Patient Protection and Affordable Care Act reporting was crazy for many Fortune 1000 employers in the first year.
The number one challenge to businesses was data as they tried to meet ACA requirements. According to a survey by Hager Strategic, ACA-reporting vendors saw that their clients (over 4,000 employers) were hampered by a variety of data gathering, accuracy and reporting hurdles in 2015. That’s not surprising. Data gathering for ACA reporting is complicated. Most employers are forced to bring together information related to benefit enrollment, hours worked, and contributions from contrasting systems, which leads to inefficient organizational methods and high compliance costs.
Penalties approach for non-compliance.
The word on the street is that the IRS is only getting started. The question is not whether the IRS will impose billions of dollars in fines, but rather when they will do it. They already have the infrastructure ready to enforce ACA regulations and they project these fines will total $164 billion over the next decade.
Failure to deliver statemetns and filings may result in a $260 fine per each required form. This can total up to $3 million annually. And as for employers who do not offer coverage to 95% of their full-time employees, they face even more drastic fines–up to $2,000 per full-time employee.
End-to-End Compliance is the Key
Large employers are now turning to third-party solutions to meet these ACA requirements and deadlines. This also allows them to comply with the employer shared reporting stipulation.
Several benefits exist for employers who are willing to implement the right ACA reporting solution. Employers will see reduced costs, improved accuracy, and year-to-year repeatability. In order to cut down reliance on internal resources, eliminate rework, and avoid the variable hard and soft costs of using internal staff, many employers are looking to automate the process of data collection, application of regulations, and content determination for IRS forms.
There are a few things, going into this, that employers want to make sure they can do effectively:
- Gather and aggregate data from disparate systems.
- Review and validate the data to ensure accuracy.
- Identify full-time employees under the ACA rules.
- Determine affordability of coverage.
- Keep up with changing regulations from the IRS to assign accurate codes for lines 14 and 16.
- Deliver forms to employees on time.
- Manage the administrative burdens of the filing obligations with the IRS.
So if you’re a business looking to overcome the hurdles of ACA reporting, we’re here to help. Here are five tips you can employ to ensure the smoothest possible experience with these new regulations.
1. Use a Database to Unify Data and Consolidate Employee Records.
The problem for employers is that the data they need is disparate but it’s also essential. This data must be managed properly for pin-point calculations, as well as IRS filings and employee statements. One issue with this is that the information is not typically kept in one spot. Usually employers will use separate systems to house data for payroll, benefits administration, plan data and other functions. There has never been a reason for data standardization before.
To counter this, businesses should find a way to securely accept a monthly feed of employee eligibility, enrollment and plan data, extracted from their systems. This data should be archived and consolidated into a master employee record database (encrypted, of course).
2. Know Your Time Frames and Deadlines!
Employers must get their statements out to participants by January 31, 2017 and file electronically to the IRS by March 31, 2017. Here are a few things employers should do to keep these deadlines:
- Gather data during the year so you can avoid the year-end stresses of trying to meet the deadline.
- Test regularly for quality and review sample statements based on data from part of the year to make sure you’re ready for the year-end statements.
- Have a demonstrated process for printing and mailing a high volume of statements of participants in a short timeframe to meet compliance deadlines.
3. Calculate Your Data Monthly.
Businesses should validate data and then apply business rules to figure out eligibility and affordability at least once per month. They can then generate reports that watch compliance and benefit planning during the year.
4. Provide Live Support to Help Answer Tax Questions from Employees.
If you aren’t looking for ways to provide support to your employees, you’re missing out. They are going to have a horde of questions about tax statements and you should be ready to answer them and fulfill their requests in an efficient manner. This will free your staff up to think strategically in other areas.
5. Integrate Electronic Consent and Distribution.
By getting your employees’ consent to receive their 1095 forms electronically, they will receive their forms more quickly and provide a postage savings to the employer as well.
Large employers are meeting ACA reporting regulations with solutions that include data gathering and integration, tax reporting, form generation, call center support, and print distribution and fulfillment. By employing the very best practices for simplifying the reporting process, businesses are effectively reducing risk, frustration, and wasted resources. And even more importantly, businesses are solving ACA issues once and for all.