ACA Compliance and ACA Reporting Requirements for 2016

By Karen Bailey, Compliance Officer Empyrean Benefit Solutions

As we look to the year ahead in meeting ACA compliance with Pay or Play and the reporting requirements that support it, we fully anticipate changes on the horizon. Prior guidance reflects that some transition relief will be sunsetted. The IRS, per its usual course of business, is expected to issue clarification and perhaps even introduce new items related to the reporting.

Yet, when they provide that guidance could be well after businesses would normally need to update systems and timely meet 2016 reporting. Add the uncertainty of presidential election year politics, and it would seem that benefits administration professionals are in a holding pattern for how best to update systems and when. However, there are a few areas on which we can reasonably focus related to changes in 2016 reporting.

1. Employers should be ready to substantiate that they made an offer of qualified coverage to at least 95% of their full time (FT) employees to avoid the sledgehammer penalty (compared with 70% coverage for 2015).
2. Annual penalty amounts for 2016 Play or Play failures increase both in terms of sledgehammer and tack hammer penalties to $3,240 and $2,160 respectively.
3. Two 2015 transition relief reporting options from the IRS Transmittal Form 1094-C Line 22 will be eliminated, so update processes and/or systems accordingly:
   • Item B – Qualifying Offer Method Transition Relief which was available only in 2015 for non-calendar year plans.
   • Item C – 4980H Transition Relief coverage rule changes. The 70% Coverage Rule available for 2015 moves to 95% for 2016.
4. The IRS stated in earlier 1095-C draft guidance there would be new codes for 2016 for use in Section II (e.g. a code if the employer offer of coverage to a spouse is conditional upon the spouse not being offered coverage under the spouse’s employer).
5. Shore up reporting completed by your COBRA vendor; 2015 “good faith” won’t meet scrutiny in 2016 if you are not able to report the proper codes on the 1095-C for COBRA offers.

To help you prepare for the year ahead, Empyrean has published an At-A-Glance Guide entitled Affordable Care Act (ACA) Compliance: Navigating through the newest demands for 2016. The guide provides a brief overview of a few key themes, including some of the benefits gained when using an outside resource such as Empyrean to support your reporting efforts. Because we work with a wide spectrum of clients in various industries, Empyrean has a broad range of experience with both ACA compliance reporting and platforms that support full scope ACA compliance and unparalleled benefits administration.