At the end of the year most American employees are gearing up for the holidays, shopping, attending social gatherings and scheduling vacations. Meanwhile, you may find many HR professionals working diligently to prepare for the year ahead. In December, HR professionals are finalizing year-end payroll, annual reviews, open enrollment, year-end audits and other forward thinking strategic initiatives to support business operations.
And... to pile on, the Affordable Care Act (ACA) now imposes new additional responsibilities for HR professionals.
The New Year will ring in new compliance reporting responsibilities. Beginning in January, employers must report to the IRS information about the health care coverage, if any, they offered to full-time employees. You might think this is a simple task. Instead, it is actually daunting. Specifically, the ACA requires that large employers (with 50 or more full-time employees, including full-time equivalents) distribute a new health care disclosure form to their employees by January 31—at the same time W-2s are distributed. Both of these forms are critical, since American employees must submit their health care disclosure form along with Form W-2 when filing their income tax returns.
So, what’s the big deal? Isn’t this just another form? Herein lies the daunting task.
Large employers that sponsor their own health care plans (self-insured employers) serve as both the insurer and the employer. Under these conditions, self-insured employers will be impacted by the new ACA reporting requirements on a larger scale than employers that are not self-insured. For self-insured employers, ACA reporting will present a significant challenge because they will be responsible for reporting both as the insurer and the employer.
The reporting forms will require specific information on each employee’s insurance coverage (and their spouse's and dependents’, if applicable), such as employer identification number, taxpayer identification number, addresses, employee's full-time status and length of full-time status, proof of minimal essential coverage offered, coverage dates, and employee's share of coverage premium costs. And... additional information may be required by the IRS over time.
Collecting required information to ensure accurate reporting is an administrative burden for employers. Yes, while HR pros have the relevant data requested, it is not contained in a central repository. Most employers will have to use multiple sources—including their benefits carrier or broker, HRIS, payroll company, time off tracking software and other sources, to obtain the data necessary to complete reporting the forms. Oh, and by the way, did I mention missed deadlines and incorrect filing of IRS forms may result in penalties and fines to the employer? This will inevitably add to the employer’s cost of providing benefits to employees. As you may have already guessed, this means that we’ll likely see an increase in employers’ implementation of cost-shifting strategies to their employees to offset higher health care expenses—which will negatively impact our wallets.
So... while you’re enjoying the holiday festivities, don’t forget to thank your HR professionals and perhaps even give the gift of empathy and understanding!