IRS Won’t Be as Forgiving on ACA Regs

YOUNGSTOWN, Ohio – Between now and next tax season, one of employers’ biggest concerns is keeping track of how many workers they have, area insurance brokers say. It’s not a simple matter of noting who’s working, they say, but knowing when they worked, how often they worked and the insurance plans offered them.

All of that is easier to keep track of as you go along rather than wait until it’s time to file all the documents, says George Morris, president of Morris Financial Group, Salem.

“An apple a day doesn’t mean seven on Sunday. If you wait until January to try to recreate what you offered, it’ll be rough,” he cautions. “If you have 80 employees and try to recreate who was on a plan and who wasn’t, who was offered health insurance and who wasn’t, it’ll be chaos.”

Many employers had to file the information last year on their IRS 1094 and 1095 forms, says Daniel Caparso, president of National Healthcare Access, Boardman, but because it was the first year to file those documents, the Internal Revenue Service allowed some leniency when mistakes were made. This year, however, the agency will be much stricter about penalizing employers who don’t provide the required information.

“Compliance is the No. 1 through the 10 things employers need to do.” Caparso says. “It continues to be the biggest hurdle.”

Adds National Healthcare Access employee benefit specialist Dee McFarland, “Just like employees need a W-2, employers must have a 1095. That’s where the tracking compliance throughout the year comes in.”

For large companies, defined as those with 100 or more full-time equivalent employees, reporting remains unchanged. But for those in the medium-sized groups of 51 to 99 workers, employers must provide the names of recipients, covered individuals, their Social Security numbers, dates of birth, monthly enrollment premiums and the monthly second-lowest cost plan on their 1095 forms.

All of that, says Bob Gearhart Jr., vice president of DC Wellness, Boardman, must be filed by next March 31, two weeks before the tax-filing deadline. “Everyone’s trying to wrap that up and have the resources for tax filing. It compresses a lot of work,” he says. “If you aren’t proactive, a lot of people are going to be spread thin.”

In this year’s reporting were “some challenges with a lot of hiccups,” he continues. Among them were electronically filed tax forms rejected for incorrect information, even after brokers and employers confirmed the data were correct, and reporting codes that filers had never used before.

It’s also important to keep up with the definitions of each group. Small employers are those with between two and 50 employees, according to the IRS. But some insurance providers have their own definition for a small group that differs from federal regulations.

There are also certain documents that employers must keep on record, including wrap documents, notifications of exchanges and summary of benefits and coverage. Should an audit be conducted, these documents will likely need to be produced.

The Department of Labor has established that its goal is to audit every small business by 2020, Caparso explains. Whether that will be achieved remains to be seen, but National Healthcare Access is already seeing an increase in insurance audits. Over the company’s first 22 years, he says, only three or four audits were conducted. In the past three, 10 clients were audited.

“It’s a very real thing. They are hammering down on all employers,” Caparso says, imploring businesses to do all that they can to understand and stay within the guidelines.

“If you’re a small employer, you don’t have to offer benefits. If you do, there are guidelines for it,” he says. “Some felt [the guidelines] wouldn’t affect them just because they’re a small business. But they do.”

All advisers interviewed for this story recommended employers to stick with their plans as long as possible before they switch to coverage through Affordable Care Act. That led to some shifting of renewal dates, which employers must increasingly be aware of.

At National Healthcare Access, Caparso says, there was some confusion as renewal dates were quickly shifted from April to December to January. “With this movement, it can be complicated to remember,” he says. “It’s all to give you as much time as you can on the old platform.”

Down the road, employers will have to return to filling out medical applications, Morris says, which hasn’t been done in several years. Backtracking here, he says, can be a headache as employees are asked to recall health issues from that time frame.

“Get ready for your census and re-engage employees on applications and updates,” he says. “It’s not a big deal but it was one of the root-canal parts of the process that no one liked doing.”

And while there are incremental changes, Morris notes that the biggest changes – barring any more after this autumn’s election – have already been rolled out.

“That doesn’t mean employers can sit idle. They have to continually manage their full-time equivalents,” he says. “An awareness of your size on the continuum is important. It can be easy to cross the line and be in unfamiliar territory.”

Pictured: At National Healthcare Access, employee benefits specialist Dee McFarland and President Daniel Caparso say that keeping up on employee’s insurance information throughout the year should be among business owners’ top concerns.

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