ACA Compliance Is a Summer To Do Item
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Ah, summertime and the living is easy. Before you pack your bags and head to the beach for vacation, make sure your ACA process is in tip-top shape. Below is a checklist of items for which you will want to review. Failure to do so could result in generating penalties in a IRS Letter 226J.
Perform Monthly Checks
ACA compliance should be integrated into your monthly routine tasks. Period. Review all of your documents that substantiate offers of coverage as well as benefits information. In the event of a receiving an IRS Letter 226J penalty notice, you will want these documents up-to-date and easily accessible.
Perform A Spot Audit
The summer is a great time to review past ACA information filings. Perform spot audits on your past 1094-C and 1095-C information filings with the IRS to identify any possible data integrity issues that could trigger a Letter 226J penalty notice. If you are not sure what to look for, consider using outside experts to conduct the audit. Some companies will conduct these audits at no cost to your organization. Catching any mistakes or problems with data in your past compliance process will ensure that you are not repeating those mistakes in future information filings with the IRS. And it will provide an opportunity to correct those items with the IRS before a penalty assessment may be issued to your organization for your 2015, 2016 and 2017 filings.
Seasonal Employees
Hiring seasonal employees for the summer is something many organizations do. By IRS definition, seasonal employees work customarily for no more than six months on an annual basis and, by its nature, should begin the same time every year. If your organization uses the Look-Back Measurement Method to determine benefits eligibility for your workforce, the same method should be implemented for your seasonal employees. These seasonal employees will not require an offer of healthcare coverage until they reach their initial stability period and average at least 130 hours of service per month during their measurement period.
Seasonal Workers
This may sound redundant, but the IRS treats seasonal employment in two different contexts. Seasonal employees are to be measured and determined if they are full-time. Seasonal workers, on the other hand, are used in the context of determining if an organization is an applicable large employer (ALE), which is an employer that has 50 or more full-time or full-time equivalent employees. Learn more about the differences here.
Surge in Hours of Service
Often times, employers assume an employee’s employment classification will change depending on the hours of service they provide. This is partially true. If you are using the Look-Back Measurement Method, employment classifications for variable-hour employees are locked in for their initial or standard stability periods. These periods can range in length. These stability periods are based on the preceding initial or standard measurement period. If an employee starts working full-time hours during the summer months, his or her status as full-time will not be reflected until the following stability period.
Check Your Time and Attendance Records
The summer is a time when people take time off from work. With employees covering shifts, taking off for long periods of time, and seasonal employees coming on-board, a lot can go wrong. Double check your time and attendance records for accuracy. These records affect full-time eligibility reporting and errors can lead to some hefty ACA penalties.
Check Your Employee Level Details
With an influx in hiring during the summer, employee counts may get overlooked and may even be entered incorrectly into databases. Make sure employee details are correct. While reporting deadlines may seem to be in the distant future, it is advisable to always keep accurate records. Misclassification can result in incorrect data being filed with the IRS and trigger expensive ACA penalties.
Continue to Extend Offers of Coverage
Whether your open enrollment is at the beginning, middle, or end of the year, full-time employees require offers of coverage outside these periods. Full-time designated employees must receive an offer no later than 90 days from their date of hire. For variable-hour employees determined to be full-time, the length of the initial measurement and administration period can significantly extend the deadline to make an offer. As you continue to hire, be mindful of these rules and do not sleep on extending offers on time! You’ll be kicking yourself come filing season if you do.
The IRS is issuing penalties to applicable large employers, (ALEs), organizations with 50 or more full-time employees and full-time equivalent employees, that are required to offer minimum essential coverage to at least 95% of their full-time workforce (and their dependents) whereby such coverage meets minimum value and is affordable for the employee or be subject to IRS 4980H penalties.
To date, over 30,000 penalty notices have been issued to ALEs for ACA non-compliance for 2015, representing $4.4 billion in penalty assessments. Follow this checklist to make sure your organization doesn’t get added to that list.
To learn more about ACA compliance in 2018, click here.
For ACA reporting in 2019, organizations should review this link for important dates and requirements.
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