When we all look at January 1, 2015 as the start date of the IRS assessment period for employer noncompliance penalties with the Affordable Care Act, there’s more to the picture of that Thursday morning than beginning to account for your employees’ hours of service as of midnight the night before.
That would be somewhat clear and almost simple. But nothing about the employer responsibility provisions of the most transformative health law in U.S. history is clear or simple.
True, as of January 1, 2015, you will need to be collecting and formatting payroll data for the month-by-month reporting you’ll be doing in January 2016 on employee information gathered in calendar year 2015. As we know, this data will populate the new ACA-mandated IRS form for documentation of health care coverage availability: Form 1095-C, which you’ll be required to produce for every employee who meets the ACA definition of full-time and for all employees who have coverage.
But January 1, 2015 is also the date by which an “applicable large employer” who has chosen to “play” with the employer mandate of the new health law must have:
Determined which employees are eligible for coverage
Offered all eligible employees a plan that provides “minimum value” and is “affordable” (to avoid all penalties) or a plan that provides “minimum essential coverage” (to avoid the penalty of $2,000 per full-time employee for not providing any coverage)
Enrolled every eligible employee for coverage, if he or she accepted a plan offer
This ACA reality packs an added urgency for companies where lines between full-time and part-time workers blur and where turnover in the workforce may be frequent.
Which employers/industries need to sweat ‘eligibility’ now?
So that they can confidently proceed with offers and signups pronto, many employers whose employees are not retained (such as staffing and recruiting firms), who employ people whose hours vary (such as retailers, and anyone in hospitality or nursing care), who hire people for seasonal jobs (such as construction companies and food packers) and at lower wages (such as restaurant management companies, particularly fast-food franchisees) – are now in the data-mining phase of figuring out who they need to be offering coverage to.
In ACA tracking lingo, these employers are “determining eligibility.” And the payroll and HR managers at these companies are living and breathing such terms as “standard measurement period,” “administrative period” and “stability period” for “variable-hour employees.”
Without their employee data filtered through exacting ACA boundaries and classifications, next steps with a company’s insurance broker can’t be sure steps.
If your workforce meets any of the above descriptions and you’re processing payroll in-house with Microsoft Dynamics GP (Great Plains), there’s still time – albeit a rapidly closing window – to determine eligibility so that you can proceed with plan offers and signups.
In providing and supporting a GP Payroll add-on that extends the functionality of Dynamics GP payroll processing for comprehensive ACA tracking, we at Sypnio Software guide GP Payroll users determining eligibility for the first time with the following information:
The earliest pay period that can be used for eligibility determination is October 1, 2013 to September 30, 2014. This choice allows a 3-month administrative period for coverage starting on January 1, 2015.
For one year only, the IRS allows employers to have a 6-month standard measurement period and a 12-month stability period in determining eligibility. This one-time relief overcomes the regulation that a stability period cannot be longer than a standard measurement period, if the standard measurement period is equal to 6 months but less than 12 months.
To determine initial eligibility in 2015, the IRS says “employers may adopt a transition measurement period that is shorter than 12 consecutive months but that is no less than 6 consecutive months and that begins no later than July 1, 2014, and ends no earlier than 90 days before the first day of the plan year beginning on or after January 1, 2015 (90 days being the maximum permissible administrative period).”
The longer you delay the processing of your employee data for eligibility, the greater your risk of not being able to select a plan in time for the offers and enrollment to be done by January 1.
Failure to have determined your eligible employees, offered them minimum essential coverage and signed them up before January 1, 2015 could lead to a penalty of $2,000 per employee, which would be assessed monthly in 1/12th installments (or $166.67 a month).
Funding provisions in the Affordable Care Act will force the IRS to assess these penalties in order to subsidize tax credits on the exchanges and the expansion of Medicaid.
Remember that this law was passed in March 2010. Much of the wrangling that led to its passage unfolded on Capitol Hill during the federal government’s 2009 fiscal year, when the U.S. deficit of $1.4 trillion was the largest since 1945. Through the shared responsibility provisions in the individual and employer mandates, framers of the Affordable Care Act built in a funding mechanism that wouldn’t worsen the U.S. deficit.
Insuring you have a system in place that helps you get at your data for initial eligibility determination and ongoing eligibility determination is vital and should now be part of all companies’ payroll monitoring and reporting.
How fast can Sypnio help you run reports?
Sypnio ACA Reporting, our cost-effective add-on which integrates with GP Payroll, takes 15 minutes to install and comes with 1 hour of training. In that hour, you will be running the reports you need to pass along to your decision-making colleagues and to your insurance broker.
We’re compatible with all supported versions of GP and do not require implementation of the HR module. If you do use the HR module, no problem; we can integrate with it, if needed. Sypnio ACA Reporting:
tracks eligibility automatically
automatically tests the affordability of coverage offered
generates Form 1095-C for employees and will generate and e-file Form 1094-C, its transmittal, with the IRS (To see Great Plains producing Form 1095-C now, visit our home page.)
Prepping GP Payroll users for ACA readiness is all we do. Sypnio's hard work on this tough compliance task has saved companies time and money. Check out our reviews and then call 815-656-4000 or email [email protected].
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