ACA ALE Health Insurance Reporting

DISCLAIMER: This information is provided as a courtesy and not meant to be definitive for any specific employer. Please consult with appropriate advisors to determine your company’s reporting requirements. These comments only pertain to FULLY-INSURED plans. If you are self-insured, please seek other information.

This year brings significant new reporting requirements for employers related to the Affordable Care Act (ACA). In order to determine if employers are subject to penalties related to the requirement to provide health insurance (Pay or Play), and to determine if individuals are eligible for subsidies on the purchase of health insurance, a new employer required IRS form 1095-C has been implemented (along with other possible forms depending on your reporting requirements).

How these new reporting requirements affect your business varies by such factors as: how many full-time equivalents (FTE) you have, what if any type of insurance your company offers, how much the insurance costs, and whether your insurance plan falls in the category of self-insured or fully-insured.

It is not my intention to summarize all aspects of these new reporting requirements. I will offer some details I have gathered in my research, but you should always confirm what requirements pertain to your company:

• Applicable Large Employer (ALE) is one that has 50+ “full-time equivalent” employees
• You can use any consecutive 6 months in 2014 to determine if you are an ALE in 2015.
• A FTE is someone who works an average of 30 hrs/week or 130 hrs/month. This can be a tricky calculation so you should consult details.
• For 2015, ALEs with 100+ FTEs require reporting. In 2016, it will be all ALEs.
• You report all full-time employees (whether they take insurance or not).
• If you have 250+ forms, you are required to report to the IRS electronically, otherwise you can mail the IRS copy. (One copy of 1095-C goes to employee, another to IRS)
• Form 1094-C is a cover form that goes to the IRS along with all 1095-C copies.
• Deadlines: Feb 1st for employee statements, Feb 29th for IRS paper reporting, March 31st for IRS electronic reporting.
• Fully-insured plans only use parts I and II of form 1095-C.
• Part II of form 1095-C requires monthly details and selection of codes for each full-time employee.

There are many more details and exceptions that I have glossed over in this summary, but here are my conclusions:

• Crosse-Over Designs will NOT be developing software for this reporting
• The best way for most employers to track this data during the year or prepare the data at the end of the year is by using a spreadsheet
• Package software at a reasonable price ($300 - $500) is available to do this reporting: www.1099fire.com is one such program, but you should do your own evaluation.
• The most confusing part of the reporting will be determining the appropriate offer of coverage code (part II line 14) and safe harbor code (part II line 16) for each employee for each month.

There is a bit of a ‘gold-rush’ going on in the accounting/payroll and human resources software arena. I see many software companies trying to extort or pressure companies by using fear and or confusion about this new reporting to somehow justify extreme decisions about new software, upgrades, etc. Some of you may use a software package for human resource management. In my opinion, this would be a logical place to have this reporting handled (if you already use this type of software). But don’t fall for extreme pricing changes or new module upgrade requirements just for this reporting. If they offer an upgrade at a reasonable price, it makes sense in HR software systems.

For many of my clients the solution would look like this:

• Someone in your company should be assigned as the ‘expert’ who will do all the research to determine how these changes affect your company, and what codes you will use when reporting.
• Purchase a good software package designed for this reporting at a reasonable price that is designed to allow for the import of data from a spreadsheet or text file.
• Use the ODBC connector in payroll if you want to pull employee names, SSN, and addresses from the payroll system. (If needed, for those who do not use the ODBC module, I may design and release at no charge an export program from payroll for this data.)
• Use the advantages of a spreadsheet to easily populate and copy data in columns to fill-in many of the data elements if you can, especially for the monthly details.
• After you have the data in the spreadsheet, you can easily import it into the selected software package and within minutes print forms and file electronically if necessary.

Using the software to prepare and print the forms will take far less time than the research someone will need to do in order to understand the codes and reporting requirements that affect your company. So this project is more of an ‘information’ project than a difficult software or processing issue. If you have a fully-insured plan, much of the advice about reporting codes, etc., could come from your insurance provider. There is plenty of information on the internet about the reporting requirements. The challenge is boiling it down for your company specific issues. One place to start is at www.irs.gov.

Sample Data Collection Spreadsheet

The data that must be reported on the form 1095-C is defined by the IRS definitions. So using a spreadsheet that collects those data elements is a convenient way to prepare for reporting. Many of the data elements will be repetitive for multiple employees and a spreadsheet presents an easy method to copy and paste columns of data. I have created a sample spreadsheet you can use as a starting point. Click HERE for the sheet.  Note that when you are ready to import your company data into the reporting software, you will need to edit the sheet to align the specific columns with the requirements of the software.  This will likely include adding several static columns that define the EMPLOYER information.  This can be done in a matter of minutes.

As we progress through this first reporting cycle with these new requirements, if I discover any ways I can help, I will pass that along.  If you have any feedback or ideas, let me know.