Keeping up With the Affordable Care Act
By: Kim Buechel, Product Support Analyst
If last year taught us anything, it’s that taking a wait-and-see approach when it comes to the Affordable Care Act isn’t always great. Think about it, you had the benefit of a filing extension and the requirement to only make a “good faith effort.” With a year of experience now under our belts, we expect that extension to disappear and a few more eyes to be focused on reviewing the new stacks of compliance paperwork.
But that’s ok because you have just that, a year of experience. You know the forms, you know the codes and, more importantly, you know what information is required to make it all work together. So, what should you be doing today to prepare? That’s easy, follow along with the tips we’ve outlined below. They’ll help you stay on track now and hopefully become part of your normal routine to help ease the ACA burden you most likely dealt with last year.
Not much has changed in the way of ALE status – at least so far. That means that any employer with 50 or more full-time employees (including Full Time Equivalents) is considered a large employer. Like 2015, large employers are once again required to file both Forms 1094-C and 1095-C. Knowing that these forms require a great deal of information, it’s important that you understand early on whether or not you’re considered an ALE. If you are, keep reading. If not, you should still keep track of your total employee count just in case you end up crossing the 50 EE threshold.
If you’re under 50 employees but self insured, that’s a whole other can of worms we won’t explore, but you’ll be required to complete Form 1095-B. More info on that can be found here.
2. Stay on Top of Your Employee Data
Although you should always be updating your employee data to reflect any changes, this is especially true if it’s determined that you are a large employer. That’s because in order for Sentric (or your ACA provider) to generate accurate forms, you need to provide us (or them) with accurate information. So, what exactly are we talking about? Specifically, you should be reviewing the below fields:
- When you hire a new employee: Pay close attention in the instance that you’re rehiring a former employee. Specific things to check when looking at a rehired employee may include full-time or part-time status, ACA status and whether or not their hire date affects benefits eligibility.
- When you terminate an employee: We often see clients terminate employees but forget to actually fill out their termination date within the software. As a result, the software thinks they’re still an employee. When it comes time to generate their 1095-C, the software will show that you didn’t offer coverage even though you didn’t have to because, well, they didn’t actually work there. This can all be avoided by simply adding termination dates as they happen.
- Updating or adding an employee’s ACA status: Pay close attention here since under the ACA, a full-time employee only needs to work 30 hours/week or 130 hours/month. Consider this your reminder since that may differ from your company’s determination of a full-time employee.
- When an employee enrolls in benefits: It should go without saying, but your employee enrollment records should match the day an employee actually enrolled in benefits NOT the date benefit deductions begin in payroll. If marked incorrectly, Part II of your employee forms 1095-C may be incorrect, specifically, line 16. As a result, your company may be vulnerable to penalties. On the flip-side, if an employee is no longer enrolled in benefits, the benefit termination date must also be accurate.
3. Verify That Benefits Are Properly Configured
Like Forest Gump and Jenny, benefits and the ACA go together like peas and carrots. However, if they aren’t properly configured, then you’re in for a whole heap of trouble when it comes time to setting coverage records and eventually completing your forms 1094-C and 1095-C. That’s why it’s important to take the time to dive into your benefit plans to verify that all of your details add up. This includes:
- Understanding how changes in benefits affect the ACA: Does your plan provide minimum essential coverage and minimum value? Is it affordable? These two questions are really the pillars of the ACA. You should be able to answer both for your current plans, as well as any changes you plan to make as you prepare for Open Enrollment.
- Getting a handle on Open Enrollment: For most, Open Enrollment doesn’t happen until the second half of the year. That means employees will have two separate benefit records and potentially, two different types of coverage. There really isn’t any problem with that as long as the information remains accurate throughout the entire year. Be sure to take some time before open enrollment to verify details, and then after the process to make sure any new or updated records are accurate.
- Double checking eligibility rules: According to the ACA, only full-time employees of ALEs must be offered benefits. If you’re using HR software – like SentricWorkforce – you then have the ability to configure specific eligibility rules to only offer benefits to those specific employees. Most often our clients choose to do this by using fields such as hire date, status (active or terminated) and status category (full or part-time). However, there are times when additional field options may be needed in order to target specific employees. A good example of this would be the company location field. Let’s say your company has offices in five different states and that the office in each state has a different corresponding benefits plan. If the company location field isn’t included in your eligibility rules, then all benefits plans will show for all employees. By simply adding in that field, you’ll fix the issue and only allow employees to enroll in the correct, corresponding plan.
Learn how SentricHR can help you build and manage a benefits program unique to your organization.