The Affordable Care Act is an initiative requiring all Americans to have access to minimal essential insurance coverage, whether that’s through their employer or purchased individually. On March 10, the IRS instituted final treasury regulations, creating new reporting requirements for large employers (100 or more full-time equivalent employees).
HR and Payroll professionals need to get ready for monthly tracking and preparing to fill out new IRS forms in 2016 to demonstrate that health coverage offered to employees is compliant with ACA requirements. This requires additional consideration for how to track, store and report benefit offer information to streamline compliance.
For example, large employers are required to keep accurate historical records of all benefit offers provided along with the associated offer and Safe Harbor codes. They also need to provide form 1095-C to employees who are offered health insurance along with proof that documentation was offered. This requires tracking hours of service, including sick time, vacation and other leave of absence, employment status, and assignment of offer codes and Safe Harbor codes. Failure to comply can increase expose to risk, fines and penalties. The challenge is that most employers keep enrollment data, but not offer data.
Infor is taking a proactive approach in helping customers prepare for this change, making it easier to collect, store and access benefit offer data for simplified reporting. The most current release of Infor HCM adds features to the Benefits Year End Process module to help produce the mandated Forms 1095-C and 1095-B, required for employees that are offered benefits and related IRS reports.
Patches were released on September 11, 2015. The ACA Phase 1 CTP(s) are available under JT-780276. Field and Form help for the ACA Phase 1 deliverables are available under JT-828164. A Master Knowledge Base Article (KB-1650062) contains references to fifteen KB Articles that provide detailed instructions on configuration and processing for the ACA solution, including FAQs and knowledge transfer presentation. Additional enhancements to HRM Payroll and employee and manager self-service are due in late 2015.
Other enhancements that version 9.0.1.x-10.0.x addresses includes allowing users to:
- Track paid and nonpaid hours for ACA full-time assessment reporting.
- Keep a record of the measurement period(s) for each employee to support why a benefit offer was made to one employee and not another.
- Categorize each health benefit plan by insured or self-insured, type of coverage provided, employee option in that plan with the MEC and MVC, and the safe harbor code that applies.
- Collect and store all health benefit offers made to employees (accepted or not accepted) for mandated reporting and to provide backup documentation to deter IRS penalty inquires.
- Track spouse and dependents associated with the benefit election that the employee made.
What can you do now to prepare?
Start planning today because there’s a lot of work to be done including a database reorg, establishing benefit codes and ensuring employee and their dependents’ personal information is on file.
Take advantage of training to support a smooth transition. New forms, new filing requirements and complex reporting will have cross-functional impact. Get HR, payroll, compliance and finance departments together to ensure your infrastructure is solid and understands what they need to do.
Know what systems your hours are located in so you can easily gather information for reporting. Are they all in the payroll application or an external system? You’ll need to identify the location and add hours in date order so they can be tracked. Pro-tip: Create an ACA pay class. This way, when running payroll, the system can automatically accumulate the ACA pay hours into the ACA pay class.
Confirm accurate employee classifications to avoid penalties under ACA. Classify positions as seasonal, variable-hour, part-time or full-time and determine the appropriate measurement assessment periods.
Review and categorize benefit plans if you offer multiple plans. Create a spreadsheet detailing all benefit plan options and mark if it’s a self-insured plan, how it ranks compared to other plans offered, the relevant offer codes and Safe Harbor codes. Boom – at a glance reference documents!
Review 2015 coverage to determine if you have everyone enrolled in a plan or included in the waive plan. Use this review to gain visibility into who has coverage, who opted out, and if they had any had changes throughout the year as well as checking that employees who selected options for dependent coverage have the corresponding Social Security numbers or birthdate on file.
ACA compliance will not occur until January 2016 to employees and March 2016 to the IRS, but the more HR and payroll professional can get ahead of the process, the easier it will be for next year.
Want to learn more about how Infor HCM can help your organization effectively manage the human resources function and streamline payroll operations with core HR, benefits, and payroll capabilities while facilitating compliance with ACA mandates? Contact Avaap to learn more.