The IRS is coming, what to do before, during and after and ACA audit

Over the last 6 years, the Affordable Care Act (ACA) has dramatically changed the employee benefits landscape across the country for employers and employees alike. As the first year of ACA reporting deadlines have just passed, they first wave of IRS audits, as specified in the ACA, will begin.

The government views the ACA as a huge revenue source and they have pushed a lot of their resources to develop an auditing system. The federal agencies are becoming quite aggressive, especially when it comes to protecting participants, as they are charged by the law to have regular enforcement efforts.

There are many triggers that could prompt a potential ACA audit, here are 5 examples:

  1. Employee complaints
  2. Reporting failures
  3. Failures of IRS control group employers
  4. Other agencies identifying issues – (Agencies like the Department of Labor (DOL) and the Internal Revenue Service (IRS) will have a cross-referral agreement where they are required to share information about businesses not in compliance, thus triggering audits from multiple agencies.)
  5. Media reports – (Media coverage on an organization’s business not in compliance, thus triggering audits from multiple agencies.)

While you may not be able to totally avoid every trigger. The best way to avoid a full-fledged audit is to keep good records. Proper documentation is key to both avoiding and surviving an audit.

Lowering your chances of an ACA audit is key, here are 6 ways to help your organization look its best:

  1. Document good faith compliance on questionable issues – (This includes reviewing and adopting corresponding wording in all internal and employee-facing materials.)
  2. Compliance review – (Focus on administrative practices and make sure they are in compliance.)
  3. Correct failures found. (Make sure administrative processes are in order but when you discover an issue, hold internal compliance discussions to correct your failures.)
  4. Designate employee status. (Create realistic benefits expectations for employees by communicating their employee status and eligibility.)
  5. Train managers well. (Beware of practices to terminate or limit hours for employees to prevent them from eligibility levels. Understand the law and work within it for hiring, firing and scheduling practices.)

If your business is subject to an audit, knowing what it will look like and how to handle it will be key to passing with flying colors. Contact FreedomCare to help maintain your compliance and minimize your risk of an ACA audit.

Employer mandate penalties are coming

It’s been two years of required reporting of the Employer Mandate under the Affordable Care Act (ACA) but the IRS has yet to impose any penalties on employers for failing to comply with the law. This delay has suggested to some employers that the IRS would not be enforcing the mandates or collecting penalties. The Treasury Inspector General for Tax Administration (TIGTA) just released a report that is a game changer.

On April 7, 2017 TIGTA issued its, “Assessment of the Efforts to Implement the Employer Mandate under the Affordable Care Act.” In this report, TIGT explained that the IRS has developed an ACA Compliance Validation (ACV) System. It will be used to identify potentially non-compliant Applicable Large Employers and calculate the “A” penalty under the Employer Mandate. The IRS has been developing the ACV system since July 2015 with a scheduled completion date of January 2017. However, “the implementation of the ACV System has been delayed to May 2017.”

The report states that once the systems are in place, the IRS will be able to mass identify noncompliant employers. This will allow the IRS to send notices to noncompliant employers for any and all reporting years.

This means that time is up for employers who were delaying. The current lack of IRS notices for noncompliance with the Employer Mandate does not imply that the IRS does not intend to enforce the Employer Mandate. The IRS will come knocking, they are just running behind schedule. FreedomCare has the solutions you need, answer our simple questionnaire to get started.

Will you have to prove your compliance?

Last November, a few weeks after the national election, the Internal Revenue Service (IRS) began to issue notices to employers who may have failed to comply with the Affordable Care Act (ACA). These notices appeared to be the start of the IRS ACA audit process.

Just a few weeks ago, Speaker Paul Ryan stated the ACA will be the law of the land for the “foreseeable future.” Companies are still liable for penalties incurred for ACA non-compliance as long as current regulations are in effect. Failure to successfully defend the IRS audit could mean significant ACA-related penalties.

These regulations are still in full effect:

  • Companies with 50 or more full-time employees, including equivalents, must offer health insurance of a certain quality to their full-time employees and their dependents – or face a penalty.
  • The threshold for classifying an employee as full-time, and thereby eligible for an offer of coverage, is an average of 30 service hours a week.
  • Employers large enough to comply with the ACA still won’t be fully ACA-compliant no matter how generous their offers of coverage are unless they also meet annual reporting requirements.
  • Employers must produce health-benefits forms (1095-Cs) for their full-time employees and copy the IRS on what’s documented on those forms.

Complying with the provisions of the ACA will be required until legislation has passed both houses of Congress and has been signed into law. But don’t worry, it’s not too late, give FreedomCare a call and we can get you or your clients compliant today.

Important – ACA 1095 update

With 2017 rapidly approaching, last week we received some good news from the IRS. The IRS released, notice 1015-70 which highlights some of the changes to come with ACA’s information reporting. One of the biggest changes is a date extension.

Form 1095-B for Health Coverage and form 1095-C have been extended from January 31st, 2017 to March 2nd, 2017.

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This won’t affect the employees’ ability to file their tax returns, but it does delay their receipt of the forms for their own records.

“This deadline was especially challenging because it coincided with Form 1099 and W-2 processing schedules,” said Mike Downey, executive vice president of BenefitScape. “A 30-day extension, while short, moves the printing and distribution to a more opportune time.”

It’s important to note, the filing deadlines remain unchanged, this is just an extension to furnish the forms to employees.  It’s still just as important for employers to get the rest of their filings completed on time, and trust me, this extra month will fly by.

There are only 21 business days left in 2016 and its filled with holiday closures. Your clients need to make their ACA compliance a top priority.

ACA Compliance Enforcement Begins!

ACA Compliance enforcement beginsEmployers are out of excuses and delays; ACA compliance enforcement has begun and they need to be compliant now. If you or your clients are an employer that decided not to choose a compliant plan or didn’t offer anything at all, the employer may be subject to penalties under the Employer Mandate.
May has been a big month for the Department of Health and Human Services (HHS). They’ve made two major announcements regarding the process for determining if an employee is eligible for a subsidy under the Affordable Care Act (ACA). Earlier this month, HHS announced that they hired a third-party contractor to conduct an “employer verification study” where the contracted company will be calling employers and asking about the health insurance coverage they offer. The purpose of these calls is to determine whether employers have successfully offered an affordable plan that meets the minimum value requirements to their employees.
The need for these calls goes back to the ACA Exchanges, a person must state that they were not offered a plan that was affordable and meets minimum value by their employer. If they were indeed offered an eligible plan, this person would be ineligible for a subsidy.
CMS also released a sample notice that the Federal Exchange will send to employers that one of their employees has submitted an application for a subsidy and claims they haven’t been offered compliant coverage.
So why does this matter to you and your clients?
Well, some employers did everything they needed to do and chose a plan that was compliant, like the ones FreedomCare offers but the Exchange did not discover that fact during the verification process. The employer will have the opportunity to contact the Exchange and provide documentation that they offered a plan that is affordable and meets minimum value requirements. After the Exchange receives this info, they will re-determine the employee’s eligibility and discontinue any premium subsidy payments.
Let’s talk about our 100% compliant ACA solutions, give FreedomCare a call asap.

Deadlines have passed – Penalties are coming

Filing deadlines have passed, penalites are comingAs we head into August with the 4th quarter rapidly approaching, the deadlines for the IRS required ACA form filings have passed. Unfortunately, a lot of employers still have questions or haven’t even filed yet.

Well back in July, the IRS held an Affordable Care Act Information Returns Program (AIR) webinar where they shared their publication, 1586. They covered a lot of information and clarified a lot of questions employers have been asking.

Just in case you aren’t sure what the AIR policies include;

Under the Affordable Care Act (ACA), insurance companies, self-insured companies, large businesses and businesses that provide health insurance to their employees must submit information returns to the IRS reporting on individual’s health insurance coverage.

ACA information returns include:  

  • Form 1094-B, Transmittal of Health Coverage Information Returns
  • Form 1095-B, Health Coverage
  • Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns
  • Form 1095-C, Employer-Provided Health Insurance Offer and Coverage

The 1596 publication made it clear that the penalties for incorrect forms or forms that haven’t been filed could devastate an employer’s bottom line.

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With this type of reporting, it’s more than just proofing your documents and filing. Employers need to consult professionals who can help them ensure their compliance. I have some good news though, some of these penalties are still preventable.

According to the IRS, corrections or late forms need to be filed as soon as possible. It’s better to file late then to not file at all. Don’t let these fines hit your business or your clients.

Use our years of experience and expertise and contact FreedomCare today to protect yourself and your clients.

3 Tips for keeping your clients trust under the ACA

3 tips for keeping your clients trust under the ACAYou are probably getting used to the impact that health care reform (the ACA) has had on the insurance market and the laws. But have you taken the time to think strategically about your clients and their futures? Undoubtedly, your time is consumed with all the day-to-day activities required to manage your business and the relationships with your clients.

With different updates happening constantly, it can be difficult to keep up, here are 3 tips you can use to help keep the trust of your clients when dealing with the ACA.

  1. Stay up to date on the laws and communicate updates asap.

    • Research and educate yourself on the ever changing laws and regulations by following reputable news sites and our blog. Forward articles to your clients, share the information you’ve learned. This will allow your clients to rely on and trust you, in turn they will be more likely to come to you when issues arise.
  2. Use the ACA as an opportunity.

    • Try not to think of the ACA as a bad thing or a burden, use the ACA as an opportunity to help your clients help their employees. Sponsoring a benefits program not only satisfies the ACA employer mandate but can greatly improve employee retention among other things.
  3. Present alternative options to traditional plans.

    • Expand your options to include things like self-insurance, ACA tracking, voluntary benefits, telehealth and other offerings your clients might not even know about. If you can devise a complete coverage package for your clients saving them time and money, you have the best chance of keeping their trust and their business.

Let’s face it, your role as a broker is changing. As healthcare reform keeps presenting more pressing dilemmas for small-business owners, employers are looking towards you and other agents not just as salespeople but expert consultants. Your clients need your expertise, advice and counsel. In these constantly changing times there isn’t a client organization out there that’s not willing to talk to an adviser who seems to have some information or a seamless process for coping with all of the change. This includes every one of your clients as well, even the ones that haven’t been interested in the past.

Look through our previous articles on the sidebar and share with your clients, remember FreedomCare is here for whatever you need.

 

IRS releases updates to form 720 (PCORI)

IRS releases updates to form 720 (PCORI)The ACA includes a number of fees that employers are required to pay in order to help support various aspects of healthcare reform. One of those fees, PCORI was just updated by the IRS for 2016. The deadline for these fees to be paid is July 31st, 2016.

What is PCORI and why does it matter to employers?

According to their website, “The Patient-Centered Outcomes Research Institute (PCORI) helps people make informed healthcare decisions, and improves healthcare delivery and outcomes, by producing and promoting high-integrity, evidence-based information that comes from research guided by patients, caregivers, and the broader healthcare community.” Under the ACA, all employer sponsored health plans are subject to PCORI fees.

Why was the PCORI fee created?

The PCORI fees were established under the Affordable Care Act (ACA) to advance comparative clinical effectiveness research. PCORI fees are assessed on issuers of health insurance policies and sponsors of self-insured health plans. The fees are calculated using the average number of lives covered under the policy or plan, and the applicable dollar amount for that policy or plan year.

How much is the 2016 PCORI fee?

$2.17 per life

When are the 2016 PCORI fees due and how do you pay?

For policy and plan years ending on or after October 1, 2015, and before October 1, 2016
Employers and insurers will need to file Internal Revenue Service (IRS) Form 720 and pay the updated PCORI fee by July 31, 2016.

Employers have one month to calculate and send payment to the IRS. This form is relatively simple, but is structured in a way as to cause some confusion about who it applies to.

Give FreedomCare a call to discuss how to calculate and what to do if your clients aren’t compliant.

Forgotten details of ACA Compliance

Forgotten details of the ACAAs healthcare reform presents more pressing dilemmas for business owners, employers are looking towards insurance brokers to be their expert consultants. Brokers and agents who can devise a complete coverage package for their clients stands the best chance of keeping the decision-makers trust and the company’s business. Unfortunately, some brokers are forgetting about the little details of the ACA that can cost the most money. As a broker, it’s your responsibility to keep your clients informed.

Here are 7 details you or your clients may have missed.

  1. Update employee handbooks

If an employee handbook doesn’t reflect a company’s current benefits offering or is not properly updated, efforts may be in vein. Especially once an audit rolls around, as both the IRS and the Department of Labor may request copies for examination.

  1. Be explicit with the health care coverage offered to employee.

The ACA makes it mandatory for all large employers (those with 50 or more full-time employees/equivalents) to offer health care coverage to their 30+ hours a week employees. Failure to communicate with employees raises the risk of employees applying for subsidies on the exchange resulting in per-employee penalties that will add up quickly. Within the handbook, employers need to make sure the criteria for eligibility for health care coverage complies with the ACA.

  1. Document employees who WAIVE coverage

Should employees waive their coverage, employer’s need to protect themselves with documentation. Healthcare.gov supplied the employer appeal request form earlier this year, which requires employers to provide a reason an employee wasn’t eligible for a subsidy and requests documents to support their case.

  1. Don’t discount your full-time equivalent employees

Under the ACA, anyone employed by your company for 30 or more hours per week is eligible for an offer of health care coverage. That may include, “interns,” “temps,” and “part-timers.” The ACA defines who is eligible based on the hours of service and not the titles the company gives such workers. These workers may be eligible for health care and the employer will want to ensure that they are offered coverage if they fall within the eligibility definition.

  1. Include legal waiting period for health care in employee handbook

90 days is the maximum acceptable waiting period for health care under the ACA. Not three months (as some months have 31 days), and not the day after the 90th day (as that exceeds 90 days). The language used must be firm, 90 means 90, an overage of days will come back to haunt employers.

  1. Provide Summary of Benefits Coverage (SBC)

Just as important as offering coverage is educating your employees on what their coverage includes. An SBC breaks down the coverage for employees in an easy to understand format and must be provided beginning on the first day of the first open enrollment period under the ACA.

  1. Calculate eligible employees correctly (or hire someone that can)

Calculating full-time employees is a no brainer for most employers but calculating seasonal or full-time equivalent employees is an area with huge error for most. It’s important to stay educated with the current changes to the law or contract a company to handle it, like FreedomCare.

Share this valuable information with your clients. With renewals coming up for next year, make their compliance a top priority and call FreedomCare. Quotes are generated in less than 2 business days.

Employers on the hook for $228 billion in ACA penalties

Employers on the hook for $228 billion2016 brought enforcement of required reporting for the Affordable Care Act (ACA) and thousands of US employers are not in compliance with the laws. This is going to translate into billions of dollars in tax penalties. Some employers chose to do nothing when it came to the law; others may think they are compliant. The opportunity for error was extensive. Brokers and employers trusted insurance companies to help them navigate the laws and choose a plan that met the requirements of the ACA.

The annual baseline budget projections by the Congressional Budget Office and Joint Committee on Taxation (CBO), is projecting employer responsibility penalties to total $228 billion over a 10-year period from 2017 to 2026. The individual mandate penalty will yield a projected $28 billion, along with high-premium employer plans (aka the Cadillac Tax) is expected to yield $18 billion.

You may have clients who have done nothing to avoid these penalties or even clients who think they’ve done all they need to do. We have tools and resources available to help you determine whether or not your clients are protected.

Congress has a 10-year projection of collecting these penalties from employers, the only solution is guaranteed compliance with a plan from FreedomCare.