How to prepare for earlier reporting in 2017

How to prepare for earlier reporting deadlinesLast December, most employers were relieved when the IRS provided extensions of employee notifications and filing deadlines for Affordable Care Act (ACA) reporting. Unfortunately, this may have set up those same employers for failure as it will seem like these deadlines are coming 2 months earlier in 2017. To prevent this from happening, here are 4 ways to prepare for earlier reporting in 2017.

1. Give yourself plenty of cushion to submit required filings on time.

This year employers must provide 1095-Cs to employees by the end of January, indicating month-by-month coverage provided through the end of the previous December.

ACA Reporting Deadlines_with citationThese forms are required of most employers;

  • Employers of any size that sponsored a self-insured health plan providing minimum essential coverage must distribute to enrolled employees and file with the IRS Form 1095-B, showing a health plan enrollment.
  • Applicable large employers with 50 or more full-time employees or equivalents must distribute to enrolled employees and file with the IRS Form 1095-C, showing compliance with employer shared responsibility/minimum essential coverage requirements.

2. It’s now 95%, not 70%.

Unfortunately, last years extended reporting deadlines may not be the only things that trips up employers this year. 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.

The thing is, some employers may not understand that it’s not a 95% average for the year, it’s 95% for each month. If an employer had a month where they fell below 95%, then the employer is exposed. The employer could be facing penalties for the months when they were below the threshold.

The IRS will ask for payroll and benefits data, this will help them determine whether the indicator codes used on Form 1095-C are accurate. With last year’s 70% threshold, employers had a lot more leeway.

3. Exchange notices have been arriving.

Employers also need to be on the lookout for exchange subsidy notices. Notices pertaining to 2015 coverage, are now being sent from the ACA’s Health Insurance Marketplace. These notices allege that a full-time employee received subsidized coverage on an exchange because the employer failed to provide qualifying coverage.

4. Determining eligibility is an on-going effort.

The coverage provided to each full-time employee needs to be tracked and recorded every month. This needs to be an ongoing process for employers to get ready for the next year’s annual reporting. Employers can find relief by working with companies who offer tracking services that work in conjunction with payroll companies as part of their coverage. FreedomCare is one of the only options that provides this integration.

Employers that were close to the 50 or more full-time employee threshold last year need to make sure they stay on top of their eligibility. They need to run the numbers each month to make sure they aren’t on the hook. It would be terrible to find out too late and be liable for penalties for the whole year.

Reach out to FreedomCare, we can help you calculate and determine whether or not an employer needs to offer coverage. Trust us, it’s much less expensive than paying the penalties.

4 tips when determining how many full-time employee’s under the ACA

  1. First add up the low-hanging fruit.4 Tips FT employees

If an employee is expected to work 30 or more hours per week, he/she is classified as a full-time employee. You can immediately put all of these people in one category.

  1. Decide how you’ll track hours for variable-hour or seasonal employees

An employee is a variable-hour employee if his/her weekly schedule fluctuates above and below 30 hours.

The IRS has proposed a safe harbor method for employers to determine each employee’s full-time status by counting employee hours using a look-back/stability period. There are two types of measurement periods:

  • The initial measurement period for new employees and;
  • The standard measurement period for ongoing employees. The measurement must be between 3 and 12 consecutive calendar months.

If the variable-hour employee averages at least 30 hours per week during the measurement period, then the employee will be considered full-time during the following stability period (which needs to stay consistent with the measurement period). The employee’s status is “locked in,” regardless of the average hours worked during the stability period.

The stability period always begins immediately after the end of the measurement period and must be at least six consecutive months or the duration of the measurement period, whichever is greater. For example, if the employer used a 12-month look-back period, the duration of the subsequent stability period must be 12 months.

  1. Review your company’s eligibility definition 

The ACA full-time employee definition differs from the 40-hour per week full-time eligibility requirement that many companies currently use. Adjust accordingly to make things less confusing for you.

  1. Don’t forget about ERISA while trying to become ACA compliant.

In a class action suit filed by Dave & Buster’s employee, Maria De Lourdes Parra Marin, claims her employer announced that compliance with the ACA would require a cut in hours to reduce the number of full-time employees from 100 to 40 for the purpose of avoiding $2 million in additional health insurance costs. After the employer mandate took effect, she alleges her hours were in fact cut, she lost full-time status, and her insurance was cancelled.

While an employer who reduces employee hours would not violate any specific provision of the ACA, Dave & Buster’s employees are pursuing their claim under ERISA.

“Under Section 510 of ERISA, an employer cannot intentionally interfere with an employee’s right to benefits,” says Lorie Maring an attorney with the Atlanta office of Fisher & Phillips LLP. “What plantiffs are claiming is that by reducing their hours, the company was intentionally interfering with their right to receive health insurance.

How can your clients stay out of trouble and protect themselves? Self-funding health care benefits with FreedomCare can give them peace of mind and control over their health benefits. We have guaranteed ACA compliant solutions available at different rates to meet the needs of most employers. Reach out today.

Disclaimer:

This article is not to be offered as legal or tax advice. Neither Freedomcare nor the publisher are engaged in legal or tax advisory services. For advice on specific tax or legal questions, contact an attorney, CPA or other professional advisor. IRS CIRCULAR 230 DISCLOSURE: Pursuant to requirements imposed by the Internal Revenue Service, any tax advice contained in this communication is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code or promoting, marketing or recommending to another person any tax-related matter.

7 tips to keep your top talent!

It’s expensive, time consuming and something all business owners struggle with..constant employee turnover. The service industry struggles the most with trying to instill loyalty and encourage their employees to stay more than a couple of months. As a business owner or manager, what can you do to change that? Here are 7 ways you can change your habits to reduce turnover and hang on to your top talent.

  1. Be choosy with who you hire.

    • Before you can even think about keeping your employees, you have to make sure you’ve hired the right people to begin with. Be sure to interview and vet candidates carefully, you want to make sure they fit well with the company culture, managers and co-workers.
  2. Offer a benefits package.

    • A salary isn’t always the deciding factor when employees begin to seek employment elsewhere. Many times they are looking for health benefits. Providing health insurance, life insurance and even a retirement savings plan can increase loyalty. Check out our previous blog, “Could the employer mandate help you reduce turnover?” for more.
  3. Provide a comfortable working environment and culture.

    • Employees want and need to feel safe and comfortable at work. Your culture needs to match your industry, engage your employees, and motivate them.
  4. Offer preventative and wellness programs.Offer preventative and wellness programs

    • Many companies have instituted wellness programs to engage their employees and encourage a healthier workforce. Doing so can also reduce your claims on self-insured health benefits plans.
  5. Offer training.

    • According to Human Capitalist, 76% of employees want on-the-job training. Offering skills enhancement to all of your workers can help employees to feel appreciated and allows them to have a future within your company. New technology, new selling techniques, changes in employment laws, and the ever changing internet are all great reasons to encourage your employees to continue their education.
  6. Offer additional benefits for purchase.shutterstock_29717131

    • Offering limited medical, dental, vision, accident, critical illness and more can make your employees feel like they have options when it comes to their health. This can relieve a lot of the burden off of the employer having to provide expensive health plans.
  7. Recognize their accomplishments.

    • Praise goes a long way. Recognizing the accomplishments of employees creates loyalty and trust. This could be a simple thank you or a handwritten note. Praising employees for completing performance goals is one of the most effective ways to make them feel appreciated, which will make them want to stay with you for the long haul.

A lot of these tips sound expensive but one thing you can start with is self-insuring your health benefits plan. That one step will separate you from other employers competing for the same talent. Not sure how to even begin? Give FreedomCare a call today.