Affordable Care Act Filing

What is Affordable Care Act (ACA)?

ACA is an US healthcare reform law that expands and improves access to health care for more Americans. It also helps curb excess spending through regulations and taxes. The main focus of ACA is:

Ensure that more Americans have access to affordable health insurance.
Improve the quality of health care and health insurance.
Regulating the health insurance industry, and reduce health care spending in the US.

Employer Shared Responsibility

Applicable Large Employers (ALE) with respect to a calendar year, are businesses employing a minimum of 50 full-time  employees (employees that work at least 30 hours per week). These businesses are required to comply with section 6056 of the ACA provision. A calculation is applied to the part-time employees compliment to determine a full-time equivalent. That number is added to the number of full-time employees to determine the full-time employees equivalent (FTE).  ALE’s will need to file a 1094c form along with a completed 1095c form for every full-time employee and provide the employee by January 31 with a completed copy of the 1095c statement. Businesses must file to the IRS by March 31 as the information filed will be used by the IRS to administer the employer shared responsibility provisions and the premium tax credit. Businesses that do not employ 50 full-time employees including FTE do not fulfill the threshold definition of an ALE as the IRS has outlined, however, businesses need to ensure that they are not part of a control group.

Organizations need to know if they fall under Control Groups.

Control Groups are businesses owned by a common owner usually having 80% or more common ownership. Code Section 4980H also includes a provision under which, the employees that are in a control group are combined together and treated as one business to determine if together 50 full-time employees (including full-time equivalents) were employed in a calendar year , if so, then all companies within the control group with one or more full-time employee including FTE have to file.

Why is it important?

ACA has changed the rules for workforce management. Businesses face new penalties, compliance risks, increased complexity with increased pressure for accurate record keeping boards on potential confusion about which department from Legal to HR to IT needs to do what and when. ALE businesses under the ACA provision are required to offer affordable health coverage that provides a minimum level of coverage to their full-time employees (and their dependents). The US government has worked diligently with the private sector to develop a sophisticated model of measuring, tracking and administrating the process of providing health insurance to full-time employees.

What problems could your business face? Information Management

The information required to administer the process of providing health insurance to full-time employees is typically captured by four core systems: Payroll, Health Benefits, Administration of Leave, plus, Time and Attendance. These systems may reside in disparate systems across various departments. This information will need to be processed, analyzed and maintained within a secure environment.  The data needs to be orchestrated into reports that will be filed to the government for review to ascertain that compliance to ACA provisions was met. Failure to prove that eligible full-time employee(s) was offered minimum affordable health coverage and the IRS imposed penalties heightens the importance of having a well-defined information management system. Having solutions in place to identify and address compliance issues before they arise and become a problem makes integration of all the various systems vital.

Some key Information Management considerations in preparation of meeting ACA compliance and filings include:

De-centralization adds to the complexity of filing

Businesses that are decentralized or have autonomous groups will find filing of returns presents a greater challenge and may look for strategies to unify information across desperate systems. An integrated solution will be key as employees are measured across the control group, not just the individual ALE’s and there may be significant differences in the way various systems store and administer payroll and health benefit information.

Reporting responsibilities for ALE’s

ALE’s within a control group is required to file a 1095 an information return. This requires maintaining multiple viewpoints into the data capturing methodology. Throw in the complexities of multiple categories an employee can fall into, along with employees working across various companies within the control group, the precision of the IRS requirements. The IRS describes a very precise schema and process for submitting the 1094c and 1095c. Control Groups with over 250 filings (individual 1095c(s)) will need to file electronically. Errors and corrections may need to be tracked back to an individual record or a subset of information within the records. Another IRS requirement is that companies maintain adequate records on filed 1095c(s) for at least 3 years in the event of an audit or appeal. Companies may need to develop a means of decomposition of the 1094c/1095c submissions.

Engagin Solutions has played a critical role in developing and managing several ACA projects. Our intimate understanding of the subtleties and nuances of the new IRS stringent filing and the IRA AIR (Affordable Care Act Information Return) program requirements is available to assist companies struggling to meet the new requirements for ACA provisions.