c9} thought the duty should fall on their legal department. Another 12{d044ab8acbff62f209a116f8142e303cb886f535b0fcf58cb82cde7cb327d3c9} said they still weren’t sure.
What Can I Do to Prepare?
Employers do have the ability to request an extension of the filing deadline, but that’s not something we recommend as a fallback solution. Rather, employees should be working to implement a plan as soon as possible. For those who don’t want to handle the reporting internally, there are even third-party vendors who can assist.
Even still, it’s important not to underestimate the time needed to make sure their data is accurate and ready to report.
Another important aspect is the need to educate employees about the 1095 form, since most will have never seen one before. It’s likely that many will have questions.
Regardless of their method of approach, business owners can no longer escape the inevitable. The ACA has been upheld, and the time to prepare is now. For more information, check out this article on TLNT by Ere Media.