These instructions brought clarity to the ACA draft forms released July 24, 2014. Although the instructions themselves are also technically in draft status, that designation is more a matter of the formality of pending approval by the Office of Management and Budget.
So with the foundation set as it can be now for such ACA reporting, this latest release from the IRS packs both good news and bad news for employers getting ready to compile information needed to submit these forms.
Before we look at the relevance of this news, let's remember that unlike the information reported every January on Form W-2 (summary data from the preceding year), information on Forms 1095-C and 1094-C will be derived from month-to-month tracking of payroll data in the preceding year. For most employers, their payroll-tracking system must be accordingly adapted by January 1, 2015.
The bad news – and why you need to know these IRS gotchas now
The first (recent) gotcha:
Form 1095-C must be generated for every employee who was full-time in any month of the previous calendar year.
What this means:
Even if an employee doesn't meet ACA-defined full-time status for a designated measurement period, he or she must still be given Form 1095-C in January 2016 if they worked at least 130 hours in any one month of 2015.
Regardless of employee status (full-time vs. variable hour), if an employee is enrolled in a self-funded health care plan offered by his or her employer, they must receive a Form 1095-C.
Now, the good news – maybe
If an employer isn't offering self-funded health care coverage, they don't need to capture information on dependents in order to meet ACA-mandated IRS reporting requirements.
The employer will still have to provide information on the type of coverage offered and on whether coverage was offered for spouses and dependents.
If an employer is offering self-funded health care coverage, details on dependent coverage must be submitted. Those details include the name, relationship to employee, and SSN or DOB of each dependent covered.
If you are using Microsoft Dynamics GP, the HR module of your ERP system can capture this information because those details are tied to an employee’s Payroll record. You wouldn’t have to fully implement the HR module to access the needed information on dependents.
Starting with GP 2013, the HR module is part of the Payroll suite of Microsoft Dynamics GP.
Added help as you prep for filing with the IRS
In late September 2014, we will be releasing Version 2.1 of Sypnio ACA Reporting, our core application for transforming the payroll processing functionality of Microsoft Dynamics GP into an ACA tracking and ACA compliance vehicle. Among the updates this version comprises will be a feature called ACA Plan Setup.
Options in ACA Plan Setup will provide all the checkpoints for what needs to be maintained in Microsoft Dynamics GP Payroll in order to generate the proper indicator codes for the information needed to complete Form 1095-C.
For every insurance plan that an employer offers, a setup screen will be available to capture the information needed for the IRS annual submission.
Sypnio’s software will generate both Form 1095-C and its transmittal, Form 1094-C, from Microsoft Dynamics GP without the need for a third-party interface.
In addition to producing Form 1095-C for each employee, Sypnio ACA Reporting will also provide the required IRS e-file capability for Form 1094-C.
Bottom line: More gotchas that would be challenging to address without a GP system enhancement
With the most recent ACA directives released by the IRS, the fine lens for tracking an employee’s hours of service got all the finer.
Exacting as that ACA-mandated lens may be, our cost-effective add-on software still will transform the Payroll module of Microsoft Dynamics GP into a vehicle for ACA tracking and reporting compliance.
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