As the years have passed, the IRS has continually improved its processes for identifying Affordable Care Act (ACA) compliance and information reporting violations. This makes your company’s compliance management more important than ever.
The IRS will continue to issue 226-J notices around quarter 3 or 4 to each employer who may not be in compliance with their ACA requirements, including non-filers and employers who have filed inaccurately or incompletely for each year they are out of compliance. The IRS is expected to begin sending notices for the 2017 plan year later in 2019.
When is compliance with the ACA required?
ACA Employer Shared Responsibility compliance is not required for all companies; however, if your company has 50 or more full-time equivalent (FTE) employees you qualify as an Applicable Large Employer (ALE). As such, the ACA requires that you may elect to provide your full-time employees with qualified health coverage or you could have the potential to pay hefty Employer Shared Responsibility penalty payments to the federal government. Full-time employees are defined as those who work 30 hours a week or 130 hours a month. Failure to provide this coverage and file Form 1094-C and 1095-C will jeopardize your compliance goals and expose you to potential receipt of IRS Letter 226-J.
Minimize (or eliminate) your penalty risk
Reducing your penalty risk has never been more vital. Here are a few things you can do to protect your company while maintaining compliance.
- Validate your data by looking for anomalies.
Inconsistent data reflecting hire dates, offers of coverage, leaves of absence and disability classifications can all pose potential problems. Solidify your data and keep it accurate.
- Review and confirm the affordability of your safe harbor and pay/play strategies.
Consider the affordability of premiums for your lowest paid employees, not your average employee. Determine if your plans meet the Federal Poverty Line safe harbor. If not, consider whether Rate of Pay or W-2 safe harbor is a best fit by working with your ACA technology solution to model affordability determinations.
- Make the most of your eligibility determination solution.
Use your ACA technology solution to validate your total number of employees, their full-time status through monthly or look-back measurement, and your Form 1095-C code determination combinations and potential fail codes and fail code combinations. This includes 1F, blank safe harbor and 1H.
- Accurately manage your acquisitions, hierarchy changes and FEIN mergers and changes.
ACA compliance can be more difficult for companies in flux. Understanding how mergers and acquisitions may impact your compliance is vital. When acquiring another company’s employee population try to collect data from the previous HR/Payroll, ACA and Benefit Administration solution providers. If you can’t get access to this information, monthly employee measurement may help you manage the integration.
- Confirm accuracy of your Form 1095
Ensure that your Form 1094-C data reconciles to your Form 1095-C data: authoritative vs. non authoritative, MEC offered by month, total employee and FT employee counts by month and Part IV completed as required for control groups.
In addition, you must remember that there is no statute of limitations for a non-filed return. This means for example if your company failed to file a return in 2015, you may be penalized for this infraction until the return is filed or until the IRS finally decides to issue a penalty assessment with interest. Companies suspected of being guilty of this violation will receive a Letter 5669.
Finding the support, you need to manage your compliance
Don’t leave your ACA compliance strategy to chance. If you have received a 226-J notice or you expect to receive such a document in the future, it pays to have an experienced vendor by your side.
As your full service solution, Health e(fx) can help you manage your Letter 226-J incidents and compliance concerns. We’ll help you respond to these letters, minimizing your concerns, and providing your company the support it needs through every step of managing your ACA compliance.
Contact us today to learn more about how the solutions from Health e(fx) can support your business.
June 18, 2019