The Affordable Care Act (ACA) is evolving, and has turned out to be the perfect storm of data management chaos with a hint of penalty induced nightmares for some companies. We have you covered with tips and insight on how to prevent those pesky errors and how to have confidence in your ACA compliance strategy. We’re doing a two-part blog with our top five recommendations to stay ahead of Tax Year 2016 reporting.
Tax Year 2015 (TY15) has provided us an invaluable experience on how we can prepare for TY16. Here are our first three recommendations to stay ahead of the curve.
- Know your target audience
The federal government, our audience, has mandated adherence to a cash-penalty-filled mandate with pinhole tight guidelines. In order to protect ourselves, we must understand what our audience wants. The IRS expects companies to follow the law with clean, accurate data that proves compliance. The goal here isn’t necessarily to become an ACA master, but it is to ensure the long-term compliance for businesses by complying with the mandate and transmitting our data on time and complete.
- It’s all in the detail
TY15 filing has provided us some insight on the AIR (Affordable Care Act Information Return) system the IRS uses for the transmission and acknowledgement of 1095 and 1094 data. Not shocking, the IRS is looking for very specific and granular data that can leave employers unprepared for tax season. Here are a few of the data points we need to be spot on to ensure we are Accepted by the IRS:
- Do our employees names and SSNs match the SSA’s records?
- Does our business name and EIN match the IRS records?
- Did we populate all of the required data on the 1095s and 1094?
- If self-insured, did we add all dependent elections?
- Proper on-boarding
Let’s begin, well, at the beginning. The ideal method to prevent nonsensical work is to do it right the first time! Many of the errors we’ve seen this year are due to employee/employer and benefit data that is typically registered within the employees first few weeks (or months for benefits) of hire. These errors, as simple as it sounds, are typically caused by data entry oversights, such as entering an employee with their nickname or accidentally including a typo in their SSN. Here are some of the key points to keep in mind when on-boarding your employees.
- Does the employee’s information match their social security card?
- Did we accurately log the employee’s medical benefit eligibility date?
- Did we log all waives
- Did we accurately record transfer dates for employees switching EINs?
- Implement a process around data management
Now that we’re aware of some of the error-causing scenarios, how do we make sure we maintain? The answer sounds simple, but takes discipline. We’re all about the adage “practice makes perfect.” To ensure we continue to tack accurate information, we must start building good data management habits. We recommend that HR Administrators schedule routine audits not only to check data accuracy, but to scrutinize their audit processes. Here are a few tips to further your audit process:
- Do you have a checklist for key data points?
- Are your audits prescheduled for the month, quarter or year?
- Do you have a dedicated employee that is responsible for the data?
- Audit strategy
In order to preserve time and prevent avoidable penalties we must take a two-fold approach:
- Schedule and execute our routine audits
- Allow time to test and revise 1095s prior to the filing deadline
By scheduling and executing routine audits, you will avoid those grueling, unorganized last minute scrambles. We recommend that you begin generating and auditing 1095s at least two months prior to the deadline. This allows a buffer to generate, review, and test 1095s helping ensure we meet our deadline with time to spare and little stress. The idea here is to submit test files in advance, which will afford us time to review errors and transmit corrections to the IRS.
Are you ready prepared for 2016 ACA reporting? To request a meeting with a FusionHR representative to learn more about how we can help you stay ACA compliant, click here.