Are You Ready For ACA Reporting in 2017?
Change is here. Not just in the wind or coming over the horizon. New ACA laws will be coming into affect and the changes from 2016 to 2017 vary from deadlines to penalties. Are you ready?
What is ACA? And why is it relevant?
ACA is a requirement that says applicable large employers, those with 50 or more full-time equivalents employees, have to offer coverage meeting affordability and other standards to their full-time employees (those working 30+ hours/week).
ACA was ranked as a top concern by 69 percent of employers with 50 to 99 employees, versus 51 percent of those with 500 to 1,000 employees, according to a recent survey of more than 400 senior-level HR and finance executives at small and midsize U.S. companies.
The survey, conducted by Chicago-based benefits broker HUB International, found that 57 percent of all respondents were concerned about the burden of calculating affordability, and 45 percent were concerned about calculating the number of full-time employees and equivalents—potential red flags for IRS audits.
Classification of Workers
Avoid major lash-backs and penalties from the IRS by properly classifying all of your workers accordingly to be best positioned for ACA compliance requirements.
Independent Contractors: Do you have long-term contractors? Are your contractors essential for your business? Then take a closer look into your accounts payable now because if you are near the 50-employee threshold or if their addition to your workforce could cause you to fail to offer coverage to at least 95 percent of your full-time employees, these contractors might be deemed as employees.
Temporary Employees: If your temporary employees are full-time, then they need to be part of the coverage offered to 95% of your full-time workforce. It doesn’t matter if these “temps” are full or part-time, they are included in calculating full-time equivalents to determine whether you are an applicable large employer for medical coverage.
Professional Employment Organization (PEO): A PEO is a firm that provides a service under which anemployercan outsource employeemanagement tasks, such asemployeebenefits, payroll and workers’ compensation, recruiting, risk/safety management, and training and development.If you are an organization that hires a PEO, then you should review your contract to insure that you offer the minimum affordable coverage to each full-time member of your staff and that you are charged an appropriate, additional fee for each employee who elects coverage. ACA regulations offer this for the employer to provide required coverage, but the arrangement has other serious benefit implications and should be analyzed closely and in consultation with counsel.
Payroll: There’s a “gray area” between a PEO and traditional staffing agency model – where the client recruits and refers workers from a staffing company that acts as their employer- which might get increased scrutiny from the IRS. Be sure to carefully consider the risks and advantages of payroll arrangements between true PEOs and traditional staffing companies.
Temporary Staffing Agencies: Employees of temporary staffing agencies are generally employed by the agency and not the client company, according to the IRS. So, if you use a staffing company for temporary labor, review your contracts and practices to reinforce that the arrangement is not a PEO.
ACA’s Shared Responsibility Mandate
Due to the ACA’s shared responsibility mandate—also known as “play or pay”—only organizations with 100 or more full-time or equivalent employees were subject to the shared responsibility mandate in 2015, and they only needed to insure 70 percent of their full-time workers.
However, starting in 2016, all organizations with 50 or more full-time employees or equivalents must insure 95 percent of their full-time employees to avoid liability under the ACA’s shared responsibility provisions, and the resulting penalties.
In 2016, the IRS extended employee notification and IRS filling deadlines for ACA information reporting for the 2015 tax year. Last year employers had some relief, but in 2017, with 2016 fillings, there is no indication for this. Thus, employers that must provide 1095-Cs to employees by the end of January, indicating month-by-month coverage provided through the end of the previous December. You should be looking at printing these forms mid-January and mailing by the end of the month.
Changes in forms:
|ACA Information Reporting Forms||2015 Tax Year Deadlines (forms filed in 2016)||2016 Tax Year Deadlines (forms filed in 2017)|
|Forms 1095-B and 1095-C are due to employees via email or postmarked by….||March 31, 2016||Jan. 31, 2017|
|If filled on paper, Forms 1094-B, 1095-B, 1094-C and 1095-C due to IRS by….||May 31, 2016||Feb. 28, 2017|
|IF filled electronically, Forms 1094-B, 1095-B, 1094-C and 1095-C due to IRS* by…||June 30, 2016||March 31, 2017|
* Pro Tip: Employers filing 250 or more information returns during the calendar year must file these returns electronically. For employers with fewer than 250 returns, electronic filing is voluntary.
What’s Your Strategy For ACA Tracking & Reporting For Next Year?
As a Workforce Management Solutions company, our ACA module allows your business to simplify the processes around ACA compliance to help avoid these steep penalties. By combining your payroll, benefit management, and employee hours tracked into one solution, you can have access to the following features:
- Both real-time and historical data on ACA measurements
- Compliance alerts to notify managers or HR staff when an employee’s status changes from part-time to full-time.
- Alerts can also be sent to employees to notify them when they are eligible for benefits and allow them to automate enrollment through self-service
- Management dashboards provide consolidated views of regular and variable-hour labor pools
Need some help calculating for ACA? Check out our calculator. For more information on how APS can help you manage your ACA strategy, while reducing your administrative costs, call 844-299-2358 or reach out to us.