5 ways to ensure compliance with ACAs employer shared responsibility
May 15, 2015 11:37 AM
Reporting requirements under the Affordable Care Act call for high levels of coordination between payroll and HR departments. One of the biggest changes this year is the employer shared responsibility provisions that went into effect for many large employers. Correct payroll data is vital to the end-of-year reporting process and in assessing whether an employer is subject to the provisions. Mike Trabold, director of compliance risk at Paychex, shares five best practices to ensure accuracy and help reduce the likelihood of penalties.
[Image: Fotolia]
[Image: Fotolia]
Coordinate with HR for accurate reporting
Payroll provides much of the data needed for Forms 1094C and 1095C, used for end-of-year reporting for the 2015 tax year. The information needed to determine employer status, coverage affordability and eligible employees requires new levels of communication among departments.
[Image: Fotolia]
[Image: Fotolia]
Know the appropriate reporting time periods
Employers may choose a look-back period of between three months and one year as the standard measurement period. Employee hours of service during this period are used to determine the full-time status for the subsequent stability period, and payroll needs to ensure the data provided covers the appropriate time period.
[Image: Fotolia]
[Image: Fotolia]
Ensure accurate information for hours worked
Service hours help determine employer status and which employees are full-time (and may put the employer at risk for penalty if they are not offered adequate, affordable coverage). For entering hours of employees who are difficult to track adjunct faculty, commissioned salespeople, per diem, etc. IRS section 4980H provides some guidance on reasonable methods for crediting hours of service. Payroll may also note personnel changes that affect the employees full-time status (and, potentially, the employers status).
[Image: Fotolia]
[Image: Fotolia]
Provide accurate information on health care coverage
Under the employer shared responsibility provisions, these employers must offer full-time employees, and their dependents, health care coverage that is adequate and affordable or face potential penalties. Payroll is essential to ensuring which employees should be offered coverage and providing the cost of that coverage on Form W2, wage and tax statements.
[Image: Fotolia]
[Image: Fotolia]
Assist in determining affordability
Affordable health care under the shared responsibility is coverage that does not cost the employee more than 9.5% of his or her annual household income. However, the IRS allows three safe harbors to determine affordability. Payroll can help the employer determine affordability based on Form W-2 and employee salary and hourly rate information.
[Image: Fotolia]
[Image: Fotolia]
