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.

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.

4 Major ACA Reporting Myths Debunked

With so many oACA Reporting Myths Debunkedf the ACA reporting requirements are difficult to interpret, business owners and brokers are struggling to see right from wrong. We did some of the leg work for you and here are 4 major ACA reporting myths you may have fallen for.

"I don't have to offer any employees medical benefits even though I have employed more than 50 full-time equivalent employees during 2014."

ALL applicable large employers are subject to the ACA Employer Shared Responsibility requirements and must report, even if the employer chooses not to offer benefits or offers benefits that don't meet minimum value and affordable requirements. In other words, you can't just avoid the law hoping to fly under the radar. You have to report it whether you comply or not.

"I don't have to report for 2015 because I had less than 100 full-time equivalent employees during 2014."

ALL applicable large employers must report, even if the employer qualifies for transition relief. What is transition relief? Not sure if you qualify? Check out ACA expert, Kaya Bromley's webinar here.

"I can wait and decide later this year how I'm going to meet the reporting requirements."

Data MUST be reported each month of the 2015 calendar year. Be prepared to hire a professional to sort it all out for you if you don't have accurate historical records of all changes made.

"There aren't going to be any fines until next year."

They've given you plenty of time. You can't claim you forgot your homework. There may be some relief from fines for employers submitting incomplete forms or forms with minor inaccuracies, however, the IRS has made it clear that there is no relief for employers that cannot show a good faith effort to comply. If you don't have something in place, you need to act now.

Are you still confused? Give us a call at FreedomCare and we can walk you through what you need to know.