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3 ACA Reporting Alternatives

3 ACA Reporting Alternatives Unraveled

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For many organizations, the employer mandate and the reporting requirements of the Affordable Care Act (ACA) loom. Employers want to ensure they will be in compliance come January 2016, when the required forms are due to their full-time employees and the Internal Revenue Service.

Yet many organizations remain confused by the law’s many complexities, especially those related to the reporting provisions. In fact, two-thirds of business executives who have attended Paycom’s ACA webinars in the past four months reported they are not ready to comply with the 2015 reporting requirements!

As staggering as that statistic is, it is important that organizations understand options exist for ACA reporting. You might be surprised to learn which method is best suited for your organization.

Who’s Set to Report?
Starting this year, Applicable Large Employers (ALEs) – organizations with 50 or more full-time or full-time-equivalent employees – will be held to the mandatory filing, which reports the details of health coverage offered to those employees.

The ACA’s “general reporting” method is completing, in its entirety, IRS Form 1095-C, Employer-Provided Health Insurance Offer and Coverage Insurance. This form must be filed with the IRS for every employee determined to be full-time for at least one month during the calendar year. Additionally, employers must provide either a copy of Form 1095-C or an alternate statement to affected employees by Jan. 31 of the year following the year the insurance was offered.

In an effort to simplify reporting requirements in certain situations, the IRS now allows three optional alternative methods:
1. The Certification of Qualifying Offer
2. The Simplified Statements for 95 Percent Offer
3. The 98 Percent Offer

The Certification of Qualifying Offer
This states that in lieu of Form 1095-C, eligible employers are allowed to certify that they extended a “qualifying offer” of health care coverage to employees, as long as the offer provided minimum essential coverage to them, their spouses and dependents, and that the cost of the coverage did not exceed 9.5 percent of the federal poverty level for employee-only coverage.

This report will include the name, address and Social Security number of each full-time employee, along with the indicator code of “1A” from line 14 of Form 1095-C. This code signifies that the employee received a qualifying offer for all 12 months; no other details are required.

The information provided to employees through either a copy of the Form 1095-C or a general statement in a format “prescribed by the IRS” must state that:

1. the employees (plus any spouse and/or dependents) received a qualifying offer for all 12 months of the year
2. and therefore, they generally are ineligible for a premium tax credit for all of those 12 months.

Most employers wishing to use this alternative method will have to furnish a mixture of simplified and general reports to their workers and the IRS, as not all employees will have been with the company for the full, 12-month span.

However, it is important to note that organizations will not know until the end of the year whether simplified reporting can be used for any individual employee; therefore, it is important to maintain records of ACA-required data – affordability, minimum coverage offered and employee full-time status – in order to ensure compliance.

The Simplified Statements for 95 Percent Offer
Available for 2015 only, this alternative allows certain employers to provide a “general statement” in lieu of filing Form 1095-C. They must certify on Form 1094-C that they have made qualifying offers to at least 95 percent of their full-time employees, their spouses and dependent(s).

The information provided to employees through a “general statement” must be in a format “prescribed by the IRS” and must state that:

1. the employees (plus any spouse and/or dependents) received a qualifying offer for all 12 months of the year
2. and therefore, they generally are ineligible for a premium tax credit for any of those 12 months.

These statements may vary, depending on whether the employee received a qualifying offer for all, some or none of the months. Thus, if the qualifying offer did not apply to an employee for the entire 12 months, the statement likely will inform them that any of the aforementioned entities may be eligible to claim a premium tax credit for any month in which a qualifying offer was not made.

Additionally, the statements must supply a contact name — which can be a member of the ALE or a third-party administrator — and telephone number, should an employee wish to call for additional information.

The 98 Percent Offer
For employers who offer qualifying coverage to at least 98 percent of their full-time employees, this third reporting alternative is available. It does not excuse them from submitting Form 1095-C, but does allow them to bypass two data points on Forms 1094-C and 1095-C:

  • the month-to-month full-time status of employees
  • and the monthly total of full-time employees.

Employers who offer coverage to “substantially all” of their full-time employees may lessen the burden on themselves to track and record hours of service in order to identify the number of full-time employees for each month. Because Form 1094-C appears to require reporting of members ranked by full-time employees, it isn’t clear whether or not this option is possible for aggregated groups.

Are the General Statements Useful?
For many, the general statement may cause more confusion than it’s worth; it may be simpler for employers to distribute a copy of Form 1095-C.

Also, it is possible that taxpayers may need to enter information from Form 1095-C on their year-end personal income tax returns, so those receiving the general statement may have to contact their HR department to obtain that information. While the IRS has not yet given guidance on the format of these statements, the bureau does require both an employer contact name and phone number for verification purposes.

The Simplified Ending
In closing, the simplified reporting alternatives may prove useful for a number of organizations, but a lot remains up to the interpretation of the law and each business’ ability to anticipate if it will be eligible to use these alternatives. If you are among the two-thirds of businesses not ready to comply with the 2015 reporting requirements, it is in your best interest to talk to a Paycom representative today.

The content of this blog is intended to keep interested parties informed of legal and industry developments for educational purposes only.  It is not intended as legal opinion or tax advice and should not be regarded as a substitute for legal or tax advice.



Author Bio: Jason Bodin has been the communications pulse for a number of organizations, including Paycom, where he serves as director of public relations and corporate communications. He helped launch Paycom’s blog, webinar platform and social media channels. He aided in the development of Paycom’s tool to assist organizations in complying with the Affordable Care Act, one of the largest changes in health care the country has seen. A graduate of the University of Oklahoma, Bodin previously worked for ESPN and FoxSports. In his free time, he enjoys adventuring with his family, reading and strengthen his business acumen.

ACA Employer Shared Responsibility Payments

IRS Quietly Prepares to Assess ACA Employer Shared Responsibility Payments

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Late last week, without announcement, the IRS amended a FAQ about its planned process for assessing employer shared responsibility payments (ESRPs) under the Affordable Care Act (ACA). Previously, the document suggested that further guidance would be forthcoming, prior to notifying affected applicable large employers (ALEs) about potential penalties owed under the federal health care law’s employer mandate.

That statement is now gone. In its place are several questions and answers detailing how the IRS will notify companies that they may owe an ESRP. In addition, the IRS intends to send assessments for the 2015 tax year in “late 2017,” which gives the agency approximately six weeks to do so.

Deadlines

The IRS notification will take the form of Letter 226J, which will include a month-by-month payment summary and a list of employees who:

  • were full-time employees for at least one month of the tax year
  • also received a premium tax credit
  • and did not allow the employer to qualify for an affordability safe harbor or other relief

While Letter 226J will indicate the employer’s deadline to respond, recipients generally will have 30 days from the letter’s printed date to contest its information. Then, following correspondence between the IRS and the ALE, if the agency determines the employer indeed is liable for an ESRP, the IRS will issue a demand and instructions for payment, via Notice CP 220J.

The FAQ’s changes to describe specific procedures and deadlines represent the clearest indication we have received that the IRS soon will notify ALEs that they may owe an ESRP for 2015. If such notifications are sent within the next few weeks, it will mark significant news.

For more on ACA, check out the October 2017 article: Trump Announces 2 Changes to ACA 

Posted in ACA, Blog, Featured

Erin Maxwell

by Erin Maxwell


Author Bio: As a compliance attorney for Paycom, Erin Maxwell monitors legal and regulatory changes at the state and federal level, focusing on health and employee benefits laws, to ensure the Paycom system is updated accordingly. She previously served as assistant general counsel at Asset Servicing Group in Oklahoma City. She holds a bachelor’s degree from the University of Central Oklahoma and a J.D. from the University of Oklahoma. Outside of work, Maxwell enjoys politics, historical mysteries and spending time with her family.

Affordable Care Act (ACA)

Trump Announces 2 Changes to ACA

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Update 10/18/2017 – On October 17, Senators Lamar Alexander and Patty Murray announced a tentative bipartisan deal to help stabilize the ACA Marketplaces and potentially fund Cost Sharing Reduction payments for two years. The bill must pass both the Senate and the House before it becomes effective, and would also require President Trump’s signature.

On Oct. 12, President Donald Trump ordered comprehensive changes to the nation’s health insurance system while also, in a separate move, ended health care subsidies to insurers for low-income Americans. The White House billed the decisions as relief to those suffering under the Affordable Care Act (ACA), while the opposition condemned these changes as actions aimed at undercutting the ACA.

Expansion of association health plans and short-term insurance

The executive order signed by Trump directs federal agencies to make it easier to set up “association health plans,” which are groups of small businesses that pool together to buy insurance. The order also seeks to broaden the definition of short-term insurance from three months to almost a year in duration.

By expanding both these types of plans, the administration expects insurance to be less costly than the plans sold on the state-based insurance exchanges, which provide more extensive coverage options. One concern, however, is healthy customers will jump out of the individual markets for cheaper plans, leaving sicker customers on the underwritten exchanges.

Health care subsidies to end

Trump also will end health care subsidy payments to insurance companies that used them to pay out-of-pocket costs for low-income people receiving coverage through the exchanges. The future of these payments have been in doubt for months – dating back to the Obama administration – because of a lawsuit filed by House Republicans. The lawsuit alleged the Obama administration was paying these subsidies illegally because Congress had never authorized the cost-sharing arrangement.

Until now, the Trump administration had continued the payments on a monthly basis. A group of state attorneys general has indicated it will sue to block the administration from ending these payments, which it claims will cause the individual markets to unravel.

ACA Awaits Repeal or Repair

What this means for employers

Neither of these changes is aimed primarily at employers subject to the ACA employer mandate, so clients using Paycom’s ACA services likely won’t see a direct impact to their obligations under the law. However, the tweaks indirectly could result in higher costs to employer-sponsored plans.

Disclaimer: This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal problems.

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Posted in ACA, Blog, Compliance, Employment Law, Featured

Jason Hines

by Jason Hines


Author Bio: Jason Hines is a Paycom compliance attorney. With more than five years’ experience in the legal field, he monitors developments in human resource laws, rules and regulations to ensure any changes are promptly updated in Paycom’s system for our clients. Previously, he was an attorney at the Oklahoma City law firm Elias, Books, Brown & Nelson. Hines earned a bachelor’s degree from the University of Central Oklahoma and his juris doctor degree from the Oklahoma City University School of Law, where he graduated cum laude. A fan of the Oklahoma City Thunder, Hines also enjoys exploring the great outdoors with his wife and daughter.

Addressing Employer Confusion With Pregnancy Related Laws: What to Expect When Your Employees Are Expecting

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The best way to prevent pregnancy discrimination is to understand the laws which can be implicated.  Such laws include the Family and Medical Leave Act, Pregnancy Discrimination Act, the Americans with Disabilities Act Amendments Act and the Affordable Care Act. Unfortunately, understanding the intricacies of each of these laws can be difficult and confusing, so let’s review each in an effort to provide clarity.

1. Family and Medical Leave Act (FMLA)

Not all employers are required to provide FMLA benefits, and not all employees will be entitled to such benefits.

  • Only “covered employers” must provide FMLA benefits. A “covered employer” may be private-sector employers with 50 or more employees, public agencies and public or private elementary or secondary schools.
  • Eligible employees are those who have worked for the employer, for at least 12 months and for at least 1,250 hours in the past 12 months.

Employees are entitled to FMLA leave for the birth of a son or daughter and also for serious health conditions that make the employee unable to perform the essential functions of his or her job.

  • This includes leave for the birth of a child, prenatal care, incapacity related to pregnancy (such as morning sickness) and any serious health conditions that the mother might have following childbirth.

When an employee takes FMLA leave, the employer must maintain the employee’s health benefits.

When an employee returns from FMLA leave, the employer generally is required to restore the employee to the same job that was held when the leave began, or to an equivalent job.

FMLA regulations allow employers to run paid leave concurrently with FMLA leave.

  • This means that employers can require employees to substitute accrued paid leave for unpaid FMLA leave. This, however, will not increase the total amount of leave allowed.
  • This also applies to short-term disability benefits.

The amount of leave allowed under FMLA does not have to be used all at once and can be used during pregnancy, after birth or spread across both time periods.

  • An employee may take leave by reducing normal daily or weekly hours.

Employers must provide notice of FMLA eligibility either orally or in writing within five days of the employee’s request for leave or when the employer becomes aware that the employee’s leave may be for FMLA-qualifying reasons.

Some states may have broader maternity-leave laws that override the FMLA. These state laws will be discussed in a later post.

2. Pregnancy Discrimination Act (PDA)

The PDA states that discrimination based on pregnancy, childbirth or related medical conditions will constitute unlawful sex discrimination under Title VII of the Civil Rights Act.

The PDA does not require employers to provide any leave to pregnant workers, except to the extent the employer provides leave to other individuals suffering from temporary disabilities.

Lactation is a pregnancy-related condition protected under the PDA and denial of an appropriate location to express breast milk could amount to pregnancy discrimination.

The PDA has been interpreted as not requiring reasonable accommodations to pregnant women, unless the employer also provides such accommodation to nonpregnant employees with temporary conditions (accommodations may, however, be required under the American’s with Disabilities Act Amendments Act.

3. American’s with Disabilities Act Amendments Act (ADAAA)

The ADAAA applies to employers with 15 or more employees, and does not set any minimum service requirements for employees to qualify and the ADAAA is implicated only when a person is discriminated against because he or she is disabled.

  • A “disability” is a physical or mental impairment which substantially limits a major life activity. This can include short-term impairments, which are substantially limiting.

A normal pregnancy will not constitute a disability, but pregnancy-related medical conditions may rise to the level of a disability under the ADAAA. (See our previous post, “EEOC Cracks Down on Pregnancy Discrimination,” for examples of pregnancy-related medical conditions that have been considered a disability.)

A pregnant employee may be entitled to an accommodation under the ADAAA for pregnancy-related medical conditions. This may include things such as altered break and work schedules, or elimination of marginal job functions.

  • Employers may not reduce the employee’s pay because she needs an accommodation to do her regular job.

There is no specific time limit on the amount of leave that may be taken by the employee or the length of accommodations if no undue hardship exists for the employer. The length of an accommodation or the period of time off must only be reasonable.

  • Courts have held that anywhere from six months to a year can be considered a reasonable period of time off from work.

Employers will not be required to hold the employee’s job open while the disabled employee is on leave, if doing so would create a hardship for the employer.

4. Affordable Care Act (ACA)

Generally, the ACA requires employers with at least 50 full-time employees to offer employees minimum essential health coverage that is affordable, or to make an employer shared-responsibility payment to the IRS. Please note that employers will face hefty fines for not providing coverage that meets the minimum requirements.

Employees cannot be denied health coverage or charged more because they are pregnant. This applies whether employees get their insurance through their employer or if they buy it on their own.

The ACA explicitly identifies pregnancy, maternity and newborn care as part of the essential benefits package that must be offered by plans.

  • Most plans must cover preventative services for pregnant women or women who may become pregnant, without charging a copayment or coinsurance.
    • This includes things such as anemia screening, gestational diabetes screening or folic acid supplements.
  • Employers’ health insurance plans also must provide breastfeeding support and counseling, and equipment for the duration of breastfeeding.

The ACA also requires that employers provide time and space for new mothers to express breast milk until the child turns 1 year old.

  • This provision overlaps with the PDA, which requires employees to be compensated for time that is used to pump or breastfeed if other employees are compensated for their break times.

 

Conclusion

Many laws are implicated when it comes to pregnant employees and most charges of pregnancy discrimination today result from seemingly neutral policies that adversely impact pregnant workers. It is important to understand that:

  • pregnancy discrimination can happen in all aspects of employment
  • some pregnant employees may be entitled to certain accommodations or specified leave
  • an employer’s policies pertaining to nonpregnant employees can impact how pregnant employees are treated
  • all pregnant employees may not be treated in the same manner

 

These laws, while all very different, overlap in many areas, and understanding the various parts of each is vital for employers.

For more about the EEOC’s current focus on pregnancy-related limitations and to address potential confusion with pregnancy related laws, be sure to read EEOC Cracks Down on Pregnancy Discrimination and for more details about terms associated with leave taken for pregnancy or childbirth-related purposes, check out “Leave Only a Mother Could Love: The Care of Pregnancy and Parental Leave.

Disclaimer: This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal problems.

Tags: , , , , , , , , , , ,
Posted in ACA, Blog, Compliance, Employment Law, Featured

Kristin Fisher

by Kristin Fisher


Author Bio: As a compliance attorney for Paycom, Kristin Fisher monitors legal and regulatory changes at the state and federal level, with a focus on labor and employment laws, to ensure the Paycom system is updated accordingly. Previously, she served as an attorney at the Oklahoma City law firm Derryberry & Naifeh LLP. Fisher earned a bachelor’s degree and MBA from the University of Central Missouri, and her Juris Doctor from the Oklahoma City University School of Law. Outside of work, she enjoys cooking, hiking, going to the movies and spending time with her fiancé.

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