1 Applicable Large Employer members must report under Section 6056 for their full-time employees qualified for a multiemployer (union) plan, even though the employer is not directly offering those employees coverage. ALE members are accountable for any penalties ensuing from improper reporting. The IRS has created special coding for employees covered by a bargaining unit that has negotiated participation in a multiemployer plan. That said, employers must confirm the multiemployer plan meets certain criteria before they are eligible to use the multiemployer plan coding.

Not properly reporting for employees covered by multiemployer plans.

TOP 10ACA REPORTING MISTAKES

The complexity and magnitude of the Affordable Care Act (ACA) reporting process left many employers scrambling to meet deadlines this year. To help ease the process in the upcoming years, we have

compiled the ten most common ACA reporting mistakes, so you know what to avoid for next year’s filing.

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EPAY Systems provides a unified human capital management system that brings together all of your ACA data to track compliance and generate the necessary forms and reports including 1094 and 1095 forms, affordability test, hours worked reports and more. We’ll monitor how your full time equivalent employees are trending, help you plan for future exposure and even file your forms and notices directly with the IRS. Interested in learning more about how we can help?

Contact us today!Email: sales@EPAYsystems.comCall: 877-800-3729

DisclaimerNote: The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a 'covered opinion' or other written tax advice and should not be relied upon for any purpose other than its intended purpose

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most common

In cases where an employee waives coverage, it is still the responsibility of the employer to report information regarding the coverage offered, so the IRS can decide whether an individual or employer penalty may apply. There is no specific code that applies when an employee waives an offer of coverage, so it is recommended to examine the other codes to see if one may apply. For example, if the employee waived coverage but that coverage was affordable based on an IRS affordability safe harbor, you should use the corresponding code for the safe harbor.

Not properly reporting waivers of coverage.

The ALE member uses Line 14 in Part II of Form 1095-C to report whether an offer of coverage was made to an employee for each month of the year. For these purposes, the ALE member should enter the appropriate code to indicate what type of coverage, if any, was offered to the employee for that month, not the coverage actually elected by the employee. So, an employer should not report that an employee was only offered self-only coverage because that’s what he enrolled in, if in fact the employee had the opportunity to elect family coverage.

Improper reporting on Line 14.

An offer of COBRA coverage made to a former employee upon termination of employment should be reported as a Series-1 code 1H (No offer of coverage) and must be entered for any month for which the offer of COBRA coverage applies. Do not enter code 2C in Line 16 for any month in which a terminated employee is enrolled in COBRA continuation coverage; instead enter code 2A. An offer of COBRA continuation coverage that is made to an active employee (e.g., as a result of a reduction in hours resulting in the loss of eligibility for coverage under the plan) is reported in the same manner and using the same code as an offer of that type of coverage to any other active employee.

Incorrect COBRA coding in reporting.

For Line 14 regarding offer of coverage, you should enter one of nine codes for each employee every month. This line cannot be left blank. You should use the “All 12 months” box if the code and coverage is the same for all months. A Line 14 offer of health coverage means coverage for the entire month. An offer of coverage is considered to be made for a month only if health coverage is available for every day of that calendar month. If enrollment is offered mid-month, you should not report coverage as not being offered, even though the employee may not have been hired yet. If coverage terminates mid-month, you should not report coverage as being offered, even if the employee terminated employment that month. That said, the Line 16 safe harbor codes could be used to indicate the reason why coverage was not offered every day.

Not properly reporting full month versus partial month offer/enrollment.

Employers are required to issue a Form 1095-C for any person who was a full-time employee at any point during the year. But, if an employee is working part-time for two related employers, that person’s hours must be aggregated in determining whether he worked “full-time.” Further, related employers must collaborate to determine who will “claim” that full-time employee for the month, as the employee would only be considered the full-time employee of the employer he worked the most hours for.

Not properly reporting for employees working for multiple employers within the same controlled group.

Only certain ALE members should complete Part III. An ALE member that offers coverage through an employer-sponsored, fully-insured health plan (and does not sponsor a self-insured health plan) should NOT complete Part III. Instead, information about coverage will be furnished to employees on Form 1095-B, which is filed by the insurance provider.

Incorrect completion of Part III on Form 1095-C.

8Employers are permitted to determine full-time status using either the monthly measurement method or the look-back/stability measurement method. While the measurement method is not required to be “declared” on the Form 1095-C, the coding necessarily reflects the employer’s choice. Employers should ensure that they are measuring hours in accordance with an IRS-approved method and that the 1095-Cs generated reflect that approach.

Reporting codes should reflect measurement method.

Outside of very narrow circumstances involving a bona fide change in position, if the employee’s hours are reduced below 30 hours a week, the employee must remain benefit-eligible for the remainder of the stability period (for most employers, the rest of the calendar year).

Failure to account for stability period for employees experiencing a reduction in hours.

The application of the look-back measurement method to a new employee depends on the employer’s reasonable expectations of the status of the employee at the start date. Employees reasonably determined to be in a full-time position are not placed in an initial measurement period. Instead, their hours are determined on a month-by-month basis. An employer’s reasonable expectations are only applied during the initial measurement period and not during subsequent standard measurement periods where the determination of full-time is strictly made by hours of service in the prior measurement period.

Incorrect reporting for new hire full-timers under look-back/stability period method.