Many midsize U.S. employers, and even some large employers, are just starting to understand what a big job filling out their first 1095-C coverage reporting forms may be.
The Obama administration pushed the new Patient Protection and Affordable Care Act (PPACA) public exchange programs to rush 1095-A exchange coverage reporting forms for 2014 out the door in early 2015.
The administration gave "applicable large employers" (ALEs) one extra year of freedom from the 1095-C requirements. ALEs could sit back and sip tea as they watched the public exchanges struggle to get accurate 1095-As to exchange users in a timely fashion.
Now, the ALEs' one-year reprieve is ending. An affected employer is supposed to make a good faith effort to send reasonably accurate 1095-Cs for 2015 to employees by Jan. 31, 2016, and to the IRS by March 31, or by Feb. 29, 2016, if they want to file their returns on paper.
Petula Workman, compliance counsel at Arthur J. Gallagher & Co. (NYSE:AJG) and Kristy Ventimiglia, health and welfare practice leader at the broker's benefits unit, are two of the people helping those employers understand what they're up against.
Ventimiglia said today in an interview that helping employers cope with the Patient Protection and Affordable Care Act (PPACA) employee counting and coverage reporting requirements now takes up much of a typical work day.
"Eighty percent of the conversation is around counting employees," Ventimiglia said.
In some cases, employers need help with understanding how to handle people who may or may not be their employees, such as adjunct professors, temporary employees, exchange students who are using J1 visas to work in the United States, workers sent in by staffing agents, and employees in offices outside the United States, Ventimiglia said.
In other cases, Ventimiglia said, employers are just learning that the new employee counting system applies to them.
Payroll companies, payroll system companies and other vendors are offering to help employers with employee counting, but the level of responsibility a vendor is willing to take varies dramatically from vendor to vendor, Workman said.
Some employers now realize that they need professional employee counting help, but "the vendors are reaching capacity," Workman said.
An employer that wants significant help with employee counting should hire a vendor quickly, Workman said.
Drafters of PPACA created the framework for the 1095-C reporting process by adding the Section 6055 coverage provider reporting requirements and Section 6056 employer health benefits reporting requirements to the Internal Revenue Code (IRC). The Internal Revenue Service (IRS) is supposed to use the information about employees and health plan enrollees on the 1095-C health benefits reporting forms, and the 1094-C summary forms, to see whether an employer is meeting the PPACA "employer shared responsibility" requirements.
Under the shared responsibility requirements, an employer that fails to provide what regulators classify as affordable health coverage with a minimum value could end up paying large penalties.
Traditionally, benefits compliance specialists have relied mainly on final regulations to interpret IRS compliance requirements.
See also: What brokers must know about Form 1095-C
Complying with the new PPACA rules is taking as long as it does partly because the IRS is so rushed that it is handling some queries by giving oral answers to benefits professionals' questions, either on Web-based seminars or at in-person events, Workman said.
If a high-level IRS official gives an answer to a question through a webinar or an in-person event, "we will run with that," Workman said.
Recently, Workman said, Gallagher used that kind of process to get an answer about how to handle 1095-C reporting for employees who are using COBRA health benefits continuation coverage. Gallagher expects the IRS to post written guidance supporting the informal oral guidance in a few weeks, she said.